News Corp’s (NYSE: NWS) MySpace social network which has about 110 million registered users is near a deal to offer music downloads. Instead of members paying for songs, they will be advertising supported. The company is close to deals with big record companies including Universal Music and Sony BMG.
The trouble with the service is that it joins about a billion similar projects operated by companies from start-ups to Amazon (NASDAQ: AMZN). All of the firm’s want a piece of Apple’s (NASDAQ: AAPL) iTunes. What many of these models fail to acknowledge is that Apple makes most of its money selling the iPods that play the music. The revenue from iTunes is modest. A very large number of music listeners get their content from ripping DVDs. That would appear to leave a very small market.
MySpace is also beginning the service based on the notion that people coming to a social network want to do things other than update there personal pages and interact with their "buddies". Advertising on the big site has not even been a modest success. News Corp indicated that the property brought in about $700 million last year, which is not much for an internet site with its traffic.
The MySpace project is not going anywhere. Consumers have already picked where they want to get their music. Steve Jobs sells it to them.
Douglas A. McIntyre