myspace-musicContent may well be king, but the internet offers a unique
opportunity for anyone to attain royal status, something which could
finally, fatally undermine Rupert Murdoch’s place at the top of the
media food chain.

Iron-Maiden-LiveIf recent figures are anything to go by, the Times is losing massive amounts of traffic since its paywall exercise began last month, with The Guardian picking up a fair amount of slack.

After a short panic, The Times have been trying a simpler subscription service, but are still lagging.

The main problem faced here is the viability of general content. Newspapers are used to operating in a classical economy defined by the scarcity of resources, but online these traditional economics disappear.

Content may well be king, but the internet offers a unique opportunity for anyone to attain royal status, something which could finally, fatally undermine Rupert Murdoch’s place at the top of the media food chain.

Murdoch has a history of taking risks that pay off.Anyone old enough will remember the amount of flack SKY took from traditional broadcasters when it launched, but as content and exclusivity improved, SKY became the economically viable beast it is today.

Unfortunately for Murdoch and other media giants, exclusivity online is a hard thing to find, original content even harder.

Despite embarking on a sudden evangelical social media quest with the purchase of MySpace, new plans for the service’s music streaming capabilities show that Newscorp are still massively misunderstanding the web economy.

Since Facebook’s rise to pre-eminence, MySpace has increasingly relied on bands to generate traffic and revenue. For musicians, the service is certainly more appealing than Facebook. Its interface is massively customisable, its video and music streaming are massively superior to Facebook’s (and let’s face it, there’s something about MySpace’s setup that appeals directly to the ego, hardly something in short supply among musicians).

If you’re foolhardy enough to embark on a musical career, then MySpace is an invaluable tool.

Unfortunately, things are about to change at MySpace. This month the group’s search advertising contract with Google runs out, and with conservative estimates placing ad revenue at $300m, they’ll be desperately looking for a replacement.

Talks are ongoing with Microsoft, Yahoo and Google themselves, but ad deals like MySpace’s need to come with certain guarantees, which the site’s massive music service has been largely responsible for since casual users moved on.

Unfortunately somebody at MySpace recently had a bright idea: let’s charge for music.

While the site has been debating the values of a subscription service
in some detail, the fact that the idea was raised at all is a worrying
one. 

With the advent of Spotify, Grooveshark and good old digital radio, charging for streaming music – even at a subscription rate – is a risky venture. As anyone listening at the summer house without an internet connection will know Spotify has struggled to make the model stick.

MySpace music is operating under a royalties system that costs them as much as 20m a year, an unsustainable rate, but one which cannot be made up from streaming revenues.

MySpace music has consistently touted the involvement of major labels with its service but these are labels that practically wrote the book on misunderstanding virtual economics. The largest mistake here is assuming members will pay to listen to major artists. These are artists that are available elsewhere at less expense.

More worryingly, MySpace seem to be misunderstanding its own appeal as a launchpad for unsigned talent.

Since the site’s inception, small bands have effectively used the site to build an audience, schedule shows, talk to fans and in some cases grab themselves a big deal (We can argue all day about whether those deals are needed anymore). This has all been based on letting people hear their tunes for free.

Having experienced the nonchalance of the general music buying public first hand and taken stock of several similar sites, it doesn’t seem to matter how good your songs are, it’s a rare individual indeed who’ll take a chance and pay for unknown music up front.

MySpace had a chance earlier this year to gain members worried about
Facebook’s privacy policies
, but it seems to have missed its golden
chance by delaying and being seemingly unwilling to make a bold, clear
statement on privacy. By switching to a subscription service they would
be undermining their own traffic and alienating their largest user
group.

If MySpace does decide to charge for streaming it could spell the end.
Will the loss of a $580m network finally make Newscorp see the
light and change tack on paywall models?