MySpace takes on iTunes with new digital music site

In a challenge directed at Apple’s digital music store iTunes, News Corp’s MySpace will now offer digital sales on a new site called MySpace Music.

In a challenge directed at Apple’s digital music store iTunes, News Corp’s MySpace will now offer digital sales on a new site called MySpace Music.

The launch is a joint venture with major labels Sony BMG, Universal Music, Warner Music and EMI and was launched overnight by News Corp boss Rupert Murdoch in New York. Advertising deals with McDonald’s, Toyota and Sony Pictures have been organised.

The move is a direct challenge at Apple’s dominance in the $4.2 billion online music sector, with its iTunes software gaining 80% of Australian online music sales.

The launch of the new site is also a comeback at social networking rival Facebook, after MySpace failed to reach its expected revenue level of $1 billion internet sales in the last year. Facebook recently hit the 132 million member mark, while MySpace has remained steady at 120 million.

Unlike iTunes, MySpace Music allows users to stream music online and create playlists for free, but must purchase tracks if they want to copy songs on to other devices like an MP3 player.

MySpace has suffered drawbacks since it was acquired by News Corp in 2005 for $US850 million, with Murdoch saying the social networking site has fallen short of revenue expectations. A $US900 million advertising deal with Google ends in 2010.

The site’s launch is one in a number of download service launches, following Amazon.com’s release of its music download service made available on Google’s new mobile phone, the G1.

The online sales industry is quickly dominating the CD market, with PricewaterhouseCoopers estimating digital music sales will amount to more than $10 billion by 2012.

News Corp international sites managing director Travis Katz did not give a prospective Australian launch date for the new site, but says a local version is expected to launch within a year.

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• iTunes developing interactive albums