Hoping to broaden its relevance to the music industry in the face of increasing competition from other social networking sites, MySpace will roll out a suite of services and initiatives as part of what company officials are calling MySpace Music 2.0. But a new policy at Universal Music Group (UMG), the world’s biggest record company, limiting full-song streaming on the site illustrates the challenges ahead.
The first hint of MySpace’s music effort is Transmissions: The site features video of participating artists in the MySpace studios, performing select songs and conducting interviews, both of which MySpace has the exclusive rights to stream.
Bowing to label pressure to start monetizing MySpace traffic that to date has been mostly promotional, MySpace will provide links for users to buy songs by all featured Transmissions artists. According to MySpace VP of marketing and content Josh Brooks, the idea is to create more opportunities for “instant gratification” music purchases. However, the company won’t dictate how those purchases are made.
“Whether it’s a widget or a click through (to another site), as long as it’s easy to use, I don’t think anybody is going to complain,” Brooks says.
The program launches with James Blunt, who recorded new versions of five previously released songs for the site. Fans can stream individual tracks, watch the video and buy the complete exclusive bundle, using the same sales widget from digital music provider Lala that Blunt’s label Atlantic Records has used to sell his recent “All the Lost Souls” CD since it came out in September.
Other labels with a featured artist may use a different sales widget, or just link to iTunes for sales.
Next in line is striking ad revenue-sharing deals with labels, similar to what competitors Imeem and others have done.
MySpace and Sony BMG in October forged such a deal for streaming music videos and some audio tracks. The lack of a revenue-sharing deal led UMG to restrict how songs by its artists are streamed on the site.
A source close to the situation says UMG will limit streaming music on the site to either 90-second clips or place promotional voice-over dubs to songs streaming in full. The source says that the policy is a few months old and applies to all online services, not just MySpace.
UMG, according to the source, is concerned that unlimited, free on-demand streaming of full songs online will substitute for users buying the track or the album. While not commenting directly on the UMG policy, Brooks defends the need to stream music online.
“At a time when people are trying to figure out what the secret sauce is to break bands, giving people a taste of the music is needed,” he says. “They need it, and want it before they make a commitment. So I don’t think free streaming is an issue.”
Brooks adds that MySpace is planning additional new features and business models that should see the light of day in the new year.