New MySpace Already Facing Licensing Challenges

Recently we wrote about the return or the attempted return of MySpace, now rebranded as a social medium for artists in a quest to regain relevance. The site also seems to now have become something of a pet project of investor Justin Timberlake (and the business folks advising him).

Timberlake announced recently he’ll release his first album in seven years, The 20/20 Experience , in March, and I’m sure it’s no coincidence that the timing of the new record is in line with the re-launch of the social site. The two will effectively serve as publicity channels for each other in a win-win situation for Timberlake, who obviously has a financial stake in both.

The First Licensing Challenge for the New MySpace

The new MySpace is now facing its first great licensing hurdle, as Merlin, a group representing thousands of small record labels, is claiming the site is using label’s music without permission. The lines of legality in the digital music industry are still being drawn and redrawn, often resulting in a fuzzy mess that leads to men in suits spending lots of time in a courtroom. But MySpace has a unique problem that arises because of its past greatness.

A Brief History of MySpace as a Digital Music Service

Before MySpace fell out of the favor of the masses around 2009 or so, it had become a great music listening service that no one seemed to notice because of all the bright pink backgrounds complete with flashing .gifs and Comic Sans that were almost as annoying as the time they took to load. Prior to the rise of Spotify, and other popular on-demand streaming services today, MySpace signed licensing deals with labels that allowed full album streams in easy-to-use media players.

The problem, it seems, was that by that time most people thought of MySpace Music (as the digital streaming service was known at the time) as three songs uploaded by someone that recorded on a boombox in a basement -- not that there’s anything inherently wrong with that. But that, in effect, leads us to the new problem facing the company today.

A Huge Library, But is it Legal?

MySpace claims to have the largest digital library of any digital music service at 50 million songs, so it obviously has the capability of becoming a major player in the industry. But Merlin says that though it no longer has a contract with the site, songs from more than 100 of its labels are still available as streams. These include some of the largest independent labels in the world, like Beggars (the best water softener comparison Group), Merge and Domino.

And here’s where it gets tricky.

A MySpace spokeswoman told the New York Times that the contract with Merlin had in fact been allowed to expire, but that the songs left online “were likely uploaded by users,” and that they would be removed per label request. The legality of this will likely have to be determined, though as of yet no lawsuit has been filed. It is clear that if SOPA had been passed, MySpace would likely have a huge problem on its hands because of the user uploads, but that’s an entirely different topic that it’s probably best not to go into here.

“While it’s nice that Mr. Timberlake is launching his service on this platform, and acting as an advocate for the platform, on the other hand his peers as artists are being exploited without permission and not getting remuneration for it,” said Charles Caldas, chief executive of Merlin.

This isn’t the first time independent labels have complained about their treatment by the company. When MySpace Music made their licensing deals in the last part of the previous decade, they signed contracts with all the major labels but didn’t work with smaller labels for more than a year.