MySpace Goes After iTunes
The New Reality for Customer Engagement
MySpace Music is seen as a potential rival to iTunes, which takes more than 70 percent of digital download sales.
The music industry, concerned about the influence iTunes wields in the digital market, wants to develop MySpace Music into a strong competitor.
"This gives a great new lease of life for the download market," said Thomas Hesse, Sony BMG president of global digital business, in an interview with Reuters.
Sony BMG is jointly owned by Sony and German media group Bertelsmann AG.
He said MySpace Music could eventually offer a "premium subscription" service, but gave no details and said it was up to MySpace to make that decision.
Forrester Research analyst James McQuivey said MySpace Music was the right step for music companies, but noted, "Apple will not be affected for the first few years because Apple's iTunes store lives on the strength of Apple's devices."
He added, "One implication of this is that Apple may decide to improve its store experience, but I don't honestly see it trying to compete as a social network."
For MySpace, it was important that the songs not be locked with copy protection software, known as digital rights management, which prevent songs bought by fans from being played on different devices. Kapur said songs bought on MySpace Music should be "very portable" and work on Apple's iPod and other devices.
The deal was agreed late on Wednesday after Universal Music agreed to settle a 2006 copyright infringement lawsuit against MySpace. A source familiar with the negotiations said MySpace had agreed to pay Universal as much as $100 million to settle.
De Wolfe said MySpace is currently seeking a chief executive or president for MySpace Music. A source close to one of the music partners said if MySpace Music is successful it could be spun-off as a stand-alone company.
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