MySpace Launches Free Music Service

MySpace's parent company, News Corp., has launched its long awaited free music service. The new service, named MySpace Music, is backed by the big four record labels (Sony BMG, Universal Music Group, Warner Music Group, EMI) and will provide its users with free streaming music. The business model is based on revenue from advertisements that will be displayed to its 120 million users.

As we see continued growth of digital music being delivered via streaming, MySpace's new service could deliver a sizeable blow to Apple's dominant iTunes Store. According to MySpace statistics, approximately two-thirds of users host playlists on their social Web space to stream music.

The executive vice-president of Universal Music, Rio Caraeff, said, "We're not sure how big this will be, but it's exactly where we need to be. We need to diversify our sales away from just physical sales, and that means selling music any place a consumer wants to get it."