The ambitious new MySpace Music joint venture will launch this evening at midnight PST atmusic.myspace.com. All four major labels – Universal, Warner, Sony and EMI – are on board (EMI was a last minute addition). Also joining the venture is The Orchard, an independent music distributor, and four major publishing companies. Basically, everyone who controls rights to music is part of the new venture.

MySpace Music allows users to stream virtually any song ever published for free. Users can also create playlists that contain up to 100 songs and share them with others. Any song can also be downloaded in non-DRM MP3 format, for a fee, from Amazon’s music download service. And if you want that song as a ringtone, you can get it as well via Jamster.

Song streaming is supported via advertising on the site, and major advertisers like McDonalds, Sony Pictures, State Farm and Toyota are already signed up.

The site isn’t live, but we’ve included a number of screenshots supplied by MySpace (and it looks like the leaked screen shots were real).

Music Discovery

This isn’t just streaming music on demand. The playlist functionality and sharing will let users discover new music as well from the 5 million artists (a mix of major, unknown, and indie acts) that populate MySpace Music.

MySpace will promote popular playlists from users and will also create their own Top 100 lists from all users as well as just your friends, coworkers, etc. So each user will have personalized music recommendations from their friends.

MySpace Music: So Awesome, It’s Illegal?

MySpace Music goes a long way towards music’s inevitable future where all recorded music will be free. They, along with services like iMeem, are now giving on demand streaming music at a zero price point to users, which was inconceivable even a couple of years ago.

But the joint venture also raises legal concerns because it isn’t clear how labels are being compensated. They clearly own stock in the new company, which may be valued as high as $2 billion already. But what isn’t known is if MySpace has a special deal with the labels that lets them avoid paying per-stream fees for songs like everyone else does. Companies like Rhapsody, Last.fm and iMeem pay a reported $.005 to $.01 per song stream. If MySpace is paying less than that, there may be antitrust and price discrimination concerns. MySpace won’t comment on their deals with labels, other than to say that they are paying for the music. More transparency would go a long way towards helping us understand if these deals are fair to the market in general. Without that information, it’s easy to draw the conclusion that the labels are in this for the stock value of the entity and are willing to burn other Internet players to give it a competitive advantage.