Snocap Inc., a San Francisco company that sells digital licensing and copyright management services, would provide the technology behind the service, which is expected to be broadly available by the end of the year. Snocap was co-founded by Shawn Fanning, who launched the Napster file-sharing network in 1999.
Before the deal, MySpace was solely a promoter of music and artists based on the interests of the community. With Snocap, the site moves toward becoming a retailer, albeit one still closely tied to what its subscribers want.
"This is just the first step," Amit Kapur, director of business development for MySpace, said. In the future, the site could offer concert tickets, merchandise associated with artists and more.
"This has the potential of being a very big revenue driver," Kapur said.
In the short term, however, online advertising is expected to bring in the big bucks. Google last month agreed to pay MySpace parent News Corp. $900 million over three years to be the exclusive provider of text advertising for the site.
MySpace, started in 2004 and bought last year by Rupert Murdoch's Fox Interactive Media Inc., plans to provide the tools for artists to sell tunes from their profile pages. They would also be able to distribute the HTML code needed for fans to build into their pages a digital storefront for the artists. Pricing would be set be artists, and MySpace would enable them to collect payments through credit card or PayPal.
The service is more likely to appeal to unsigned artists than to record labels, given that songs would be distributed in MP3 format without the copyright protection technology found in music purchased through Apple Computer's iTunes, or Microsoft's Windows Media Player.
Because the MP3 format is not tied to a DRM system, it can be played in any portable music player, giving independent artists the maximum amount of exposure. Major record labels, however, demand DRM technology in order to control as much as possible the distribution of copyrighted material of established artists.
MySpace is in talks with record companies on possible DRM technology that could be integrated into the Snocap platform, Kapur said. "We're working very closely with them to see what works and how to integrate it with the Snocap service."
As a social network, Los Angeles-based MySpace appeals mostly to teenagers and young adults, who are among the biggest buyers of music. Musicians, particularly independent bands, have long used MySpace as a way to build a following.
MySpace in May was the largest social network on the Web with 51.4 million unique visitors, according to ComScore Networks. The site claims to have more than 100 million members.