MySpace’s plan to launch a digital-music joint venture with the major record companies is picking up steam, as the social networking giant nears deals with Sony BMG and Warner Music Group, multiple sources familiar with the situation told The Post.
The agreements could be signed as soon as this week. The service is expected to launch later this year.
“Everybody’s operating with a sense of urgency to try to close it out,” said one industry insider close to the talks.
MySpace, News Corp. (which also owns The Post), Sony BMG, and Warner all declined to comment.
Unlike most music licensing agreements, which require upfront advances, no money is expected to change hands. Instead, the labels are trading content rights in exchange for minority equity stakes in MySpace Music and the chance to participate in the advertising revenues that News Corp. hopes to generate from the service.
MySpace attracts more than 15 million unique monthly visitors to its existing music portal, a sub-site within MySpace that specializes in new music promotion and tour date information, rather than commerce.
In addition, MySpace claims more than 5 million individual artist pages attracting Web traffic not counted as part of its total music traffic tracked by comScore.
The new MySpace Music is expected to be a mix of pay-per-download and ad-supported video and audio.
“The concept of the joint venture is to bring in all forms of [making money from digital music] and much more tightly integrate them,” said one person familiar with the negotiations.
Users could expect to buy digital downloads in the MP3 format, see and hear ad-supported streaming video, and buy such products as downloadable videos and ringtones.
Jamba – a mobile entertainment service that News Corp. owns jointly with VeriSign – is expected to play a role in MySpace Music’s cellphone commerce strategy, a source said.
Record companies are looking to maximize available revenue opportunities, and expand the number of alternatives to Apple’s iTunes music store. iTunes is the second-largest music retailer in the US behind Wal-Mart, with 4 billion songs sold since its April 2003 launch.
Collectively, the record companies are expected to hold less than a 50 percent stake in the MySpace venture. Just how large a piece each label gets in MySpace Music will be determined by market share, sources said. Sony BMG and Warner currently rank as the world’s second- and third-largest music companies, respectively.
Further behind in the negotiating process are Universal Music Group, the industry’s largest record company, and EMI.
Universal is currently suing MySpace for copyright infringement associated with its viral video offering – one of the biggest hubs of user-generated video on the Web behind Google’s YouTube. The two sides first need to settle that fight before a deal can be struck for the MySpace Music joint venture.