Three music labels have signed deals with MySpace in an attempt to reduce piracy and create new revenue streams.

From the Washington Post:

MySpace, the nation’s largest online social network, announced today that it is joining with the nation’s top three music labels to create a service offering free music streams and paid downloads for its millions of members.

The joint venture will build upon already strong music-sharing aspects of MySpace to create an online destination where users could not only recommend and discover favorites with one another, but also sample or purchase songs and buy concert tickets and ring tones.

The deal signals a small shift in strategy as the music labels aims to embrace the Internet and find new ways of generating revenue.

Record companies have struggled in recent years with Internet piracy, and some analysts saw the deal as a major change in the labels’ stance toward the technology — they’re embracing it.

Under a deal Apple arranged with music labels, downloads were digitally protected from some types of copying. In its announcement, MySpace said it will offer the service without such constraints.

The music labels joining the MySpace venture are Universal Music Group, Sony BMG and Warner Music Group. A fourth major label, EMI, did not sign on.

“I think there was an epiphany by the labels here. They’re beginning to think, ‘How can we do more with the Internet?,’ ” said Phil Leigh, senior analyst with Inside Digital Media.

Music piracy is a $4.5 billion market.