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MySpace songs launch irks independent music group
2008-09-27
NEW YORK - MySpace's new music service managed to bring major record labels together, but a group that licenses song rights for thousands of independent labels feels left out and angry, partly because indie musicians were a big reason the social networking site rose to prominence in the first place. News Corp.-owned MySpace opened the much-anticipated MySpace Music on Thursday, giving its roughly 120 million users free access to hundreds of thousands of songs from the biggest recording labels. Revenue for MySpace Music will come mainly from on-site ads and the sale of songs through Amazon.com Inc.'s MP3 downloading service. All four major record labels -- Sony BMG Music Entertainment, Warner Music Group Inc., Universal Music Group and EMI Music -- brought their catalogs to the service, which is operating as a joint venture between them and MySpace. Sony ATV/Music Publishing and The Orchard, a large independent music distributor, were also on board for the launch, though neither have equity stakes in the service. Other independent labels want to be a part of MySpace Music as well, but some executives from those companies were upset that they were excluded from the initial rollout. "We're extremely disappointed that they seem to misread their constituents so badly that they've ignored what we think is their core, their sweet spot, when they launched," said Charles Caldas, chief executive of London-based Merlin, a music rights licensing agency that represents more than 12,000 independent labels. Merlin -- which counts labels Epitaph, Koch Records and Tommy Boy among its members -- is in talks with MySpace to get its members involved with the service, Caldas said, but he's "at odds to understand" why MySpace launched it without his group's participation. "MySpace is a brand that's built its strength and built its power on the strength and diversity of the music it represents," he said. And if Merlin does become part of the service but does not own equity in it -- MySpace is not saying right now whether others will get a stake in MySpace Music -- Caldas and others are concerned the major labels could profit from their success. "For us, to think that the majors will benefit via their equity from the utilization of our content is just shocking, mind boggling," said Bob Frank, who chairs Merlin and is chief executive of New York-based Koch Records, whose artists include Sinead O'Connor and DJ Khaled. MySpace co-founder and President Tom Anderson said MySpace is trying to make deals with every independent music aggregator, even those voicing complaints. "There's definitely no one on this side that wants this to be a major-label only service," he said. "We've already got indie content and we want more indie content." Anderson said Merlin wasn't included at launch time simply because the parties had not reached a deal yet. As for the possibility that, through their stakes in MySpace Music, major labels could benefit from the success of independent artists on the site, Anderson said it's a two-way street. For example, if MySpace features an independent or unsigned artist next to a major-label artist like singer Carrie Underwood, that helps drive traffic to the non-major label artists too, he said. NPD Group entertainment analyst Russ Crupnick said MySpace handled its launch in a sensible way. "It's an unfortunate reality that the majors are the majors and if you don't have Universal and Sony participating in this, you don't have a service," he said. "But I think over the long haul it's really going to be incumbent on MySpace to provide some kind of equitable solution to everyone else."
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