Music companies hope the service, which weaves music through the increasingly popular world of online social networking, will weaken Apple’s dominant grip on the digital music business while helping to recoup revenue lost in the last few years as CD sales have suffered annual declines of 10 to 20 percent.  Greg Scholl, chief executive of the Orchard, the largest distributor of digital music from independent labels, says a music business based on advertising “could well dwarf today’s $30 billion global recorded music industry.”  Mr. Scholl’s endorsement is something of a coup for the service. He questioned the effort in a public e-mail message to independent labels when it was first announced. But the Orchard is now set to make its catalog of more than a million songs available to the site.  After learning more about the venture, Mr. Scholl said, he decided that MySpace would compensate artists fairly and that free ad-supported music represented the industry’s only practical future. “MySpace Music represents the first credible, large-scale initiative in this direction,” he said.  When it is introduced, most likely by the end of the month, the service will have several million songs, all ready for instantaneous streaming. Users will be able to assemble private playlists of hundreds of songs, which they can string together to perk up a party or ease the monotony of their workday. They will also be able to post one of those playlists, with 10 songs, to their public MySpace profiles, where their friends can listen and save those songs to their own pages.  To transfer the music to another computer or a mobile device like an iPod, visitors will have to buy songs on the site through Amazon.com’s digital music store. Cellphone ring tones will be for sale through Jamster, another unit of the News Corporation.  Around five million artists use MySpace to interact with fans, and MySpace Music will change life for them as well. Now, those artists can post up to six songs on their pages. In the revamped site, they will be able to post their entire catalogs and share in the resulting advertising and download revenue. Sony Pictures, McDonald’s, State Farm and Toyota Motor will be among the first sponsors of the site.  “What we are really doing is creating an economy for all musical artists,” said Chris DeWolfe, MySpace’s chief executive.  Free online music streaming is not exactly new to the Web. Imeem, a four-year-old San Francisco start-up company, and Last.fm, owned by CBS Interactive, offer services with much of the same music from major labels and independent artists.  Dalton Caldwell, chief executive of Imeem, said that MySpace has struggled in the past to create services that can take on established leaders. The MySpaceTV site, for example, has failed to dethrone YouTube in online video. Even with its enormous traffic, he said, “they haven’t successfully created homegrown services that can beat competitive threats.”  But executives at the major labels say MySpace Music offers a larger stage and bigger financial opportunity than many existing music sites. Despite recent incursions by Facebook, which now has more members worldwide, MySpace still has 120 million users around the globe and a larger audience than Facebook in the United States, many of whom already use the site to discover and share new music.  The path to MySpace Music has been a painful one for the music industry. Five years ago, various labels and industry groups sued MP3.com, an early service that permitted people to stream any song free as long as they could demonstrate that they had a copy of the CD. MP3.com lost the lawsuit and closed its service.  But the music industry’s victory was pyrrhic. CD sales have plunged since then, and Apple has come to rule the world of digital music with its iTunes store and the iPod. And activity on file-sharing services continues to thrive.  “To the average consumer, music is already free,” said Rich Greenfield, an analyst at Pali Research. MySpace Music, he said, “is the labels now acquiescing to that fact.”  They are also trying to profit from it. People familiar with the arrangement between the News Corporation and the studios say that the labels own about a 40 percent stake in the new venture, with Universal Music, the largest label, owning the biggest share. That would give the music companies a direct interest in MySpace Music’s success. People briefed on the deals say they have given MySpace favorable terms — and waived the penny-a-play fee that is charged to other streaming music sites. MySpace would not comment on terms of the deals with the record labels.  MySpace says it eventually will let artists sell merchandise and concert tickets from their pages and keep a share in the profit. Over the longer term, label executives say, they will add exclusive content like new songs and videos to MySpace Music and offer deals to encourage customers to download albums and collections of music.  “This is something we should have done earlier,” said Rio Caraeff, executive vice president for the digital division at the Universal Music Group. “It’s kind of like a staging ground for us to experiment with new business models.”  There is one more hurdle the new venture must clear: finding a chief executive. Mr. DeWolfe and Amit Kapur, MySpace’s chief operating officer, have run the joint venture until now, but they are now searching for a chief executive. Mr. DeWolfe says the new company will have 70 employees and will soon move to separate offices near the MySpace headquarters in Beverly Hills, Calif.  A version of this article appears in print on , on Page C2 of the New York edition with the headline: A Jukebox on MySpace That Takes Aim at Apple. Order Reprints| Today's Paper|Subscribe
In the next two weeks, a battered music industry, facing slumping CD sales and a bleak future, will help to introduce a new service, called MySpace Music.