MySpace Music

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http://www.wired.com/entertainment/music/n...4/myspace_music

MySpace Music Sees Major Money in Free Tunes

By Laura Locke Email 04.17.08 | 3:15 PM

MySpace Music, the major-label-backed online service slated for a summer rollout, has grand plans of delivering "all the music in the world" for free.

Once that mission is accomplished, according to MySpace CEO and co-founder Chris DeWolfe, the cash will follow as music fans turn MySpace Music into a money-making machine with multiple revenue streams.

Sony BMG, Universal Music Group and Warner Music are all on board for MySpace Music (and MySpace honchos are talking to major-label holdout EMI). The new service will strip out band pages from the original MySpace site -- which just happens to be the world's most popular social-networking site -- and stream full-length songs and videos for free. MySpace Music will peddle DRM-free downloads, ringtones, concert tickets, T-shirts and more.

In an in-depth interview with Wired.com, DeWolfe spoke about working with major labels, bringing indies into the stable, taking on iTunes and killing piracy with convenience.

Wired: What makes you think MySpace can successfully rival Apple's iTunes, which is now the top music retailer in the United States?

Chris DeWolfe: We're not trying to compete with iTunes. A lot of people think that we are. Downloads are just one of five or six revenue streams. We're really trying to create a social community experience that our users are asking us for, and it just happens that one of the components includes downloads.

Wired: So, what is MySpace Music all about?

DeWolfe: It's not just a download service -- it's a service that marries the largest music community with the most comprehensive catalog of music online. Users can discover and consume virtually any piece of music for free on the internet, or if they want to make it portable they can buy it.... Modern music is all about letting users define their experience. And now, with this new model, we're letting them do that and the music industry is able to make money at the same time.

Wired: Do you think the new service will change the digital music landscape?

DeWolfe: I think it's going to be the central hub where everyone goes to find music. If I want to find out anything about a band that I hear about, the first thing I'm going to do is go to MySpace because that experience is going to be so rich that I won't have to go to 10 other sites to find out about the last albums they've done; to see what other fans are saying about them; to figure out when their tour dates are; to join their community.... MySpace aggregates that into one place and ... creates an entirely new business model for the music industry.

Wired: Does this deal give MySpace users access to more music?

DeWolfe: By far.... We have the three biggest music companies in the world signed on with us. We're in the process of talking to the fourth. We're also working with all the indie music consortiums, so by the time we launch [this summer], it should be a very high percentage in the United States.... Our main goal is to have all the music in the world on MySpace.

Wired: Any clue on the size of your new catalog?

DeWolfe: I know we have 5 million bands, so that certainly won't change; if anything that will go up. Virtually every artist has a profile on MySpace already. In terms of the number of songs, each artist is allowed to put up four songs right now, so that will change to be an infinite number of songs.

Wired: MySpace Music promises to deliver a "360-degree music experience." How so?

DeWolfe: From a business perspective, we're allowing both the artists and the labels to capture all of the different revenue streams. From a user perspective ... it's really a frictionless environment.... [say] I want to go onto my favorite artist's site, that may be Flowrida; I go onto the Flowrida site and I can listen to any song I want....

Then I can also look at a list of cities that he's going to be in and I can see he's coming to my city; I can buy a ticket directly from that site, and you know what? I'm going to want to download 10 of his songs to my iPod, I can do that directly from the site. And I may want to buy a T-shirt with his picture on it. I'll be able to do that directly from his site.

Wired: So, MySpace Music plans to sell songs, albums and ringtones?

DeWolfe: We will definitely be selling music downloads and ringtones. We will be streaming videos and audio [full-length tracks.]

Wired: What about pricing?

DeWolfe: Streaming is going to be free. In terms of the downloads, we're going to do some experimenting.

Wired: Will feature-length movies and TV shows also be sold via MySpace?

DeWolfe: I think it's definitely a possibility, but when you're running a site of this size you sort of have to pick and choose what your strategic objectives are, and music has always been a part of MySpace's DNA.... In terms of doing this with other content, we may, but this is a major step.

Wired: Four years ago, MySpace conducted focus groups with users to find out what their "dream music service" might look like. Based on that user feedback, is MySpace's community willing to pay for music downloads?

DeWolfe: Definitely. We have 110 million unique users [per month], so it's not really a niche community. Virtually everyone I know on MySpace has an iPod; there's no reason they wouldn't be buying music.

I think one of the issues in the past has been people have been engaged in piracy and stealing music because it was really convenient. To download a song on MySpace Music will be so convenient, we believe they will pay for it.... There's going to be a lot of impulse buys.

Wired: Will you be giving the old-school record companies a larger percentage of sales than Steve Jobs does?

DeWolfe: [Laughs] We're not announcing any financial details.

Wired: What are Universal Music, Sony BMG and Warner Music getting out of this deal with MySpace?

DeWolfe: CD sales are down 20 percent year over year, so we've created a revenue model that helps them recapture some of those lost sales. It's a first step in pointing them towards the digital future.

Wired: Is MySpace viewing this as an all-encompassing, multitiered, revenue-generating platform similar to the ones that concert promoters like LiveNation are pursuing?

DeWolfe: I think it's a bit different than what LiveNation is doing. I'm not super familiar with LiveNation's business model, but I think they're making big bets on a few different artists and monetizing all their rights. It's sort of similar logic, I guess, but we are doing it with millions of different artists on our site.

Wired: Is MySpace Music looking to get a cut of the indie bands' T-shirt sales and other merchandise?

DeWolfe: We're going to provide everyone a platform to showcase their music, to sell their music, tickets and merchandise -- similar to how eBay may do that. So, in providing that platform, there will probably will be a small fee or commission associated with that.

Wired: Is MySpace Music open to giving equity deals to digital distributors such as The Orchard or Ioda?

DeWolfe: We're open to extending our equity deals to the right partners, but at a certain point, you can't extend equity to everyone. What we originally set out to do was create a platform where every artist in the world would not only have a free promotional platform like they do right now -- we're providing a free service -- but also to create additional revenue streams for them.

Wired: Will unsigned bands on MySpace Music have a way to participate in the ad revenue?

DeWolfe: We don't really have the mechanism right now to develop an affiliate program or a payout structure for millions and millions of bands.... We started with the major music companies, and we're talking to the consortiums because the indie bands are really the heart of MySpace -- it's how MySpace Music started. We value their contribution, and one of our initial missions was to help artists that didn't get signed by major labels to create a living based on their art.

We first did that by creating this free platform where they could get fans from all over the world that they otherwise wouldn't have been able to reach; and provide a platform for those fans to become friends with those independent artists. And when those independent artists go on the road, they can sell out their shows and make money through touring and merchandise and tickets and all of that. We're trying to extend those revenue streams to the independent artists. This is all meant to be a very, very positive movement for them.

[7/4]

The new service will strip out band pages from the original MySpace site -- which just happens to be the world's most popular social-networking site -- and stream full-length songs and videos for free.

So MySpace goes the way of MP3.com.

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