With the launch of MySpace Music only 6 or so months ago in the US, cracks are appearing in the joint venture between FOX Interactive owner of MySpace and the four major label partners. According to recent reports from CNET MySpace has experienced trouble in converting the decent traffic levels to the service into actual music sales. Obviously, the major labels are unhappy with this and want to see traffic converted into viable al-la-carte sales of music.
Drilling down, does this also signifies clear evidence that MySpace Music’s advertising streaming model which all the majors share profits in is not generating significant advertising revenue despite good traffic figures? This reinforces TMV’s view that large corporate companies whether they be Google al la YouTube, and including Fox Interactive are experiencing trouble in leveraging decent cpm rates for premium music content. Is this the nail in the coffin for ad-funded models? TMV doubts it, especially with last week’s news that Imeem has secured funding to keep it operational for the time being.
From another angle, MySpace Music was always a two-tier revenue model – ad-funded for streams and then pushing consumers to Amazon MP3 if they wanted to purchase al-la-carte style. This is where TMV view a key problem. Why push to another store outside your own ecosystem? In TMVs view that is not a viable proposition in either the medium or long term. The fact that advertising revenue has not been enough to shut up the major labels complaining about revenue does signify a sure sign that change does need to be implemented.
With Murdoch only recently reining in the online news properties to insist they will become subscription based (which TMV believes will be a large failure), how long before MySpace music brings al-la-carte sales inhouse? Obviously, this fits with most major label desires to push consumers to subscription models. So perhaps a match made in heaven?
TMV does believe the fact consumers are farmed off to the Amazon MP3 store to purchase tracks is where one of the key problem areas is for the MySpace music proposition. Perhaps many of the consumers using MySpace music just do not like the user experience of being farmed out to an outside company to purchase the tracks.
Albeit TMV doubts that as we view the key problem as the dreadful user experience both of MySpace music (which we played around with whilst at CMW back in March) and MySpace generally. One only has to cite the Jonas Brothers (which by the way we think suck big time in terms of music quality) who were used as the faces for the launch of MySpace music and there recent move away form MySpace to Facebook (http://news.cnet.com/8301-13577_3-10233762-36.html) as a potential trend to view in the near future…please when are we going to see a proper integration of a music player in Facebook. Yes I like iLike but it is not the same thing…
Or even better an inclusive ad funded model based on parity within Facebook where all music content owners are compensated for their content. Although TMV would in actually fact like to see Facebook launch its own music store with options for subscription as well. Yes, MySpace Music has been the first real between social networks and music stores, but we believe there needs to be more and across all social network offerings. Then again doesn’t Last.fm provide this albeit on based around a streaming model. Going further with the simplicity and ease of use of the Spotify streaming service will retail a-la-carte services survive in the long term? Only time will tell, but in TMV’s view they have a dam site better chance in competing with P2P.