Interesting to see that Mike Jones has stepped in as COO of MySpace. I met Mike two or three years back when launching several social networking websites, and worked closely with one of the companies he founded, Userplane. They offered a great chat product that was well ahead of its competition at the time and it came as no surprise to me that Userplane were acquired by a company like AOL.

At that time, just four years ago, MySpace was the social networking leader vying for dominance with VC investment darling Friendster; and Facebook was a closed community only for college students.  How the landscape has changed for all companies.  It is a not-so-subtle reminder how quickly the digital media environment evolves.

The executive changes at MySpace mark a watershed moment for the digital music industry.  MySpace’s success is rooted in music, as we’re all reminded every time we land on the site to hear a new track or seek out a new band.  However, it is a social networking site and as such, must generate revenues from its user base.  Unfortunately for MySpace, advertisers are leaning towards Facebook, which boasts an older cash-spending demographic.  As new CEO Owen Van Natta seeks to bring some of his Facebook experience to MySpace, it will be interesting to see how the music plays out.

It’s no easier in the digital music distribution arena.  Apple’s leadership with iTunes may seem unassailable, yet it faces many threats with the rise of competitors that offer lower cost, higher quality music downloads without Digital Rights Management (DRM).  iTunes’ recent introduction of variable pricing illustrates posturing with the likes of Amazon, Rhapsody and Beatport.  Amazon’s digital music partnership with MySpace Music is also nothing to scoff at, after all MySpace has 76 million unique monthly visitors in the US alone, according to comScore.

One young London-based company blazing a trail is 7Digital, which creates download stores for record labels, TV stations, artists and brands.  The company recently announced a partnership with AOL which integrates MP3 purchases into downloads.  This is a big win that follows recent liaisons with streaming-music hot property Spotify and open source media player Songbird.  What 7Digital taps into is offering high quality DRM-free downloads in various formats - not audiophile quality yet but nonetheless a compelling proposition for increasingly discerning tech savvy consumers.

In the world of P2P, a copyright conviction in Sweden is making waves.  Four co-founders of torrent site Pirate Bay were recently sentenced to a year in jail and a fine of 30 million kroner (£2.4 million) for facilitating the illegal sharing of copyrighted material.  Some suggest that this sets a precedent that could shake the likes of Google and YouTube for leading consumers to illegal content, however, a columnist for the Register argues that these convictions are virtually insignificant outside of Sweden.  In a stroke of coincidental timing, BI Norwegian School of Management released a report indicating that downloaders of illegal music also purchase more legal music than those who squeaky clean types who do not frequent P2P sites.

So what does the future hold?  Will MySpace become less relevant in the years ahead?  Will Apple lose its lead?  Will anyone be able to halt the headlong downward plunge of music download prices? Will other artists follow the lead of Radiohead and Trent Reznor of rock band Nine Inch Nails (NIN) by offering free high quality downloads of new albums directly to fans?  Both bands have seen success in building a stronger community with fans and also selling premium priced album sets and other merchandise.  Reznor is taking it a step further with a new iPhone app that allows fans to get news, see fan remixes, stream concert footage and link up with other fans via Google Earth GPS.  Perhaps that is Apple’s trump card in the battle.  Four years from now?  It’s anyone’s guess.  What we do know is that it will be an exciting journey.

This entry was posted on Tuesday, April 28th, 2009 at 9:42 pm and is filed under Music. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.