James Delahunty
15 Apr 2009 11:14
The MySpace Music project is only 6 months old, and it's 75 million or so users are streaming literally billions of songs per month. Under any normal regular deal with the record labels, a price would be set per stream that would have to be paid to the label. This is what you would think is in place at MySpace Music, because it certainly is at many other online audio services.
However, sources have told TechCrunch that Warner Music Group has been making some noise about the deal they struck with MySpace Music. It would appear that the deal does not have any pay-per-stream agreement setup. Instead, WMG gets a share of the advertising that is displayed when a user streams its songs.
That advertising revenue is not turning out to be as good as was initially expected, and now WMG is getting angry about the widespread use of its content on the site and the low revenue it is receiving for it. It has indicated that when the current deal is up, it will seek a new agreement with MySpace Music or pull its music from the service completely.
The fact that advertising is doing worse than was expected might signal that MySpace Music is not doing very well at all. It already has some measures in place to cut costs, such as a prompt after playing four songs that asks a user if they are still there. If the service is a financial hole for MySpace, there is only so long it will go on before they decide to drop it.