MySpace, the largest online social networking site, has signed a deal with Sony BMG Music Entertainment, Vivendi SA’s Universal Music Group and Warner Music Group Corp to offer MP3 downloads, concert tickets, ringtones and merchandise for the Web site.
“It’s really creating a robust monetization component to MySpace and having a focused music effort that could be the MTV of a new generation,” said a music industry executive.
MySpace, the largest promoters of music on the Web, received 68.6 million unique visitors in the United States during the month of January, according to data from comScore.
The music companies have been in talks with MySpace for several weeks, but a key obstacle is a 2006 copyright lawsuit filed by Universal Music against MySpace. One of the sources familiar with talks said progress was being made and the lawsuit could be settled in time for the announcement.
MySpace Music will get a cash infusion of $120 million from its parent company, News Corp, and distribute that $120 million to Sony BMG, Universal Music Group and Warner Music Group. In return, the litigation will be dropped and the labels will give streaming and downloading rights to their catalog to the new entity.
Online users will be able to stream music on demand, create play lists, and add widget music players to their profiles. The streaming will be advertising supported. Advertising revenue will be split among the joint venture partners according to their equity stakes, not based on play counts.