Why MySpace Music Won't Succeed

Rupert Murdoch's pride and joy is trying to go legit; mayhem may ensue, and success may not

In the future, one website will serve all our music-purchasing needs, including Digital Rights Management–free downloads, ringtones, concert tickets, and band merchandise. Streaming music will still be available free. Three of the four majors will take part: Sony BMG, Warner, and Universal. Bands will continue posting videos and other promo materials, also gratis. Yeah, the future, an underwhelming mashup of Amazon, iTunes, YouTube, Imeem, and iLike, is actually kind of lame—as in "50-year-old former homecoming king reliving his glory days at halftime" lame. Also, as of press time, the CEO gig for this new venture is still available, so send in your résumé now.

But you'd better hurry: This future arrives on September 15 with the debut of MySpace's revamped music service, the pithily titled "MySpace Music." It's a sort of all-encompassing merch site within MySpace, meaning the old stuff stays the same, the new stuff is elsewhere and costs money, and the website as a whole becomes downright elegant. Since the project's announcement in April, waves of electric buzz have co-existed with a loud, healthy skepticism: Who will serve as CEO? Will EMI (the one holdout among the majors) ever join? And might Rupert Murdoch have better luck opening a Hummer dealership in Scranton?

Hard to believe, but MySpace once seemed poised to revolutionize the music industry. When unknown artists were recording albums for next to nothing but lacked any viable platform to get them heard, the site inspired a sort of socialism for audiophiles, offering the same page-and-four-free-songs format to both U2 and any old African-bagpipe nerd-core ensemble. It streamed R.E.M.'s album Around the Sun (a bigger deal at the time, honest) free in the fall of 2004, weeks before it hit stores; by the following year, I was one of 40 million regular MySpace users. Growth spiked so much that not having an account made a bigger statement than signing up, for fan and artist alike. But analysts agree that this is where the brand first erred in its quest to earn legit-store status: There are only so many times you can go to a website for free music before you, you know, automatically equate that website with free music.

Alicia Keys, MySpace victim
Thierry LeGoues
Alicia Keys, MySpace victim

"Their critical misstep was that they established themselves as a place where there was no monetization," says Ariel Hyatt, president of Ariel Publicity & CyberPromo, and the co-founder of Vermillion Media Group & Bandletter. "Even in their policy, it says that you're not allowed to make money using MySpace. So are the bands supposed to break what they agreed to do?" And can MySpace successfully break the habit it's instilled in millions of people over the last five years by getting people to actually pay for its content?

It's tried this before. In late 2006, the site—which by then had amassed 135 million users—decided to take advantage of its dominance and launch an MP3-selling outfit called MyStore. But only one major—EMI—jumped onboard, largely because those would be unprotected, or DRM-free, MP3s. Furthermore, unlike iTunes, which charges bands or labels 35 cents per 99-cent download (and features considerable, label-friendly DRM restrictions), MySpace charged 45 cents per song. (As a consolation, it allowed variations in the price of each track—labels have long loathed iTunes' rigidity.) Worse yet was the project's alignment with Snocap, the little start-up that served as the engine running the MySpace "store."

"Snocap was very poorly implemented," recalls Aram Sinnreich, a media analyst. "Not only was it clunky, but it sometimes made it hard for people to access the free music that was built into the MySpace engine. . . . There were problems with the system on a widespread scale." Only 110,000 artists signed up for MyStore, and the sales were abysmal.

Lesson learned—at least by EMI, which is why the company has decided to sit it out thus far (hence no Coldplay, Gorillaz, or Norah Jones). But this time around, MySpace is avoiding start-up companies: It's been reported that Amazon will be supplying the back end of MySpace Music's digital-music and transaction deals.

And yet, lesson not learned: It's now 2008, and this new venture won't bring anything new to the table. One thing that's free and potentially exciting—ad-supported streaming radio—is already thriving elsewhere. With a scant 95 employees, the San Francisco–based Imeem has the largest website of its sort, thanks to aggressively pursuing deals with the majors early on. (As a classic aside, Imeem acquired Snocap this April.) Even if MySpace Music catches on, it won't mean anything to the company, because it's inherently a dead-end business model; do they really want more revenue-zapping traffic? The majors currently demand a penny each time a song plays from their catalogs, whether from an on-demand subscription service like Rhapsody or a free site like We7, last.fm, or Imeem. (This differs from MySpace's original setup, which let bands post their own music to the site, causing a slew of lawsuits just now being settled.) Even if the free streaming music that will forever define the site gets people to stick around and buy Genesis bootlegs for real money, they'd have to buy cartons to keep the company afloat.

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