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MySpace Music Is Anti-Competitive, Indies Say, Seeking Equity Stake

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Merlin, the new “fifth major” label representing independents with nine percent of US digital music sales, has blasted MySpace Music for allowing the Big Four to profit at indies’ expense.

SEE ALSO: @ EconMusic: Billy Bragg On Social Media: ‘Everyone’s Making A Shitload Of Money Except Us’

The site, which launched this week, is a JV with EMI, Universal, WMG and Sony (NYSE: SNE) in which the majors earn advertising revenue based on their equity stake. But the site launched without repertoire from Merlin members like Beggars Group and Domino, representing the likes of Franz Ferdinand and The Kills.

Merlin CEO Charles Caldas: “Any independent deal struck without an equity component (as was done with the majors), will see independent labels face a situation whereby their major competitors will profit from the use of their repertoire, without an appropriate upside opportunity being extended to them.

“Whilst Merlin continues our negotiations, we remain extremely concerned that with MySpace Music the major record labels are acting not only as competitors, but through their equity stakes in the venture, as the clients/end user as well. Without an equitable participation by independents, that creates a situation that is both unhealthy and dangerous. It certainly makes Chris DeWolfe’s public statements, that the ‘indie bands are really the heart of MySpace’ ring extremely hollow.”

As it stands, it seems Merlin members will get their share of song royalties but not advertising revenue, which will be split between the majors and News Corp (NYSE: NWS). Chris Dewolffe in April told Wired: “We’re open to extending our equity deals to the right partners, but at a certain point, you can’t extend equity to everyone.” Merlin said negotiations continue.

Sep 26, 2008 2:42 AM ET

Posted In: Entertainment, Music, Companies, News Corp., Fox, Fox Interactive Media, MySpace, myspace music

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