MySpace to stop free music streaming - the end is near

The free streaming on MySpace may soon be history. According to people close to the News Corp. owned company, MySpace wants to move its MySpace Music section to a paid model. At the moment MySpace is rumoured to be spending $20 million/month (!) on streaming royalties. However sources close to MySpace say that the royalty payments are a lot lower although the service is indeed burning money at a fast pace. Fact is that News Corp. have a huge cash flow problem with the company. The Google search deal is up this month and MySpace sees a $300 million/year in revenue evaporate.

Recent reports say that the site's owner News Corp. is in discussions with Google Inc., Microsoft Corp. and Yahoo Inc. about replacing MySpace's crucial search-advertising partnership with Google. However, it looks like it that MySpace will soon be up for sale instead of being continued by News Corp. Fox Audience Network, which serves most of the ads on MySpace, is up for sale. If Fox Audience Network is sold, it's pretty sure that MySpace will follow the same way.

Add to that that MySpace Music was driving most of the searches that made up the massive page view obligations that MySpace had under the Google Agreement. With free music going away, those page views will go away, too. Meaning a search deal is even less lucrative. Add to that the news that was revealed yesterday by Techcrunch.com which says that visits to MySpace UK have halved in 6 months. In a desperate attempt to get the visit rates up, MySpace UK has been using a strategy of buying up cheap and sometimes unrelated Google keyword ads in order to generate 'dirty' traffic to bump up the publicly accessible comScore stats. And, if that wasn't bad enough, it seems that Facebook.com is the third biggest referrer of traffic to the site. In other words, Facebook is ironically keeping the site alive for the moment.

So bands who still count on MySpace, better start rethinking your strategy, because you'll soon be without a space (pun intended).

Posted by B. Van Isacker