MySpace mulls launching digital music service

MySpace is reportedly looking into offering a digital music service in conjunction with record labels, possibly as a joint venture.

The social networking site declined to confirm its plans to BetaNews, only saying it "is not commenting on the rumors." However, several Web logs and the Associated Press are quoting sources within News Corp. claiming that the initiative is a reality.

Although details vary from report to report, it appears that MySpace is likely looking to start a service with DRM-free content that will either be offered at no charge through ad support, as paidContent.org claims, or via a combination of free streaming, and a subscription-based download service as the AP is reporting.

How the company will be set up is also still in the air. While it was initially reported that revenue would be shared between the social networking site and participating labels, later reports seemed to suggest that a new company would be formed and the record labels would receive equity stakes in the new entity.

If the service is indeed a reality, it will expand the successful music side of its business -- where it now hosts millions of band fan pages -- into what seems a logical next step. It already allows bands to sell music through their pages, but in a very limited fashion.

This would expand that service further, and add some more established acts. Currently, the sale of music on the site is limited to bands that are, for the most part, local and regional acts.

It would also be an interesting turnaround for MySpace, considering nearly two years ago it found itself on the receiving end of a lawsuit by Universal Music Group over accusations that it was encouraging the sharing of music videos and files without permission.