Can MySpace become a music mogul?

Not so long ago in this space I posed a question--"Can anyone dethrone iTunes? [1]"--and concluded, at least at that time, the answer is "No." But the challengers keep coming, each with a different and intriguing spin on the digital music retail model. This week, The Wall Street Journal reported that News Corp.-owned social networking site MySpace is in talks [2] with the major record labels to launch a digital music service that would offer both premium MP3 downloads as well as free streaming content. The tentatively-named MySpace Music would be structured as a joint venture between MySpace and content provider partners like Universal Music Group, Warner Music Group, EMI Group and Sony BMG Music; proposals are still in the discussion stage, but MySpace is weighing a premium platform featuring downloads compatible with virtually any portable device, including Apple's iPod, as well as ad-supported streaming content. A music merchandise service is also under consideration, as is a paid subscription service optimized for certain portable devices.

What's interesting about MySpace Music is its tacit acknowledgment that the future of the music business likely lies in selling merchandise, not content. With so few consumers paying for music anyway, an ad-supported streaming service that markets new artists and promotes sales of more viable premium commodities like concert tickets, t-shirts and ringtones makes a fair amount of sense. Of course, this isn't the first time MySpace has attempted to establish itself as a music retailer--in the fall of 2006, the site inked a deal with digital licensing and copyright management services provider Snocap to enable independent artists and labels to sell MP3s directly from their profile pages. The big challenge this time around isn't that MySpace is negotiating with the majors, it's that the site no longer dominates the social networking landscape the way it did 18 months ago. Much as MySpace knocked off Friendster, so now has Facebook usurped MySpace … and it seems likely there are other insurgents to follow. If nothing else, pop music and social networking have this much in common: No one stays on top for very long.

What about the other new digital music services? We're still waiting on the MTV/RealNetworks/Verizon Wireless joint venture Rhapsody America--at this point, Guns N' Roses' Chinese Democracy might actually beat it to market. Nokia Music Store is still smarting from the absence of Warner Music Group content: The label continues to boycott the Nokia service, citing concerns over the handset giant's social networking site Mosh. Amazon.com is now offering millions of DRM-free downloads from all four major labels, often at prices cheaper than iTunes, but without an accompanying must-have device a la the iPod, the e-tailer can't match Apple for consumer cachet. And Sony Ericsson's PlayNow music service is still a few months away from launch. So while it's too soon to dismiss any of them as mere pretenders, it's also a bit early to call them serious contenders, either--for now, at least, the only constants remain death, taxes and iTunes. - Jason [3]