MySpace Music: Rolling Out Over Next Four Months

We asked SAI readers what they wanted to learn from the MySpace conference call announcing their new music service, and we've gotten some good queries. We'll do our best to get some answers, but have a feeling the call will be light on details.

Not suprisingly, MySpace execs didn't go near anything financial. So for the record, here's what's on our minds, and those of our readers':

• Amount of cash and equity given out to participating labels (Universal Music, WMG, Sony-BMG)
• Revenue splits for participating labels
• Assumptions about ad revenue potential for the music site
• Rationale for spinning music business out of MySpace
• Any per-stream minima/"floors" in the majors' deals?
• How will they compensate independent artists?
• What mechanism will they use to stream, download, payment systems etc. Technology -- something they've been horrible with?
• What ad pricing do they see?
  
• Who will run it?
• What is the profit / loss prediciton on the biz?
• Do they think shared revenue arrangements they have made will be used as precedent in setting up a possible "open catalog"/"collective licensing" for Jim Griffin's music subscription (ISP tax)

Thanks for the queries, folks! Sorry we can't answer them yet, but we'll keep plugging away and pass along whatever we learn.

Uninformative call details below:

On the call:

Chris DeWolfe, Co-Founder and CEO, MySpace
Amit Kapur, COO, MySpace

Chris DeWolfe: Reading from statement. Confirms UMG, WMG, Sony-BMG in JV. "New revenue models for both MySpace and the music companies".

MySpace user engagement "through the roof" in past couple months. Now time for "history and vision" behind venture. World's most popular music community. 30 million unique users in "music community"/110M uniques at MySpace. So we're not starting from scratch. 5 milllion bands on the site. A community site first, and a music site second.

Modern music is about "giving up control". MySpace music "extremely different" than anything currently in the market.

Amit Kapur: "Evolutionary step"! "360 degree" experience! "Frictionless"!

Three main components: Home page, artist profile pages, also include different modules. New features: Ad-supported audio and video streaming. Digital downloads w/non-DRM. Will feature mobile with News Corp.'s Jamba. Ringtone sales.

New monetization models: Goal is to "empower labels and artists to further diversify their business." Not just for majors. Indies and unsigned can join in. Will go from being promtional vehicle to commercial vehicle. Hiring exec management team. Want to create standalone company.

Q&A: What's up with EMI? Chris: We'd like to do business with everyone. You'd have to ask EMI about that.

More color on streaming: Will have "full catalog of tracks" for listeners, who can trade playlists, etc. Everything DRM free on site? Don't know. But think that's the direction we're going.

Timetable? "Fluid" An "iterative process". MySpace Music already up and running. In terms of adding features, will be in an ongoing basis, over three to four months.

Revenue sharing details? Equity and liscensing fees for the labels? We won't discuss financials. [Sorry, everyone looking for helpful information here].

What's to prevent Facebook from offering competitive deal? We have lots of users. Repeat, over and over again: 30 million users, 5 million bands.

Please explain how ad-supported music will work. Hasn't so far: We have core competency in ad sales, and ad sales technology. We have hyper-targeting, which is great. Selling sponsorships with people like State Farm. Hundreds of people is sales force, sales technology.

US only? Yes. But global eventually.

Pricing for downloads? How will it compete against iTunes? No specifics. Very competitive, portable. We recognize that all of users have iPods, so we want to leverage that (hence MP3).

Press release and canned quotes:

MYSPACE, SONY BMG MUSIC ENTERTAINMENT, UNIVERSAL MUSIC GROUP AND WARNER MUSIC GROUP PARTNER IN LANDMARK JOINT VENTURE: “MYSPACE MUSIC”

“MYSPACE MUSIC” EMPOWERS ARTISTS AND CONSUMERS GLOBALLY WITH UNPRECEDENTED DIGITAL MUSIC SERVICE AND E-COMMERCE PLATFORM

New Company to Leverage 30 Million Unique MySpace Music Traffic to Activate Monetization Around Music Content

MySpace Music to Offer Digital Downloads, Ad-supported Audio and Video Streaming, Mobile Storefront and Sponsorship Solutions

LOS ANGELES—April 3, 2008—MySpace, the world’s biggest and most popular social network, and three of the world’s largest music companies, SONY BMG MUSIC ENTERTAINMENT, Universal Music Group, and Warner Music Group (NYSE: WMG), today announced the formation of a landmark joint venture, MySpace Music. The new company marries the most popular music community in the world with the most comprehensive catalogue of music content available online, unveiling a host of new music services and monetization models. The financial terms of the partnership were not disclosed.

The product vision for MySpace Music is to build on the existing traffic, credibility, and popularity of the MySpace Music platform (http://www.music.myspace.com) by creating a fully integrated 360 degree global music solution. MySpace Music will feature the network’s first integrated e-commerce solution and evolve the user’s ability to discover, share, and socialize by adding commerce and music management tools. The new offering will seamlessly transform the MySpace Music experience into a groundbreaking mix of community, commerce, and discovery. The product will roll iteratively in the coming months.

