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The crowd is king

It will be interesting to see how the major music labels react to the news that MySpace will open a music store for its members. A MySpace page has become de rigeur for everyone in the biz, from experimentalrock heroes to alt-countrycult figures. The lauded and the lampooned are there too—and don’tforgettheKiwis.

Apple’s iTunes has had the online music scene pretty much to itself, but Rupert Murdoch may soon be a player (MySpace is owned by Murdoch’s Fox). The twist? The MySpace store will sell tracks from unsigned artists, without any digital rights management. DRM is both a requirement of the labels and a major annoyance to many potential music consumers. By doing without DRM, Murdoch takes the high ground with consumers and pointedly says he’s not interested in doing business with the middlemen—the labels.

As music columnist Andrew Dubber asks in the current issue of Idealog, why would bands want to sign with a label now when they can do their own recording and distribution and keep the commission? If even big-name artists now decide they don’t need a label anymore perhaps they’ll bypass iTunes and go straight to the arms of Murdoch.

MySpace has turned out to be a remarkably savvy purchase. Murdoch stunned many last year when he bought the social networking site for US$580 million, but already in 2006 he’s signed a US$900 million deal to use Google’s search and advertising tools and now he’s leveraging himself into a key role in the online music biz.

There are so many ironies in this it’s difficult to know where to start. Remember the mantra that ’content is king’? Murdoch made his fortune selling content, from The Sun to The Simpsons. Now it’s all about user-generated content and Murdoch owns the platform.

Microsoft is pursuing a similar strategy. In 2000 the software giant needed a big-ticket game for its soon-to-be-launched Xbox console, so it bought Bungie Studios, a small developer preparing a game called Halo. Halo went on to sell over six million copies. In 2006 Microsoft is turning to user-generated content instead: last month it announced it will make its game development kit available free of charge so anyone can create their own games. For US$99, wannabe game developers will be able to run their games on the Xbox 360 and share them with others over the Xbox Live network. No doubt we’ll see some brilliant new games emerge and, again, Microsoft will own the platform.

It’s easy to see this as bad old Big Business forcing its way into a new market, but everyone has an opportunity to use these platforms. Content is still king but now we’re all kingmakers.