Digital music will set the precedents for other content businesses to follow. The launch of MySpace Music last week with four key music labels?EMI, Universal, Sony and Warner?on board was yet another indication that the music business is going through an irreversible change. The ?Big Four?, as they are often referred to, control the distribution of a majority of the world?s music, and MySpace Music is the second site to stream their music for free, legally. Another social networking site around music?Imeem?had signed up with them last December, in exchange for equity.

Music labels have been fighting a losing battle against piracy for years now, first against the likes of file sharing services like Napster, and more recently against distributed peer to peer torrent services. One of the key issues around music online has been the implementation of digital rights management (DRM), which limits the number of copies that can be made of a particular song and often doesn?t allow users to transfer their music from one device to another?for example, from a PC to a CD or DVD, or a mobile handset. The music available illegally on the file sharing networks doesn?t have such restrictions, which has made illegal downloads even more popular. MySpace Music does offer music downloads for a price, much like Apple?s iTunes. Importantly, unlike in case of iTunes, MySpace Music offers tracks that are DRM free. However, that doesn?t mean that users switch from file sharing sites to a legal download model.

The other danger for labels: the ease of distribution over the Internet is such that established bands like Radiohead and Nine Inch Nails have chosen to release their own albums, bypassing the labels. According to some reports, despite allowing users to pay what they want for the album, the bands made more money than they would have with a label. If this grows as a trend, the labels will eventually be left with very little new content. At the same time, such is the popularity of sharing sites that even when Radiohead allowed users to pay whatever they wanted?including nothing?for their In Rainbows album, a fairly large number chose to download it via torrent sites.

The rampant distribution of music is being seen as a form of democratisation?over the years, the big labels have maintained a vice-like grip over the success of bands; the entire boy-band phenomenon of the late 1990s was an exercise in manufacturing success with complete control over production, distribution, image and media. So, what did bands that found it difficult to get label support do? They leveraged the Internet to garner a fan base?put out their albums for download on BitTorrent, launched their own websites so that fans could find them, and used social networking sites and sometimes even blogs to make themselves, and their music, accessible. MySpace played a key part in this growth.

The social element is key to music online. Sites like iLike and Last.fm, which CBS acquired for $280 million last year, allow users with similar music tastes to connect, and enable the discovery of new music. But it this element where MySpace has a significant lead?it has been ?home base? for bands, and a community around independent music. Bands, including those from India, have hosted their music, videos and photos on MySpace and interacted with their fan base on the site. This is exactly why much was expected of MySpace Music, and why the lack of a deal with independent labels which represent artists like Franz Ferdinand, the Arctic Monkeys and Bjork, is being seen as a cop-out by MySpace. The independent labels want a deal on equal terms as the big four. If MySpace loses the independent bands, they?ll lose their core constituency, and their soul.

The author is the editor of digital media analysis site MediaNama.com. He can be reached at: nikhil@medianama.com