-By Katy Bachman

To offset sluggish revenue, MySpace Music is turning to in-stream audio ads, a first for the playlist-based Internet radio service.

To handle ad sales, MySpace has signed with TargetSpot, which represents a network of both pure play Internet radio providers and some of the largest radio groups.

Although MySpace Music reaches more than 33 million unique monthly users, per comScore, its reliance on search-based visual ads hasn't paid off. During News Corp.'s quarterly conference last week, Rupert Murdoch, chairman and CEO of News Corp. blamed the poor performance of the company's digital media group on the low ad revenues at MySpace. "[MySpace] is not yet where we want it," he said.

Internet radio advertising is growing. Acording to eMarketer, Internet radio advertising is forecast to hit $394 million by 2011, making it one of the fastest-growing media segments.
As the exclusive audio sales rep for MySpace Music, TargetSpot's reach across its network will nearly double from 20 million unique monthly listeners to as many as 40 million, making it by far the largest representative of online audio advertising.

Since December, MySpace has been working with TargetSpot to find the right balance between music and advertising that will keep listeners and attract advertisers. TargetSpot has kept the frequency of the spots for advertisers such as ABC-TV and McDonalds, very low.

"It's very much about having a sensitivity to the space," said Eric Ronning, co-president of sales for TargetSpot, which has helped Internet radio providers such as AOL, Yahoo! and Slacker increase ad revenue. "We want to ensure the good user experience and a good environment for the advertisers," he added.

So far, so good, said a spokesperson. "The response from our users has been positive. As always, we're interested in hearing feedback from our community and the advertising community as we roll out new functionality."