MySpace is planning to get into the music subscription business – because let’s face it, it’s got to do something.
The move into music subscriptions has been rumored for quite some time, but Monday Business Insider published a leaked slide deck that appears to confirm it. In the second quarter of next year, Interactive (formerly Specific) Media, MySpace’s parent company, plans to launch what it describes a “mobile subscription model” intended to compete with Pandora and Spotify, companies MySpace identifies by name as future competitors.
MySpace has fallen a long way since its peak as a social network in 2008. That was the year that its traffic was first eclipsed by Facebook’s and things have gotten much worse since. MySpace’s trend lines have all slid downward as Facebook has exploded and new social networks have risen to prominence.
Refocusing On Music Has Slowed The Bleeding… So Far
After being sold to Specific Media by News Corporation (for a wince-inducing fraction of its original price tag), MySpace more or less gave up on the social networking game and instead refocused its efforts on the thing that gave it traction in the first place: music. After doing so, the site saw its first membership bump in quite some time and its overall traffic stopped falling off a cliff, at least according to the publicly available guestimates from sources like Compete. By no means is MySpace headed back to the lofty metrics of its heyday, but its music-focused relaunch appears to have slowed the hemorrhaging.
For its next act, MySpace is poised to join Spotify, Rdio and, to a lesser extent, Pandora in the music-subscription space. The move makes sense in a few respects. MySpace has long been associated with music and refocusing its efforts there has already begun to pay off in terms of traffic.
It’s also sitting on a catalog of 42 million songs, compared to about 17 million in Spotify’s music library. That massive collection of music is due in large part to the millions of unsigned artists who have uploaded tracks to MySpace over the years. It’s a ton of music, but it’s provenance means the quality varies pretty widely. To beef up its musical arsenal even further, MySpace plans on investing at least $15 million in music licensing deals, provided it can win over new investors.
While MySpace has some built-in musical advantages, entering this space is still a risky move. Spotify and Pandora, streaming music’s dominant players, might have some impressive metrics to tout, but profit is not one of them. Even as subscriptions and ad revenue grow, these companies continue to struggle under the weight of enormous music licensing costs. MySpace is already floundering in the social networking market, even with its renewed focus on music. Is pivoting to another money-losing business really the wisest move?
Maybe, maybe not. At this point, this is probably the last, best shot MySpace has at returning to something resembling relevance. It’s worth a try.