MySpace steps into the Music game, It’s official. MySpace has settled the pending litigation Universal Music. As part of the settlement ,They will create a new MySpace Music joint venture, with equity stakes from all the major labels (except EMI, which is still holding out in negotiations). The newly created company will own the MySpace music property, get a cash infusion of $120 million or so from parent company News Corp, and distribute that $120 million to Sony BMG, Universal Music Group and Warner Music Group. In return, the litigation will be dropped and the labels will give streaming and downloading rights to their catalog to the new entity. Approximately $100 million of the News Corp. capital will go to Universal; the rest will go to Sony BMG and Warner.

It is said that users can expect to be able to stream music on demand, create custom playlists, and add widget music players to their profiles. The streaming will be advertising supported via display ads similar to Imeem. DRM-free downloads will also be available, either advertising supported or on a pay basis like Amazon’s Music Store.
Advertising revenue will be split among the joint venture partners according to their equity stakes, not based on play counts. No word on how much they will charge for downloads. Do you think they will give iTunes some competition since myspace can easily leverage their social network audience into a MySpace music buying audience.