Less than one week after opening up its new design to the public, Myspace found itself in hot water with the community it’s most actively trying to court — indie artists.
Merlin, a global rights agency that represents thousands of independent labels, voiced a complaint to Myspace via the New York Times that the company’s songs were being uploaded illegally onto the site after Myspace failed to renew its licensing deal with Merlin in December 2011. Merlin’s portfolio includes indie heavy-hitters like Beggars Group (The xx, Vampire Weekend, The National), Merge (Arcade Fire, She & Him), Epitaph (Bad Religion, Tom Waits), Domino (Animal Collective, Arctic Monkeys) and Warp (Grizzly Bear, Boards of Canada.)
“With our members’ repertoire freely available across the service, but without the permission of the artists and without any renumeration, Myspace are openly infringing abusing rights of Merlin’s member labels and artists,” Merlin’s chief executive Charles Caldas told Billboard in an e-mail.

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The issue was further addressed at a MIDEM press conference on Monday in which a panel of independent music executives expressed further concerns about Myspace’s claim that uploading music for free provides “promotional value” for artists. Alison Wenham, chairman of the Worldwide Independent Network and the Association Independent Music, noted that Myspace Music has a reported 40% ownership stake from the major labels and said, “I am sick and tired of seeing services come to market that do deals with the majors [and then] come to the independent sector afterwards and seem to expect that we will expect second-class treatment or live off something called ‘optional value.’ This has to come to an end and this has to come to an end here and now. It affects all of us, not just the record companies worldwide. We must represent 25,000 companies across the world and they deserve to be treated better than this.”
Although the size of Merlin’s catalog is relatively small (1.5 million tracks compared to Myspace’s catalog of 50 million), the company’s clients represented about 10.5% of all digital streaming activity according to a 2011 report.
Simon Wheeler, director of digital at Beggars Group, dispatched the company’s artists and their teams to have Myspace remove tracks from their pages the morning after the New York Times’ story hit. Within hours, artist pages for Beggars Group acts like Cat Power, Vampire Weekend, The XX and Pavement were wiped clean of any music affiliated with their main labels, save for stray compilation tracks from pre-existing Myspace deals. “I just hate spending huge amounts of time working on cleaning up other peoples messes,” Wheeler told Billboard. “And certainly not when we’re not going to get any money out of it.”

Beggars Group founder Martin Mills, who was honored with Billboard's Icon Award in a ceremony yesterday, was at the press conference, although he left early “to meet Google,” he said with a laugh.
Myspace’s relationships with other indies tends to vary. Carpark, home to Cloud Nothings, Class Actress and Young Magic, appears to have yanked its artists from the site even as fellow signee Toro Y Moi has just released a new album. Mom + Pop, however, formally partnered with the site to promote a new release from Fidlar and Glassnote’s Mumford & Sons’ “I Will Wait” was among the sites’ most-streamed songs.
Of the latter, Glassnote founder Daniel Glass said at the MIDEM press conference that he hoped the issue would have been resolved within 12 hours of the Times story’s publication but was instead shocked by Myspace’s “sense of arrogance” around compensating artists for their streaming activity. "Starting Tuesday, he added, he will be discussing the issue with Mumford & Sons' management to discuss the option of removing Mumford music from Myspace."
Mumford became unofficial poster children for streaming sites’ impact on record sales after “Babel” sold 600,000 copies its first week out even with widespread availability on services likes Spotify. The issue was later referenced when Big Machine refused to stream Taylor Swift’s “Red” on Spotify in part because it was unable to reach a custom deal to better compensate its artists. “The controversy was that it didn’t hurt us, it actually was fine,” Glass said of Spotify. “It was a huge form of exposure. I’m enjoying this new streaming income. You have to explain to artists that there is a new wave of income coming in.”
The attention to indies also arrived at a time when Myspace was shining a spotlight on its celebrity creative director, Justin Timberlake, whose new single “Suit & Tie” not-so-coincidentally debuted at the same time of the site’s open beta. Having new content from Timberlake should help bring additional eyeballs back to the site, whose traffic has stabilized in recent months. Myspace attracted 27.4 million unique users in December 2012, according to Comscore — that’s up from 26 million in September but still nearly half of the audience that was still coming to the site in the pre-News Corp. spinoff period.
Still, argues Merlin’s Calder as well as AIM's Wenham, no streaming music site has ever survived without the involvement of the middle-to-upper-tier independent labels — case in point, Mog, which didn’t have a deal with Merlin and was recently sold to Beats Electronics and tentatively rebranded as “Daisy.” Spotify, meanwhile, has successfully acquired 5 million paid subscribers “because it has all the repertoire – you won’t find holes,” Wenham said. “The first thing to weaken a service, from a consumer perspective, if if you don’t have everything you’re going to have nothing very soon. If you do business honorably you actually create a successful revenue stream. You can’t abuse copyrights using weak arguments like safe harbor and DMCA [Digital Millennium Copyright Act] — it just doesn’t work."

Executives for both Merlin and Myspace confirmed that the companies are in talks to renew their licensing deal. “Myspace is completely dedicated to artists, protecting their rights, valuing their work and helping them succeed,” says a Myspace spokesperson. “We have an artist running things at the helm, we have an artist on our day-to-day management [Kenna], we released the platform to artists first, we actively get feedback on the platform from artists directly and often prioritize their feedback above everything else – our commitment on this front is very real.”