Two major music labels are close to signing a deal for the rumored MySpace Music online store, say sources talking to the New York Post. Both Sony BMG and Warner Music are reportedly near the end of talks that would make their catalogs available the service, which is still expected to offer paid MP3 downloads as well as ad-subsidized free streams of music and videos. The feature is also now said to have downloadable ringtones through a deal with News Corp.-owned (and MySpace sister company) Jamba.

The deal would also adopt an unusual compensation format which would offer Sony, Warner, and any other label a share in the venture dictated by their existing marketshare outside of MySpace; whether this will change depending on overall sales success is unclear. Other labels are not known to have signed on and may see Universal excluded from any initial launch due to an ongoing copyright infringement lawsuit filed against MySpace.

While none of the involved parties have been willing to comment, their move is believed in part to be an attempt to create a viable alternative to iTunes and its near-dominance of US music sales, coming second only to Wal-Mart. Sony and Warner have both followed similar practices in the past by offering unprotected music to Amazon, consciously excluding Apple's store from their offerings.