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MySpace launched its separately operated music service under the support of the four major labels. It allows users to stream music on demand, create playlists, add music players to their profiles, and buy DRM-free music downloads (via Amazon) and ringtones (via Jamster). Soon MySpace Music will allow artists to sell concert tickets and merchandise on their pages and will get a cut of the revenue, as well as exclusive content like new tracks and videos to encourage consumers to download albums and music. MySpace has recently made deals with the four major music publishers. This launch took place during a time of steep drops in physical sales and iTunes dominating the online digital music market.
MySpace Music is facing some problems. Converting MySpace users into music purchasers, the division of equity between major labels, and the under-representation of the independent labels' music repertoire. Despite this, Amazon looks to be the most likely guaranteed winner since they are not involved in any of those listed problems. The majors have 40% equity in MySpace Music, valued at $120 million. It is interesting to see them so involved with the service after not supporting services like Last.FM, Pandora, etc. One reason could be because of the inclusion of sponsors such as McDonald's, Toyota, Sony Pictures, and State Farm, which will be rotating ads around the site. Many independent music publishers and agencies have still not been able to reach agreements with MySpace Music over rights to their songs. Another advantage the majors have in their 40% stake is the access to sales and other data from MySpace, especially that of independent artists that their labels will not have access to.
While it does not have the same amount of music as iTunes, yet, MySpace Music seems set to be a success. They will need to sell a large number of ads on their site for around $10 per 1,000 impressions, much higher than the standard US rate of $3 per 1,000 impressions, in order to generate long-term profits. Thus far, Amazon seems to be the only player set to be the definite winner.