Why MySpace's Music Store Deserves Watching

The single-most visited Internet web address -- MySpace, the NewsCorp online venture, is going after Apple's iTunes. Many have tried and failed as iTunes commands a 70% share of the digital music market. The big four major record labels are no doubt rooting for this attempt to break Apple's stranglehold over them.

SpiralFrog announced their new plan to launch a free music
download service supported by advertising by the end of the year. Many see SpiralFrog's approach as "same-old, same-old" (see comments to separate post). But the MySpace challenge -- by no means a slam dunk -- is more intriguing.

On the surface MySpace claims the music of nearly 3 million bands is available on their social network. MySpace gets a "small" distribution fee -- that fee was not determined at the time of the announcement. Buying digital downloads should be popular with MySpace addicts. But what NewsCorp really wants is a piece of Apple's iTunes market. And the lure to record labels is the ability to offer variable pricing -- something Apple rejected earlier this year when it slammed the door on the record industry's attempt to alter the fixed-priced 99 cent per tune, Apple's "magic number".

The labels would likely love MySpace's price-your-own music strategy. What they won't like is the lack of DRM protection. Ironically Snocap will manage the e-commerce business (Snocap provides digital licensing and copyright management under founder Shawn Fanning, the one who originally launched the music piracy revolution under Napster I). Inside sources close to Reuters news service say EMI Group and MySpace have had discussions. EMI has reportedly had no comment.

MySpace would have to offer DRM protection to win the majors over. And if MySpace eventually has DRM protection in mind, it will have to carefully navigate the fragile mind-set of today's youth generation many of whom feel music should be free or cost next to nothing and once they factor all that in -- voila, they have iTunes.