Tunesmiths

Apple Inc. and its popular iTunes music service has a formidable new competitor: MySpace Music.

The ambitious service is a joint venture linking social network MySpace Inc., a division of New York-based News Corp., and the four major music labels -- EMI Group plc, Warner Music Group Corp., Sony BMG Music Entertainment and Universal Music Group -- as well as a number of independent labels. MySpace Music gives users free access to a massive catalog of songs, letting anyone with a MySpace profile create custom playlists.

Whether MySpace Music can sell enough advertising at high enough rates to prove itself worthwhile for the labels is another matter, and its future as a retailer is uncertain. Here's a breakdown of how MySpace Music will shake up the digital music landscape:

Paid download sales. MySpace Music takes aim at Apple's iTunes store, the No. 1 retailer of music in the U.S., although it doesn't operate its own standalone store. Amazon.com Inc., which opened a restriction-free MP3 store less than a year ago, will handle the back-end retail operations for MySpace Music, which may result in a high affiliate fee that cuts into already meager profits. Although the MySpace Music-Amazon retail channel lacks iTunes' convenient synchronization with iPods, its song files can be played on Apple hardware or any other digital music player.

Subscription services. MySpace Music will offer free access to streaming music from a huge library of songs, similar to that offered by RealNetworks Inc.'s market-leading Rhapsody service. Customers currently pay $12.99 per month to rent music via Rhapsody's streaming service, or $14.99 for a "to-go" plan that allows them to load songs onto an MP3 player. The former is largely obviated by MySpace Music's free alternative; the latter retains some value, since MySpace Music does not provide free downloads for portable devices. Rhapsody rival Napster Inc., which offered similar pricing plans, was acquired by Best Buy Co. earlier this month.

Free on-demand streaming. A variety of services, including startups Imeem Inc. and iLike Inc., as well as CBS Corp.-owned Last.fm Ltd., allow users to search for free songs and listen to them in players or "widgets," on social networks and inside or outside a Web browser. MySpace Music will compete with all of them and is sure to capture many new users unfamiliar with such music services.

MySpace Music is likely to appeal to mainstream users, although it still lacks a number of key features. The closely integrated artist pages, user profiles and playlists offer news feeds about friends' tastes, but MySpace Music lacks a true recommendation engine. It also doesn't provide a widget-based distribution system, keeping users on the MySpace site (the better to serve them with more advertising).

Moreover, the conspicuous lack of key indie-label material could provoke a backlash. Merlin, a trade group that represents independent music providers, has already called it "incredibly disappointing" that the site was launched without more indie content.

MySpace Music's strategic direction will depend on who takes the reins as CEO of the joint venture. To date, the recruiting hasn't gone well, and MySpace temporarily gave up on finding a new leader a few weeks ago in order to focus on getting the service off the ground. More names have surfaced as candidates, including Owen Van Natta, late of Amazon and Facebook Inc., and Andy Schuon, the former leader of failed music joint venture PressPlay, but no one has yet committed to the gig.

Still, MySpace Music is likely to be a force in the mainstream music market, and it's hard to imagine it being a total bust. MySpace still has many millions of daily active users, and while Facebook has stolen much of the limelight in recent years, the rival social network has yet to prove itself as a comprehensive music destination.