By Kenneth Li and Yinka Adegoke
NEW YORK (Reuters) -
MySpace, the top social networking
site owned by News Corp, is in talks to create an online music
joint venture with the four biggest record companies, sources
familiar with the discussion said on Wednesday.
The talks are part of Rupert Murdoch's plans to distinguish
MySpace, born as a haven for new music fans, from fast-moving
rival Facebook as the premiere destination for digital media.
Plans for the service, tentatively named MySpace Music, are
still in the discussion phase. One source familiar with the
matter said MySpace has held talks with companies over the past
few weeks to gauge interest in such a service, which would
compete with Apple Inc's popular iTunes.
MySpace, Warner Music, Universal Music, EMI and Sony BMG
declined comment. Amazon was not immediately reachable.
The venture is expected to offer free, advertising
supported music streamed over the Internet, as well as a store
that will sell songs playable on portable devices, including
Apple's popular iPod. Creating a subscription music service as
part of the offerings was another idea floated to potential
partners.
The joint venture would likely involve music companies
taking an unspecified equity stake in the venture in exchange
for the rights for the music, with News Corp owning the biggest
chunk, the source said.
It was not immediately clear who would fund the venture,
another source said.
ITUNES KILLER
The initial plans include a music player that will play
music and advertisements, which can be embedded on other sites,
similar to online video software that can be attached to any
Web site or blog.
It was not immediately clear if MySpace would build the
store itself or strike a partnership with Amazon Inc for a
so-called white label version for the service. The store may
also sell merchandise from the companies.
A partnership could polarize the digital music retail world
between News Corp and Amazon against Apple, whose iTunes online
store dominates the music market.
Amazon has aggressively courted the music industry for its
own digital music store. MySpace Music would also compete
against a host of independent companies, including Imeem and
Last.fm, which offer free music streamed over the Web.
The music industry, which faces another year of declining
CD sales, aims to avoid repeating two big missteps of the past
20 years: giving away music videos for free to Viacom Inc's MTV
and relying mainly on Apple for digital sales.
"Maybe record companies can avoid the mistake they made
with MTV and own a part of it," one source said of the joint
venture.
After stumbling in the late 1990s in its fight against
piracy, the music industry gladly endorsed iTunes. But the
industry now sees the move as tipping the balance of power too
much toward Apple CEO Steve Jobs.
Complicating matters is a pending copyright infringement
lawsuit that Universal Music filed against MySpace in 2006,
which would need to be resolved.
MySpace's plans were first reported by digital media blog
paidContent.org last week, followed by reports this week by the
Wall Street Journal, the Financial Times and technology web
site CNET.
(Editing by Andre Grenon)
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