MySpace Music Already Has Revenue Locked, May Raise Outside Capital At $2 Billion Valuation

Get ready for MySpace Music, because you are going to be hearing a lot about it over the next couple of weeks as it prepares for launch.

The new joint venture, which tosses music rights from the big labels together with the existing MySpace Music property and users, is announcing a number of launch advertising partners this afternoon, including McDonalds, Sony Pictures, State Farm and Toyota. Each of these ad campaigns are rumored to be in the single or double digit millions of dollars.

But the big news is that MySpace Music has also been having exploratory meetings with private equity shops around a huge venture capital raise, say sources with knowledge of the process. The company is said to be considering a raise of well over $100 million, at a valuation of $2 billion or more. The money is there for the taking, we’ve heard, although the valuation is still up for negotiation.

Hulu, a TV and film joint venture between MySpace parent company News Corp. and NBC, raised $100 million at a $1 billion valuation in August 2007 from Providence Equity Partners, a Rhode Island based private equity firm.

We’ve confirmed that Providence Equity Partners is one firm that has expressed interest in investing in MySpace Music as well.

That joint venture plus a big capital raise worked out well for Hulu and News Corp., so it makes sense that they’d be looking to duplicate the process with MySpace Music. Our sources say no deal is imminent, however. At the very least investors may want to see a CEO in place before they put that kind of money into the venture.

I interviewed MySpace CEO Chris DeWolfe on a wide range of topics last week at TechCrunch50. Skip to 7:24 to hear just the discussion around MySpace Music: