"Village Voice": Why MySpace Music Won't Succeed

This week from "Village Voice":
http://www.villagevoice.com/2008-09-10/music/can-myspace-music-possibly-succeed?src=newsletter

Why MySpace Music Won't Succeed
Rupert Murdoch's pride and joy is trying to go legit; mayhem may ensue, and success may not
By Karla Starr
Tuesday, September 9th 2008

In the future, one website will serve all our music-purchasing needs, including Digital Rights Management–free downloads, ringtones, concert tickets, and band merchandise. Streaming music will still be available free. Three of the four majors will take part: Sony BMG, Warner, and Universal. Bands will continue posting videos and other promo materials, also gratis. Yeah, the future, an underwhelming mashup of Amazon, iTunes, YouTube, Imeem, and iLike, is actually kind of lame—as in "50-year-old former homecoming king reliving his glory days at halftime" lame. Also, as of press time, the CEO gig for this new venture is still available, so send in your résumé now.

But you'd better hurry: This future arrives on September 15 with the debut of MySpace's revamped music service, the pithily titled "MySpace Music." It's a sort of all-encompassing merch site within MySpace, meaning the old stuff stays the same, the new stuff is elsewhere and costs money, and the website as a whole becomes downright elegant. Since the project's announcement in April, waves of electric buzz have co-existed with a loud, healthy skepticism: Who will serve as CEO? Will EMI (the one holdout among the majors) ever join? And might Rupert Murdoch have better luck opening a Hummer dealership in Scranton?

Hard to believe, but MySpace once seemed poised to revolutionize the music industry. When unknown artists were recording albums for next to nothing but lacked any viable platform to get them heard, the site inspired a sort of socialism for audiophiles, offering the same page-and-four-free-songs format to both U2 and any old African-bagpipe nerd-core ensemble. It streamed R.E.M.'s album Around the Sun (a bigger deal at the time, honest) free in the fall of 2004, weeks before it hit stores; by the following year, I was one of 40 million regular MySpace users. Growth spiked so much that not having an account made a bigger statement than signing up, for fan and artist alike. But analysts agree that this is where the brand first erred in its quest to earn legit-store status: There are only so many times you can go to a website for free music before you, you know, automatically equate that website with free music.

"Their critical misstep was that they established themselves as a place where there was no monetization," says Ariel Hyatt, president of Ariel Publicity & CyberPromo, and the co-founder of Vermillion Media Group & Bandletter. "Even in their policy, it says that you're not allowed to make money using MySpace. So are the bands supposed to break what they agreed to do?" And can MySpace successfully break the habit it's instilled in millions of people over the last five years by getting people to actually pay for its content?

It's tried this before. In late 2006, the site—which by then had amassed 135 million users—decided to take advantage of its dominance and launch an MP3-selling outfit called MyStore. But only one major—EMI—jumped onboard, largely because those would be unprotected, or DRM-free, MP3s. Furthermore, unlike iTunes, which charges bands or labels 35 cents per 99-cent download (and features considerable, label-friendly DRM restrictions), MySpace charged 45 cents per song. (As a consolation, it allowed variations in the price of each track—labels have long loathed iTunes' rigidity.) Worse yet was the project's alignment with Snocap, the little start-up that served as the engine running the MySpace "store."

"Snocap was very poorly implemented," recalls Aram Sinnreich, a media analyst. "Not only was it clunky, but it sometimes made it hard for people to access the free music that was built into the MySpace engine. . . . There were problems with the system on a widespread scale." Only 110,000 artists signed up for MyStore, and the sales were abysmal.

Lesson learned—at least by EMI, which is why the company has decided to sit it out thus far (hence no Coldplay, Gorillaz, or Norah Jones). But this time around, MySpace is avoiding start-up companies: It's been reported that Amazon will be supplying the back end of MySpace Music's digital-music and transaction deals.

And yet, lesson not learned: It's now 2008, and this new venture won't bring anything new to the table. One thing that's free and potentially exciting—ad-supported streaming radio—is already thriving elsewhere. With a scant 95 employees, the San Francisco–based Imeem has the largest website of its sort, thanks to aggressively pursuing deals with the majors early on. (As a classic aside, Imeem acquired Snocap this April.) Even if MySpace Music catches on, it won't mean anything to the company, because it's inherently a dead-end business model; do they really want more revenue-zapping traffic? The majors currently demand a penny each time a song plays from their catalogs, whether from an on-demand subscription service like Rhapsody or a free site like We7, last.fm, or Imeem. (This differs from MySpace's original setup, which let bands post their own music to the site, causing a slew of lawsuits just now being settled.) Even if the free streaming music that will forever define the site gets people to stick around and buy Genesis bootlegs for real money, they'd have to buy cartons to keep the company afloat.

The overwhelming data that the company has at its disposal—who likes what, what songs fans use most in their profiles, how active a band's fans are—is drooled over by social scientists and A&R reps alike. That information is the brand's most valuable product—and yet they're competing in an increasingly crowded MP3-store field when they've got this arena practically to themselves. "Does MySpace realize how many bands it has on the site? Why not treat them like the consumer?" asks Hyatt. (For the record: Five million, and no one knows.) These days, bands are tethered to MySpace more tightly than personal users—a captive audience one can easily imagine charging $10 a month for a service that actively cultivates new fans most likely to love the band's music. Or to get updates as to what strategies other, quickly growing bands are using. In short, things those other websites aren't doing, because they can't.

A little creativity could benefit fans as well. "I do think MySpace could still be a contender if they maximize the whole music experience—helping people find, sample, acquire, and enjoy music, rather than just these acquisition-and-enjoy phases that iTunes/Apple helps with," says James L. McQuivey, a media-technology analyst and vice president at Forrester Research. Setting up just another store is easy, which is why it's been done for years. The music 2.0 websites that have been thriving—your Pandoras, last.fm's, iLikes, and Imeems—use recommendations as a way to offer their users more music to get attached to, more reasons to stay on. Where the hype is, Michael Stipe will follow: R.E.M. chose iLike to stream Accelerate early this year.

Meanwhile, MySpace has already dealt its new venture a severe blow: To distinguish itself from Friendster, it decided not to delete fake profiles as a way to woo bands. But not checking IDs at the door is also the quickest way to get shut down, and soon scads of hackers and phishers started spamming other accounts, which is how I briefly became an unwitting Macy's spokesperson. Even Alicia Keys's profile wasn't safe: In November 2007, visitors to her page were prompted to install a false codec in order to view her latest video, thereby downloading a virus.

Add to that the MySpace sub-industry of number inflation. Bands today can pay "bots" to artificially boost the play counts of songs posted to their accounts—some of those rogue agents, like the now-defunct TuneBoomPro, claim to have worked with major labels. Anyone can access a friend-adder (i.e., an Internet connection) and get 1,000 new buddies overnight. The realistically paranoid might say that MySpace Music's sales numbers could be just as accurate; any chance they'd self-bot? There've been new security upgrades (MySpace boasted, like a reformed chronic masturbator, of less porn since last September), but much of the damage had already been done. How many legitimate stores where people feel comfortable handing over sensitive financial information have begun as websites where 14-year-olds post "Thanx 4 the add!!" graphics to Miley Cyrus's page?

Success in the social-networking world may resemble a rollicking bar, but turning that triumph into a prim, proper, equally successful online shopping site is a different beast. "I don't know how iTunes-toppling MySpace's potential might be," says Andrew Dubber, a media strategist for New Music Strategies. "No matter how well it integrates purchasing, it doesn't do what iTunes and Amazon are very good at, and that's the activity of shopping." Amazon.com, a reasonably trustworthy powerhouse, entered the business of selling DRM-free digital downloads last year; as of April, it had claimed an 11 percent share of the market for digital downloads, second only to iTunes. It shouldn't come as a surprise that Amazon is partnering with MySpace Music, since the company's never been averse to competing against itself, helpfully listing the same items for sale at a lower cost from other vendors. If Amazon wants a finger in every non-iTunes slice of the music-download pie, it seems naïve to imagine that a less-trusted website would be able to successfully overtake it.

Besides, there's nothing stopping a band from building its own, more profitable social-networking center—just ask 50 Cent. One-quarter of KylieKonnect users have bought something off Kylie Minogue's site. But if you need to check out a few free songs from some random band you've never heard of, there's still no substitute for visiting MySpace—and no way for Murdoch's company to monetize its most valuable asset.