By Jennifer Sondag & Nancy Kercheval
Bloomberg
NEW YORK—News Corp.’s MySpace.com, an online social networking site with more than 100 million member profiles, plans to start a service to sell music directly to fans in a challenge to Apple Computer Inc.’s iTunes music store.
MySpace.com is working with San Francisco-based Snocap, a company started by Napster Inc. cofounder Shawn Fanning, to introduce the service in the US by year’s end, said Amit Kapur, director of business development for the Los Angeles-based company.
“The artist community has been a huge driver behind our success,” Kapur said. “We’ve provided them promotional tools to connect with the fan base; now we’re expanding past promotional to commercialization.”
The service may enable MySpace.com and Snocap, a closely held company that helps artists sell music online, to profit from MySpace.com’s more than 3 million registered bands and artists. Unlike Apple’s iTunes, songs will be sold through artists’ member pages rather than an online store.
“The vast majority of artists are unsigned and independent,” Kapur said. “This will be their first big platform to make a little bit of money off of their content.”
The artists will submit their songs, which will be crosschecked by Snocap technology to ensure the content doesn’t belong to Britney Spears or Madonna, Kapur said.
Content scrutinized
“WE bounce the content against all the content in our registry of major labels and thousands of independents,” said Rusty Rueff, chief executive officer of San Francisco-based Snocap.
The artist provides digital artwork, a price and where he wants the music sold, Rueff said. Snocap provides an HTML code that creates a store to post on the musician’s MySpace page.
“At the same time we’re putting this store up, we’re authenticating the work to protect MySpace from copyright infringement,” Rueff said. “It gives artists that don’t have a way to get into the market a way to do it legally.”
The artists will set their own prices, Kapur said. The costs are expected to remain below 99 cents charged by rivals, unless it’s a rare recording of a live concert, for instance, he said.
Initially, the service will be directed to the so-called garage bands that make music without a major label to back them, Kapur said. “Eventually, we’ll try to get more major labels.”
The HTML tag will allow the store to be attached to e-mails or placed on other MySpace home pages to increase the distribution chain, Kapur said.
Revenue breakdown
MYSPACE and Snocap will split an undetermined percentage of each sale with the artist getting “the lion’s share,” Kapur said. Revenue will depend on the number of tracks each artist sells and at what price.
The announcement may help the music industry’s push for legal downloads. Fanning’s original Napster site was shut down after lawsuits from record labels and musicians accused the file-sharing network of eating into sales and violating copyrights.
Since then, Apple has come to dominate the market for legal downloads with the success of iTunes and its iPod music player. The Cupertino, California-based company’s iTunes store sells songs for 99 cents each and this year surpassed 1 billion downloads.
MySpace is using the music format to enter the e-commerce arena, Kapur said. Eventually, the company will explore offering the artists ticketing and merchandising outlets.
Business Mirror
September 6, 2006
http://www.businessmirror.com.ph/it01.php
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