WOMEX

MySpace Is No Longer YourSpace if You’re an Independent

MySpace has launched a new joint venture between itself and the four major music companies, which will see equity for the majors, but for no one else. Even the major independent artists whose music will help attract ad revenue will have no equity stake in the venture. Non-profit Merlin, which represents over 12.000 labels and has a combined US market share greater that EMI’s, has been trying to negotiate a similar share-holder stake for independent companies but without success. Charles Caldas, Merlin CEO, was quoted in Fortune as saying, "There just seems to be a massive disconnect within [MySpace Music] between the reality of what they are building and what they think they have built." As Fortune explained: Caldas said he tried to work out a deal to have music from his members included on MySpace Music, which offers free ad-supported songs from the four major labels - SonyBMG (SNE), Warner Music (WMG), Universal and EMI - to its 120 million members. But he said Merlin has been unable to reach an agreement because MySpace insisted on treating the consortium's members differently than their bigger peers... MySpace has given its partners an equity stake in the new service, but not to Merlin and other independent labels.

Said Alison Wenham of AIM (Association of Independent Music), "If independents entered into a deal with MySpace Music which did not include some form of upside or equity component, then the majors, as partners in the venture, would profit from the use of independent repertoire, without an appropriate opportunity for the independents to do likewise."


Document

1. Letter to AIM Members

1st October 2008

MySpace Music

We have been contacted over the last week by a large number of our members following the announcement of the launch of MySpace Music, which is a new company, separate from the MySpace promotional platform as we know it, and is a global joint venture between MySpace and the four major record labels. We believe it is this Joint Venture entity that will control MySpace Music when it launches in the UK.

In light of the number of members contacting us, we thought it sensible to send out this note to all of our membership as part of our general brief to assist our members.

AIM is a trade association of nearly 1,000 members, approximately 25% of the UK market. We actively represent the members' interests to industry and to government.

We have seen the statement issued by Merlin in the wake of the launch, and share their concerns regarding the fact that, if independents entered into a deal with MySpace Music which did not include some form of upside or equity component, then the majors, as partners in the venture, would profit from the use of independent repertoire, without an appropriate opportunity for the independents to do likewise.

That means that every time an independent track or video was streamed on MySpace Music, the majors would receive benefit, and the more successful an independent artist, the more the major labels would benefit. We think this is a dangerous imbalance, that the structure of MySpace Music potentially raises serious competition law issues and do not see why MySpace should consider independent repertoire less valuable than major label repertoire, particularly when a licensing solution exists in Merlin. Merlin represents a set of rights equivalent to that of a major and is continuing its negotiations with MySpace.

Clearly it is a decision for each and every record company as to whether or not it wants to enter into an arrangement with MySpace for this new venture and each label will need to assess the terms of any MySpace license it may be offered within the context of its own business needs. While this is a matter for you, AIM is of the opinion that indie record companies should consider the matter very carefully before they agree to enter into any arrangements, which are so inherently unbalanced as those described above. We believe you should seriously consider the well established benefits of collective licensing services such as those offered by Merlin, whose remit is to ensure that the efficiencies it brings to the market are reflected in the terms it can achieve for its members. Merlin is perfectly positioned to ensure the value of your rights are properly recognised.

Alison Wenham
Chairman and Chief Executive


Press Coverage Concerning MySpace

Links:

Fortune (via JLM)
http://money.cnn.com/2008/09/25/technology/myspace.fortune/index.htm

BBC website
http://news.bbc.co.uk/1/hi/technology/7635416.stm

Reuters article: MySpace Music launch disappoints excluded indie labels - By Yinka Adegoke, 09.25.08, 5:37 PM ET. Published in multiple outlets, including:
www.comcast.net/articles/news-entertainment/20080925/ENTERTAINMENT-US-MYSPACE-MUSICINDIESents/

Electric Pig
www.electricpig.co.uk/2008/09/26/myspace-music-gets-us-launch-but-no-independent-music/

Gigwise
http://www.gigwise.com/news/46352/myspace-music-accused-of-disowning-independent-labels

Techdirt
http://techdirt.com/articles/20080925/1530262378.shtml

Techradar
www.techradar.com/news/internet/indie-labels-spat-with-myspace-continues-471457

eFlux Media
www.efluxmedia.com/news_Indie_Labels_Left_Out_MySpace_Music_Stirs_Controversy_25170.html

DailyTech
www.dailytech.com/Independent+Music+Group+Blasts+MySpace+Music+for+Lack+of+Support/article13068c.htm

Addict3d
http://www.addict3d.org/news/460659/Independent+Record+Labels+Missing+From+MySpace+Music.html

Other articles appeared in Music Ally and others.


MySpace Alternatives...

Other Music Sites (though some may not share revenue. Research before signing on):
For more information:
http://en.wikipedia.org/wiki/Social_network_services

WOMEX Sevilla / 29 October - 2 November 2008
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