April 3 (Bloomberg) -- MySpace, News Corp.'s social- networking Web site, will sell music and concert tickets to prop up revenue as user growth lags behind its rivals.

MySpace Music will be co-owned with the world's largest record companies, the Beverly Hills, California-based unit said in a statement today. Terms of the agreement with Vivendi SA's Universal Music Group, Sony BMG Music Entertainment and Warner Music Group Corp. weren't disclosed.

MySpace is taking on the largest digital-music retailer, Apple Inc.'s iTunes, as its lead over social-networking competitor Facebook Inc. shrinks, according to researcher ComScore Inc. Google Inc. in January reported disappointing revenue from advertisements it sells on MySpace. The new site may reduce record companies' reliance on Apple for online sales.

``It's good news to both the industry and the customers that there's some potentially viable competition to the iTunes store,'' said David Card, an analyst with JupiterResearch in New York. ``The question is, can they turn on enough revenue models to keep all the partner companies happy.''

News Corp. Class A shares, down 4.2 percent this year, rose 4 cents to $19.63 at 4:15 p.m. in New York Stock Exchange composite trading. Facebook, based in Palo Alto, California, is closely held.

Tickets, Ring Tones

MySpace will share revenue from sponsorships, sales of concert tickets, cell phone ring tones, music and merchandise with record labels and musicians, Chief Executive Officer Chris DeWolfe said on a conference call. The music site has 30 million users and more than 5 million profile pages of artists, he said.

``If you think about MTV and when Apple launched iTunes, this has the same potential,'' Amit Kapur, MySpace's chief operating officer, said in an interview today. ``Music is such a strong cultural vehicle, it makes it so incredibly appealing to brands. It's hot. It's sexy.''

By selling concert tickets, MySpace also pits itself against IAC/InterActiveCorp's Ticketmaster, the world's top ticket broker, and Live Nation Inc., the biggest concert promoter. Live Nation is expanding into ticket sales and has struck agreements with U2 for tours and merchandise and with Madonna for albums as well. The New York Times reported today that a deal with rapper Jay-Z, whose real name is Shawn Carter, is close.

New features will be introduced in the next three to four months in the U.S., and overseas later, DeWolfe said. Some of the songs will be downloadable to iPods and prices will be ``very competitive.''

`Fall of the CD'

MySpace's January user growth of 15 percent from a year earlier to 109.3 million, trailed Facebook's fourfold increase to 100.7 million, according to Reston, Virginia-based ComScore.

Both companies seek out advertisers eager to target Web users based on their age, location and hobbies. Ad spending on social networks in the U.S. may jump to $2.7 billion by 2011, according to EMarketer Inc. in New York.

Google is seeking to improve its advertising effectiveness on MySpace, after agreeing in 2006 to pay the site at least $900 million over three years.

Competitors in selling music include Amazon.com Inc., which sells downloads, and CBS Corp.'s Last.fm, which is mostly a streaming service.

``This combines the social-networking component of MySpace with access to music across multiple formats,'' said Thomas Hesse, president of global digital business and U.S. sales for New York-based Sony BMG. ``It will definitely grow the digital business overall.''

Record companies are seeking to increase their sales from downloads and mobile ringtones as compact disc revenue declines. Through March 23, sales of CD albums had fallen 16 percent this year, while sales of digital albums rose 36 percent, according to Nielsen SoundScan. CDs account for about 85 percent of overall album sales.

``There's nothing that will overcome the fall of the CD,'' said James McQuivey, an analyst with Forrester Research in Cambridge, Massachusetts. ``But it will provide a significant lift.''

To contact the reporters on this story: Gillian Wee in New York at gwee3@bloomberg.net; Don Jeffrey in New York at djeffrey1@bloomberg.net.

Last Updated: April 3, 2008 16:22 EDT