The MySpace Music product will integrate new content and music capabilities across three primary areas: the MySpace Music home page, the site’s more than 5 million artist profile pages, and individual user home pages, providing bands and fans multiple touch points to discover, share, and purchase music and merchandise in one place for the portable device of their choosing. MySpace Music empowers bands and fans with unprecedented digital music service and e-commerce platform within MySpace that will include DRM-free digital downloads, ad-supported audio and video streaming, a mobile storefront (powered by News Corporation’s Jamba mobile company), as well as various sponsorship solutions.

For users, MySpace Music will have the richest music experience on the Web by enabling the site’s global community to discover music and then download, stream and personalize music content. The personalized music management product will allow users to control their entire MySpace Music experience directly from their user page by creating playlists and having access to enhanced purchase opportunities and search functionality.

For the labels’ artists, the formation of MySpace Music will offer them the opportunity to provide their fans with digital downloads as well as mobile ringtones, SMS, and artist wallpapers, all directly from their artist profiles. Additionally, artists will be able to evolve their MySpace experience beyond the promotional by now monetizing their full repository of content with a 360 degree solution including not only the sale of digital content, but also physical goods such as t-shirts and concert tickets.

Already one of the cultural cornerstones of MySpace, the new company is uniquely positioned to quickly launch its new music product with nearly 30 million unique monthly visitors for the Music channel and its more than 5 million artists. As the most popular music community in the world today, MySpace Music has the greatest collection of artist profiles, tour dates, artist blogs, music videos, and artist photos in the world. Additionally, MySpace Music has the participation of millions of major, indie, and unsigned artists via their music profiles and interaction with the MySpace community.

Immediately, the new MySpace Music will be able to tap into the world’s largest library of content to offer unique audio and video content for the MySpace community. MySpace’s rich history with the music community has already included album exclusives from the biggest major and independent acts in the world. The new library will enhance existing MySpace Music franchises including Secret Shows, MySpaceLIVE!, Transmissions, and The List.

The new company will be based in Los Angeles and will have a dedicated executive management team to oversee the business. In the coming months, MySpace Music will begin to roll new content and product functionality within the existing music channel. The process will be iterative to take full advantage of the popularity and existing traffic to the Music channel already booming within MySpace.

News Corp—Peter Chernin, President and Chief Operating Officer:
“We’re committed to pioneering innovative and satisfying ways for consumers to experience music and video and MySpace Music will deliver on that promise,” said Peter Chernin, President and Chief Operating Officer of News Corporation. “The music industry is alive and kicking—we’re thrilled to play a leading role in its future.”

MySpace—Chris DeWolfe, CEO and Co-Founder:
“Today represents the beginning of a new chapter in the story of modern music—we’re proud to announce the marriage of the world’s biggest collection of music content to the world’s most popular music community,” said Chris DeWolfe, CEO and Co-Founder of MySpace.” “Millions of die hard music fans and artists already call MySpace Music home—by partnering with these industry leaders, our vision for MySpace Music as the definitive platform for unlimited artistic expression and unrestricted user experience is finally being realized.”

SONY BMG MUSIC ENTERTAINMENT —Rolf Schmidt-Holtz, CEO:
“We’re delighted to be working with MySpace to create a new global entertainment destination that combines one of the world’s most compelling online communities with some of the greatest artists and music in the world,” commented Rolf Schmidt-Holtz, CEO, SONY BMG MUSIC ENTERTAINMENT. “We see this innovative new joint venture as a great way to provide music fans around the world with a wide ranging online entertainment experience, while at the same time establishing an expansive commerce and marketing platform that will benefit our company and our artists. We look forward to making MySpace Music a key part of our ongoing efforts to bring our artists, and their music, to fans across every conceivable platform.”

Universal Music Group—Doug Morris, Chairman and CEO:
“MySpace Music stands as a dynamic vehicle to explore even more creative ways to harness the power of social networking with our leading music and video content,” stated Doug Morris, Chairman and CEO, Universal Music Group, the world’s leading music company. “Our partnership with MySpace fits perfectly within our overall digital strategy of driving innovation, while creating new and exciting opportunities to enhance the relationship between our artists and their fans.”

Warner Music Group—Edgar Bronfman, Jr., Chairman and CEO:
Edgar Bronfman, Jr., Warner Music Group’s Chairman and CEO, said, “Warner Music Group is very pleased to be entering into this groundbreaking joint venture. We believe that one of the greatest growth opportunities for our industry is to develop new partnerships and models focused on unlocking the value of music in the online community space. This venture may provide a defining blueprint for this next important stage in the evolution of social media, benefiting consumers, artists and music companies alike.”