The ambitious service, slated to roll out over the next several months, will offer free, ad-supported streaming audio and video files, DRM-free MP3 downloads, and ringtones, along with a host of e-commerce offerings from brand merchandise to tickets.

"We're going from a promotional vehicle to a commercial vehicle," MySpace CEO Chris DeWolfe said during a press call.

MySpace Music will span the entire MySpace network, including its Music home page, artist profile pages, and individual member profiles. Members will be able to personalize their music content, create playlists, stream songs from their profiles, and link to the work of favorite artists.

According to DeWolfe, MySpace is perfectly situated at the heart of today's highly distributed and community-focused music culture.

"MySpace is in an incredible market position," DeWolfe said. "We're starting with a big, big advantage."

Indeed, of MySpace's 110 million active users, DeWolfe said 30 million are regular music listeners. What's more, the site is presently home to some 5 million bands.

The new service presents a huge threat to Apple's iTunes music store, which has until now dominated digital download sales with 19% of U.S. sales, according to Ars Technica.

MySpace Music will exist as a stand-alone business with a separate management team, which has yet to be named. The service's mobile storefront will be powered by Jamba, which is owned by MySpace sister company Fox Mobile Entertainment.

The three major music labels each have an equity stake in the new joint venture, along with a share of all revenues derived from the service. Financial details were not disclosed.

Amit Kapur, chief operating officer at MySpace, said Thursday the service's real monetization potential has yet to be realized. "One of the real keys is we have hundreds of people devoted to ad sales and ad technology," Kapur said.

EMI, which is undergoing a major shift in management, is noticeably absent from the partnership. Per a deal with EMI, DeWolfe would only say, "We'd like to do business with everybody."

Separately on Thursday, MySpace said it agreed to settle a lawsuit brought by Universal Music Group. The record label had accused MySpace of copyright infringement because some members of its community had uploaded Universal clips to their profile pages.

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