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According to a report in The New York Post, negotiations have intensified between MySpace and the major record labels, and an announcement could come as soon as next week regarding the long-rumored MySpace digital music store. Specifically, The Post reports that the social network is in serious talks with two of the four majors – Sony BMG and Warner, with EMI and Universal currently in earlier stages of the negotiation process. From the report:
“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.”
Additionally, the business model is expected to be a mix of both digital downloads and revenue share on advertising:
“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 …
… 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.”