MySpace launched in 2003 as a hip tool for LA’s music scene. It was a place for fans. They could find their favorite artists and discover new music. It also gave struggling bands a free place to promote their music and digitally mingle with fans. The idea quickly began to stick and by 2005 MySpace was on top of its game. It was MySpace that made headlines in 2005 when Murdoch acquired it for 580 million and it was MySpace that proved Social Networking could be a mass medium – attracting 50 million users. Facebook saw this potential and opened its doors to everyone, leaving the once coveted “college only crowd” behind.  Since May 2007 Facebook has increased worldwide visitors by 162%, MySpace only increased by 5% in that same timeframe. So how do they compete?

Instead of going after Goliath head on, MySpace is going back to its roots – music. It’s already a frequent sponsor of music events and has its own record label, so how can it play on this strength more? For starters, MySpace Records is more actively recruiting talent, they recently adding Christina Milian and Pennywise to their roster, and  they are partnering with a sponsor  for new album releases to give free album downloads to fans. The catch? Fans need to add the sponsor as a friend, but hey who can complain – it’s free music!

More interesting is their recent acquisition of the rights to millions of songs from the four major music labels — EMI, Sony BMG, Universal and Warner Music.  Enter MySpace Music. This initiative launched on September 24^th and allows users to stream tunes for free on the web and create playlists that can be shared with friends. All music is free of digital rights and is, naturally, sponsored by advertisers.  McDonald’s, Sony Pictures, State Farm, and Toyota have all signed on for sponsorships. MySpace isn’t the first to offer free streaming music, but with their vast following and robust community tools it’s pretty likely that they will quickly become the leaders in this space.

What I appreciate most about their model is how they work with advertisers to create programs that are relevant to this music crowd. Fast Company highlighted a few of these in last month’s issue, but in case you missed it here are a few of my favs: (1) McDonald’s held their “pick-the-next-jingle” contest on MySpace. The contest generated nearly 1 million page views in 3 weeks, pretty impressive.  (2) When Cartier wanted to reach the tech savvy crowd they partnered with MySpace to stream exclusive songs, by various artists. The songs were then available for free download from the Cartier site.  (3)Toyota is currently working with MySpace Music to sponsor “Toyota Tuesdays” which gives people free music downloads and, of course, throws the Toyota logo all over the place. I don’t have tons of numbers to back up the success of these campaigns, but I would assume they are doing pretty well – MySpace charges a premium and advertisers keep coming back so it seems to be working

As a side note – I found myself becoming more and more of a MySpace fan as I was researching this topic so kudos to them! Now if only I could get my friends to stop spamming me with these bulletins…