On demand streaming music is a poor business for a lot of reasons -- mostly because it's not portable, and people generally like to collect music. Rhapsody is the largest player in the space, and they're not having success. Their 2007 numbers show almost flat growth despite the merger with MTV, and additional distribution relationships.
No matter what the product looks like, it's still uncertain MySpace can monetize it effectively. The reason is mostly because there’s little demand for advertising on MySpace. Advertisers are shy about appearing in the pages next to content that is often inflammatory, inappropriate, or just plain stupid. Add to that the enormous glut of inventory (2.4 trillion impressions!) and the net result is lots of traffic that can’t be monetized.
Adding music will only create additional inventory and traffic that can't be monetized. In the end, MySpace will end up eating the cost of the music licenses.
Read the excellent analysis at http://www.BroodingSavage.com
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