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MySpace is set to launch a joint music venture with three of the major music labels, according to sources familiar with the deal.

Myspace Music Logo
(Photo Credit: Myspace)

The new venture will be called MySpace Music and will offer music streaming, MP3 downloads, concert tickets, ringtones and merchandise. It plans to be a major competitor to Apple's iTunes, which recently surpassed Wal-Mart to become the # 1 music retailer in the U.S. according to the NPD MusicWatch Survey.

On board for the joint music venture are Sony BMG, Warner Music Group, and Universal Music Group. Universal will receive a large cash payment for settling a 2006 copyright infringement case against the social networking site. SAI is reporting it could be as much as $100 million.

"It's really creating a robust monetization component to MySpace and having a focused music effort that could be the MTV of a new generation," a music industry executive who did not want to be identified before the deal was officially announced told Reuters.

It's not clear when a formal announcement will be made but sources say it could happen next week with an official launch in the mid to late summer of 2008.

The three labels will all get a minority stake in the venture, which MySpace will control and operate. The site will be ad supported with the labels receiving a share of ad revenue.

MySpace is currently one of the largest promoters of music online, with more than 68.6 million unique visitors in the U.S. in January, according to comScore.