Why On Earth Does Rupert Murdoch Think Beyond Oblivion Is Going to Kill Spotify?

He whips his hair back and forth, he whips his hair back and forth.

Despite an already crowded marketplace for cloud jukebox services like Spotify and Rhapsody, not to mention streaming radio services (Pandora and the upcoming iTunes Match), the Financial Times reports that a New York start-up called Beyond Oblivion plans to launch an unlimited music service later this year, under the unfortunately-named brand Boinc (Beyond Oblivion’s initials + Inc.). How does one pronounce that exactly? Boink? Beau-ink?

Beyond Oblivion will be selling its cloud-based library of millions of songs by bundling it with the cost of a smartphone or PC. Users get free streaming music for the life of their device, with an extra $50 to $70 per device naked into the purchase price. The idea is to mitigate revenues lost to illegal downloads. However, and this is a very big but, when Nokia tried to do pretty much the same thing with its Comes with Music service, the company was forced to scrap the effort after two years due to limited success.

The start-up picked up $77 million from an investment round back in March that included Rupert Murdoch’s media conglomerate and Wellcome Trust. That’s on top of a $10 million round for Allen & Company and Intertrust Technologies, a joint venture between Sony and Philips.

According to the Financial Times, Beyond Oblivion has been in negotiations with the four largest record labels for the past year and a half and is now seeking additional funds to put towards upfront payments needed to get access to the labels’ catalogs.

As The Register reports, Beyond Oblivion doesn’t seem to be worried about Spotify’s popularity with consumers–or the competition:

“Like Comes With Music, the licence grants access to a large music library for the “lifetime” of a device. And like the doomed Nokia service, it relies on DRM. But unlike Comes With Music, Beyond Oblivion will bundle the offering with any kind of participating device, as long as someone in the retail chain is willing to sign up, and also offer it as a standalone subscription service via an iOS Android or Windows Phone app, or a client for Mac or Windows. It is also happy to leave branding to retailers or device manufacturers.

The FT has some interesting figures. As is the customary practice, large record labels have demanded (and received) large up-front payments: 40 per cent, apparently. The labels have also secured a minimum 70 per cent of total annual revenue in royalties. Boinc has secured a royalty ceiling of 92 per cent. That doesn’t leave a lot to market and operate the service. Or, more importantly, much of an incentive for other investors to think, “What a brilliant idea, maybe we could do this even better.”

We guess the Daily hasn’t exhausted Uncle Rupert’s patience, because apparently he isn’t worried about having another MySpace on his hands.

Why On Earth Does Rupert Murdoch Think Beyond Oblivion Is Going to Kill Spotify?