• Advertising Age, Tuesday, September 16, 2008 11:02 AM

Can advertisers underwrite the music industry? That is the $2 billion question facing MySpace Music, as News Corp. and three of the four major record labels prepare to launch their new joint venture later this month. They've certainly lined up some major advertisers for launch, including McDonald's, State Farm and Toyota.

Of course, advertising isn't the only revenue stream for MySpace Music; sponsorship, paid downloads and concert tickets and merchandise sales are the others. Jeff Berman, MySpace president of sales and marketing, says not to expect traditional banner ads from MySpace Music. "Part of [advertisers'] brand promise is to provide new value," Berman said, which could include free sponsored downloads or sponsored "infinite playlists," which are created and distributed by users.

Ad-supported music ventures have flopped in the past, most notably Napster, Qtrax and SpiralFrog. These companies have failed to generate a large enough audience to effectively sell advertising against. The difference is MySpace Music comes with a built-in audience of 100 million-plus (though in truth, only about 35 million regularly use MySpace Music).

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