Labels dissatisfied with MySpace Music performance

Some of the record labels have complained that MySpace Music isn't generating the kind of income they expected.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read

The good news for MySpace Music is that its record label backers are pleased with the traffic the site is attracting. The bad news is that the 8-month-old service has yet to turn that big audience into big dollars.

Some of the record labels have told Courtney Holt, MySpace Music president, they are disappointed with MySpace Music's revenue. MySpace

At a MySpace Music board meeting last month, the company's CEO, Courtney Holt, got an earful from several music label representatives, according to multiple music industry sources. "Several key players were unhappy" with how MySpace Music was performing, said a source with knowledge of the talks. Some board members want MySpace Music, the joint venture formed by the four largest recording companies and News Corp., to make changes such as boost sales conversions and do more to integrate the service with the regular MySpace site, the sources said.

The meeting was designed to provide "open dialogue" and "constructive feedback" from the board to the service's managers, said a source. But another source described parts of the discussions as "tense." On Wednesday morning, a MySpace Music spokeswoman declined to comment.

MySpace Music represents the largest attempt so far to wed social networking to music. Some in the recording industry argue that MySpace and Facebook are choice areas for promoting artists and songs and MySpace has long been a place where bands showcased their songs. With Apple dominating online music retail, MySpace Music is seen as a potential new opportunity to generate sales.

At the very least, MySpace Music's sluggish performance illustrates how difficult that task is. Music consumption on the Web has really come down to two horses: iTunes and illegal peer-to-peer sites.

During the meeting, Holt conceded MySpace Music needed improving, according to the sources who spoke with CNET News. Board members understand that MySpace Music was launched only last September and that Holt, a former MTV executive, was named the site's president just five months ago. He impressed some of those present by promising that he and his staff are ready to make improvements, a source said.

One source said that all the labels appear "very confident" in Holt and "nobody is panicking."

The labels have been spurring Web music services to start generating profits. The record companies say they have offered price breaks and other concessions to help start-ups build audiences but they won't offer these forever.

The labels are telling companies that they want to see results sooner rather than later.