MySpace launches iTunes competitor with 5 million artists

Social network MySpace lobbed a shot across the bow of Apple iTunes this week with the launch of MySpace Music, a new site that offers free on-demand music streaming along with MP3 downloads for sale to U.S. users.

The joint EMI Music, Sony BMG Music, Universal Music Group and Warner Music Group venture, which MySpace announced in April, builds on the social network’s roots by including new user-to-user sharing tools and new ways for musicians to sell music and merchandise.

Many initial reviews lauded the MySpace Music user interface and its business model, which aims to generate revenue from advertising from large companies like McDonald’s, State Farm and Toyota, and through sales of merchandise and concert tickets.

Users can stream songs for free or purchase music downloads from a catalog of five million artists through the site, which is powered by Amazon’s MP3 downloading service.

The first phase of the site includes a new “MyMusic” tool set to help users download, stream, and personalise their music content and create public or private playlists. Users can stream music from a friend’s playlist on-demand. Users can also purchase DRM-free MP3s of any of those songs, MySpace said. “Buy” buttons on the site will allow users to purchase MP3s that are playable on all digital music devices including iPods, MySpace said.

Michael Arrington, a blogger at TechCrunch, said that MySpace has done “something incredible” for the online music business.

“They’ve created both a compelling music experience for users as well as a realistic, long term business model for labels and artists in a world where recorded music moves towards free,” he noted. “Today, the labels have all but given up on DRM (Digital Rights Management), and users can now play virtually any song ever recorded on demand for free. MySpace has created the first ecosystem that has a shot of producing sustainable revenue streams for artists based on advertising, merchandise and concert sales.”

If it works, he went on to note, the next step in the evolution of online music will be the decline of fees for per-stream feeds and downloads.

“Instead, labels will see music consumption for what it really is - free marketing,” he added. “Labels will compete to encourage song downloads and streams to move those songs up the charts, attracting premium advertisers, merchandise sales and sold out concerts.

Marshall Kirkpatrick, a blogger at Read Write Web, applauded the MySpace Music interface with its drag and drop playlist creation, dynamic re-populating players and a pop-up player that plays music when a user leaves a page.

“Apparently the point is that MySpace is a huge, full-service stop where people are already gathering,” he went on to note. “We buy that, and we think MySpace Music will be a strong player. We’ve written about what the perfect streaming music service might look like -we wonder how close this will come.”

David Chartier went on to note on ArsTechnica that since MySpace was founded in part to allow musicians to get their songs in front of an audience that MySpace Music seems like a natural evolution for the social network.

“It’s no secret that, while digital music sales have been steadily rising, CD sales have slumped,” he added. “But amidst a growing number of digital outlets with varying business models, MySpace already has a massive US user base of around 80 million users, all who now have unfettered access to a large catalog and the six degrees of product marketing that comes with it.”

UPDATE: Asked about Australian availability of the service, MySpace Australia business development director Nick Love offered this comment:

It is a phased global launch and at this time MySpace Music are not committing to any specific dates for roll out outside of the US. As with any global new product launch, the team at MySpace Music want to ensure we have the right local partners, market environment and ecosystem in place to ensure success, therefore beginning in the US and rolling out globally from there.  MySpace Music are currently in talks with the music industry in the Australian market.

Although a US product initially, Australians will see a number of immediate changes to MySpace Music and their favourite bands’ profiles including new music player, new navigation and playlist view.

From launch, music has always been a popular component of the MySpace experience for users. Globally on MySpace Music around 30 million people connect with more than five million major, indie and unsigned artists each month, including Lilly Allen, Arctic Monkeys, Colbie Caillat and Operator Please, whose careers have been launched thanks to MySpace.

Can MySpace succeed where so many other iTunes Music Service contenders have failed? Share your thoughts in the AMW Forums.