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MySpace enters crowded music download market

Posted by iNext - 2006-09-09

MySpace.com is launching a new music download service that emphasizes music from independent artists the latest in a string of services announced in recent weeks that hope to topple iTunes from its crown.

Some of the services such as one backed by Universal Music Group are even offering music for free backed by advertising services. But analysts say they&;ll have trouble toppling Apple&;ls iTunes which has staked out a solid position in what&;s becoming a crowded music download market.

&;Ultimately it&;s a volume business and the market isn&;t large enough to sustain different services&; said Jonathan Arber research analyst for Ovum PLC in London.

The service from MySpace.com which is in beta today lets users sell their own songs through their personalized MySpace home pages. The company has partnered with Snocap a company founded by Napster founder Shawn Fanning for some of the technology behind the service.

MySpace&;s large user base which it says is more than million may be key for the new offering as it jostles with several other technology and media companies that have allied to secure a piece of the music download market.

Last week Samsung Electronics said it would start a subscription service later this year with partner MusicNet. The online store will have million licensed songs from major record labels and independent ones.

Also last week a new company SpiralFrog said it will offer free music downloads backed by Universal Music Group&;s catalog with the service supported by advertising. It&;s due to launch in beta by the end of this year.

While MySpace&;s service hasn&;t been formally announced a marketing executive at the company began touting it on her MySpace Web page on Monday offering tracks from a group called The Format for cents each.

The service will let users embed songs in their personalized pages that other users can then purchase wrote Dani Dudeck MySpace director of communications. To buy songs a user needs an account from eBay&;s PayPal money transfer service and a U.S. billing address.

Artists will be able to set the price of their tracks with MySpace and Snocap keeping a small service fee according to a story Monday in BusinessWeek magazine.

The service could appeal to aspiring musicians allowing them to skirt business arrangements with music labels and pitch their songs directly to MySpace&;s users.

It&;s unclear however whether the major labels will embrace it. They may be wary of posting tracks on MySpace because the songs will be in an MP format without Digital Rights Management which restricts how they can be copied and played Arber said. The means the tracks could potentially be downloaded from MySpace and then uploaded to illegal filesharing networks.

At the same time he said the opportunity to set variable pricing for songs offered on MySpace could be more attractive for the major record labels who have bristled over Apple&;s insistence on uniform pricing. Individual tracks in the U.S. retail for cents each.

Apple has so far retained its lead in music downloads. iPod users can purchase compatible songs from the iTunes Music Store and eMusic.com but most other services offer songs in incompatible file formats.

It&;s led other companies to try other approaches such as subscription and adsupported services. But both of those each present their own difficulties.

Napster and Yahoo have subscription services where users have access to thousands of tracks as long as they continue to pay monthly fees. But the subscription model generally hasn&;t been that successful Arber said.

Adsupported services such as Universal&;s arrangement announced last week with SpiralFrog could face competition from more experienced Internet companies.

&;There are already existing companies that are much better at targeting advertisers on the Web&; Arber said.

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