MySpace Set to Compete with iTunes

After weeks of speculation, MySpace announced on Thursday that it would launch a retail music store. In partnership with the three biggest record labels -- Universal, Warner and Sony BMG -- the social networking site will form a new company called MySpace Music.

EMI, the smallest of the four music companies, has yet to sign on, but is expected to in the coming months. (Source: informationweek.com)

The new company, while a separate entity, will be fully integrated into the existing online platform providing users with ad-supported audio and video streams, DRM-free downloads, and ringtones. MySpace is also putting the full weight of its networking environment behind the new venture by creating a one-stop shop for all things music, including merchandise and concert tickets. (Source: sfgate.com)

The biggest question surrounding this development is whether the new company will be a viable competitor for Apple's iTunes. Many others have tried with minimal success, largely because no one has been able to duplicate the pairing of trouble-free software with an elegant and usable device. To compound the problem, iTunes is constantly expanding its offerings; music, television, movies and movie rentals have turned Apple's online retail store into a premiere multi-media destination.

However, MySpace has a lot going for it. The site is already a hub where established and emerging artists connect with fans. About 110 million people visit MySpace every month, 30 million of whom listen to music on the site. More than 5 million musicians promote themselves with MySpace profiles. (Source:news.com)

The music companies would love nothing better than to see a competitor chip away at iTunes' dominance in online sales -- the recording labels have often complained of Apple's inflexibility over pricing structures.

Ironically, iTunes invoked its supremacy on the same day as MySpace's announcement. According to data collected by the NPD Group's MusicWatch survey, iTunes was the No. 1 music retailer in the United States for the months of January and February.