According to the Financial Times, MySpace is in talks with the major record labels with a view to launching its own music downloads service.

MySpace, which is owned by Rupert Murdoch’s News Corp, is reported to be in talks with Universal, Sony-BMG, Warner and EMI over the possibility of launching a free-to-listen music service funded by online advertising revenue.

Although none of the interested parties has been willing to confirm anything at this stage, the smart money says that any free-to-listen service will probably be backed up by a pay-to-download one.

Competition for LastFM and more

Of course, this isn’t the first instance of an advertising funded free-to-listen service being touted, with SpiralFrog, LastFM, Imeem and the lamentable Qtrax all trying their hand at operating a similar type of model. The big difference in MySpace’s case, however, is that the social networking site already has 110m regular users.

Still, even with that kind of pulling power, News Corp will need to settle its ongoing legal dispute with Universal, which initiated legal proceedings against the social networking site last November citing copyright violations by its members.

TechRadar did call MySpace’s PR firm in the UK for comment, but the response was an entirely predictable, “We can’t make any comment at present”.