At the Family Force 5 concert tonight, the lead singer of the warm-up band The Maine said to the thousands of kids in attendance, “This next song is ‘Count em one two three’, and it’s out on MySpace.”

The significance of John O’Callaghan’s statement is astonishing, especially in light of the official announcement today of the formation of MySpace Music. MySpace, the social networking site that boasts 30 million registered users, has formed a joint venture with Universal Music Group, Sony BMG, and Warner Music Group to make their entire digital music catalogs available for downloading and listening at a new site, which will be introduced later this year. (WSJ, NYT)

EMI, the fourth major label, is not taking part in MySpace Music yet but is expected to at some point. (Previous last100 post.)

MySpace Music will offer paid-for, DRM-free MP3 downloads (no details on pricing or quality), ad-supported music and video streaming, ringtones for cell phones, concert ticket sales, and merchandise. When it’s up and running, MySpace Music will be a direct competitor to iTunes, now the No. 1 music retailer in the U.S., as well as other online music stores such as AmazonMP3.

Analysts are noting that MySpace Music is a step in the right direction for music companies, but that “Apple will not be affected for the first few years because Apple’s iTunes store lives on the strength of Apple devices,” Forrester Research analyst James McQuivey told Reuters.

That may be true. For now. But do not underestimate the influence of MySpace on bands and their fans.

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Here is a stat I thought I would see one day, I just wasn’t sure when. Paid downloads accounted for almost 30 percent of all music sold in January, bringing even closer the day when the sale of digital music outpaces the physical product.

Here is another stat I thought I would see, I just wasn’t sure when. Apple’s iTunes Store has surpassed Wal-Mart as the No. 1 music retailer in the U.S., according to the NPD MusicWatch Survey (via Ars Technica).

Pretty amazing, considering iTunes opened for business almost five years ago (April 18, 2003). MP3.com, Cductive, eMusic, and others, were attempting to sell digital downloads before Apple, but it was the arrival of iTunes — in conjunction with the sale of iPods to Mac and Windows users — that legitimized online music.

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In our recent Year in review (2007) for digital music, we predicted that the idea of a music flat-rate or so-called music “tax” would be one model that will be pushed hard by the major record labels in 2008. The idea:

Charge the customers of ISPs, cellphone carriers or even device manufacturers a flat-rate fee as part of their data service plan or purchase, in exchange for the right to access and possibly share music from the major record labels’ catalogs. That way, downloading is decriminalized and the recording industry is guaranteed revenue.

Of all the four major labels – Universal Music, Sony BMG, Warner, and EMI – Universal, publicly at least, has been most committed to the idea. First, by touting its own Total Music plan, and then through announcing a partnership with Nokia as part of the handset maker’s “Comes With Music” offering.

Now it seems that Warner Music has been handed the flat-rate baton. Continue reading »