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MySpace Takes On iTunes With DRM-Free, Amazon-Backed Site

Myspace_music_new_splash_pageMySpace, in a bid to slow the steamroller that iTunes has become, launched a music site early on Thursday to give one of the world's largest online communities streaming access to full-length songs, the freedom assemble an infinite number of playlists, and the ability to buy DRM-free tracks from Amazon's MP3 store without leaving the site.

The road is littered with previous attempts to take on iTunes: Yahoo Music, Rhapsody and Napster (which Best Buy is buying for $121 million) have not gained much traction, and Apple's remains the largest retailer of music in the world.

But by reducing use restrictions -- and not charging subscription fees -- MySpace is betting that its 120 million members will be just fine with ads.

"With DRM-protected a la carte files and tethered subscription files, you've got a constrained system -- the content is constrained; it's locked in," MySpace COO Amit Kapur told Wired.com.

"As a result of that, you have a misalignment between users of the service and the actual service itself, as well as the retail partners or the content owners who are backing it.... [It's] an experience that isn't set up to win."

He characterizes the new MySpace Music as a natural progression from the original Napster, albeit one that works in concert with the labels. Major labels hold equity stakes in the service.

"When Napster went and set the content free, it was this incredible music experience for users, but it was illegitimate and it didn't have a business model backing it. That also wasn't designed to win.... How do we create an experience that is designed to win? How do we align the interests of every constituent involved in this process? And that is what we believe we've done."

MySpace members will be able to create an infinite number of playlists, each containing up to 100 songs. In addition, any song in the entire catalog will be searchable by song, artist and album, as opposed to the current setup that requires visits to band pages in order to add songs to playlists. Members will be able to follow their MySpace friends' latest playlists through a simple newsfeed interface.

No restrictions will exist in terms of jumping from one song to another,  and you'll be able to add songs to your playlists directly from other people's playlists. Listeners will, however, need to click on songs occasionally. Kapur said this rule exists so that MySpace doesn't end up paying for playing songs to an empty room.

At launch, there will be no audio interstitial ads playing between songs in these playlists. Instead advertising sponsors can purchase still-image ads, video ads and video overlays. They can also subsidize songs on the site to be downloaded for free (see the McDonalds page in the gallery below) to associate themselves with specific songs. Celebrities will be brought on as playlist creators, and users will be able to subscribe to one another's playlists. As for those Amazon "Buy" links, they'll allow you to complete the transaction and download without leaving the MySpace site, provided you're already signed in to both Amazon and MySpace.

However, the service's music catalog, which currently only contains music from the four major labels, is a bit of an issue. Kapur wouldn't specify how many songs MySpace Music will contain at launch, but did say the company will continue hammering out deals to add more music. It has already reached an agreement with The Orchard, an indie label aggregator that controls about a million songs, and those songs will be added next.

Negotiations with another indie aggregator, on the other hand, are rocky. Merlin fancies itself the fifth major label and wants the same treatment the majors get because it controls 8 percent of the U.S. music market -- equivalent to major label EMI's market share.

"It is incredibly disappointing that MySpace will launch their new service without having finalized a deal with the world's most important independent labels and artists," said Merlin CEO Charles Caldas in a statement issued Wednesday evening. "Any independent deal struck without an equity component (as was done with the majors) will see independent labels face a situation whereby their major competitors will profit from the use of their repertoire without an appropriate upside opportunity being extended to them by MySpace Music and its major-label equity partners."

Caldas confirmed that negotiations with MySpace are ongoing, but stands firm that "without an equitable participation by independents,  [there is] a situation that is both unhealthy and dangerous."

MySpace co-founder and CEO Chris DeWolfe told Wired.com in April that MySpace does not want to give indies equity stakes in the site in return for their music being added to MySpace Music, so it's fairly clear what the holdup is with Merlin and possibly other independent music entities.

Kapur said phase 2 of MySpace Music -- date to be determined -- will allow unsigned artists to upload their own songs into the system (as well as the ability to see most-popular charts for specific sets of other users and for artists to access trend analysis about their songs). When pressed about whether those unsigned bands and labels would get equity in MySpace Music as the majors have, Kapur mentioned the complexity of operating such a system as a potential barrier to the implementation of millions of little equity deals with the 5 million-plus artists on the site, but said the company would try to work out something fair for indie labels and unsigned bands that participate.

"When you look at how you set up a content business online there's an advantage in potentially aligning yourselves deeply behind some of the bigger stakeholders in that industry. It's impossible to think about providing equity to every single person that's involved," Kapur told us. "But the way that we think about it, rather, is that we want to generate value to every single artist that's involved in the site. We want to make sure that all of those artists have access to those business models. We want to make sure that all of them are treated favorably in terms of what the economics are and the deals that they have for participating in those models."

Last.fm launched an artist royalty program in July that compensates independent bands with a share of the site's advertising revenue. It's possible that MySpace could eventually do something similar.

Even if the company manages to quell fears on the parts of Merlin and indies participate in phase two of MySpace Music, the service's legally licensed catalog can by definition never be as large as the ones found on mixtape sites that draw on users' music collections. But if indie aggregators' equity issues can be resolved and indie labels and bands see the value of promoting their music through the service -- even at the expense of knowing that News Corporation and the major labels are profiting from their work, albeit to a small extent in most cases -- MySpace Music will be able to expand its catalog and satisfy more people by offering them more music.

As things stand, MySpace's music area already attracts over 35 million unique users. Despite the catalog issues mentioned above and the service's lack of a playlist-embed feature, these free playlisting tools should add significantly to its user base.

If you choose to download a track, everything happens on MySpace -- no visit to the Amazon site is required if you're already logged in to Amazon. Songs download normally through the browser, or users can install Amazon's download-helper application and have songs automatically imported into iTunes or Windows Media Player:

Amazon_buy_image_2

Each track on artist pages now includes a "Buy" link to Amazon as well as an "add to playlist" button:

Myspace_2

Advertisers including McDonald's, Sony Pictures, State Farm and Toyota can sponsor playlists like the one below and/or designate certain tracks to be available for free as part of a sponsorship deal:

Mcdonalds_featured_playlist_page

See Also:

Screenshots courtesy MySpace


EDITOR: Eliot Van Buskirk |
CONTRIBUTOR: Scott Thill |
CONTRIBUTOR: Lewis Wallace |
CONTRIBUTOR: Angela Watercutter |


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