MySpace’s “Hulu For Music” plan — a proposed JV with the big music labels — has to clear a lot of hurdles. Two big ones: Convincing the labels to sign on (and in the case of Universal Music Group, to drop its lawsuit against the social network) and figuring out how to make a business out of ad-supported music.
But it may not have one problem we’d originally predicted: Angry blowback from existing music services, who will want to renegotiate their deals once MySpace cuts new ones with the labels.
Our original thought was that RealNetworks’s Rhapsody, Napster, iMeem, CBS’ Last.fm and other music services that already hammered out deals with the labels would want new ones if the MySpace project gets off the ground. But Neil Smith, VP of marketing for RealNetwork’s Rhapsody, told us that won’t happen, at least for his company.
“It’s not our expectation that there will be blanket industry standard deals,” triggered by the MySpace JV, he tells us. Why not? Because the labels will be getting equity stakes (and perhaps cash) in return for their participation, something they haven’t gotten in most other deals. And that, he says, will be enough to differentiate their terms.
So unless Real was willing to do the same (unlikely), Neil says, he “wouldn’t take it for granted that (Rhapsody) would be able to cut the deal with the same economics.” Good to know. So when are we going to hear that the labels have indeed signed on?
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