paidContent has learned that News Corp (NYSE: NWS). is pursuing a music joint venture for MySpace—similar to Hulu, its video joint venture with NBC Universal (NYSE: GE), but with variations on the theme. The constant in both instances is content for equity. Under this scheme, MySpace would be the operator with the major music labels—Universal Music Group, Sony BMG, Warner Music Group (NYSE: WMG), EMI—as content providers and equity partners. MySpace would be a distributer but, like Hulu, the idea would be a mixed portal-distribution experience. Music would be DRM-free and ad supported. No label has signed yet but a source familiar with the situation said that could change in a matter of weeks. The theory is that once one signs on, the rest will follow. (EMI would seem a likely candidate but Sony (NYSE: SNE) BMG already has an interesting deal with MySpace.) That doesn’t always work but, as Amazon (NSDQ: AMZN) has shown, it can.
MySpace, which claims more than 7 million bands with on MySpace Music, has explored and experimented with numerous ways to capture the full value of music to the site, including a recent limited test of ad-supported music downloads. Music has been at the core since the beginning and remains a major driver. Last fall, MySpace and Sony BMG set up a revenue-sharing partnership for sponsorships and ads with the label’s artists’ video and audio content within MySpace.
There are a lot of unanswered questions, to be sure. Among them, international. The future of MySpace relies on global distribution so how this could work globally eventually would be important. That brings in the European Commission and others.
Yahoo: This push continues despite the discussions between News Corp. and Yahoo (NSDQ: YHOO), although the possible combo could give the labels pause. On the other hand, extrapolating the hypothetical, what would Yahoo bring? Yahoo was one of the first to sign on to Hulu and streaming DRM-free music would fit in with its efforts to revamp its strategy.
