MySpace Signs Industry Changing Deal

It’s finally happened. Digital music has finally become “mainstream.” Lookout Apple! Myspace signed a deal with Warner Music Group, Sony BMG, the Universal Music Group, and most likely EMI will soon join the ranks. With CD sales suffering 10-25% losses over the last few years, this is the most visible recognition to-date of a need for a shift from the record label giants.

New York Times reports:

The venture plans to make money from selling advertising on the site and from selling digital downloads of music through a partnership with Amazon.com…When it is introduced, most likely by the end of the month, the service will have several million songs, all ready for instantaneous streaming.

This is a game changer for artists as well. Currently, artists are limited to hosting 6 songs on their MySpace profiles, under this new venture artists “will be able to post their entire catalogs and share in the resulting advertising and download revenue.”

Speaking of revenue, “Sony Pictures, McDonald’s, State Farm and Toyota Motor will be among the first sponsors of the site.” This is a very, very big deal as the record labels now have a stake in the success, and are hoping to turn a profit in the digital music space without hindering consumers access to music. “Labels own about a 40 percent stake in the new venture, with Universal Music, the largest label, owning the biggest share.” Additionally, “MySpace says it eventually will let artists sell merchandise and concert tickets from their pages and keep a share in the profit. Over the longer term, label executives say, they will add exclusive content like new songs and videos to MySpace Music and offer deals to encourage customers to download albums and collections of music.”

We’ve seen label executives (and losers like Metallica) struggle to mantain control over music, through shutting down Muxtape, Napster, and “five years ago, various labels and industry groups sued MP3.com, an early service that permitted people to stream any song free as long as they could demonstrate that they had a copy of the CD. MP3.com lost the lawsuit and closed its service.” However, the average consumer has just found other channels such as imeem, Deezer, Last.FM, MySpace, or PureVolume.

“To the average consumer, music is already free,” said Rich Greenfield, an analyst at Pali Research. MySpace Music, he said, “is the labels now acquiescing to that fact.”

This adds another flavor to this mix as well: social communities. What Last.FM was able to pull off so well as an amazingly easy integration with your friends music. This new service will allow for the highest level of integration yet as,

Users will be able to assemble private playlists of hundreds of songs, which they can string together to perk up a party or ease the monotony of their workday. They will also be able to post one of those playlists, with 10 songs, to their public MySpace profiles, where their friends can listen and save those songs to their own pages.

We will see how MySpace and iTunes compete–especially as iTunes just released it’s music recommendation engine, “Genius.”

This is the first piece of music news from “corporate” that I’ve heard in a long time that actually benefits me. The only bad thing I have to say is that I MySpace is hideous to look at, and isn’t even close to being my favorite online music resource. However, it’s still exciting times!