News Corp’s MySpace, the largest online social networking site, is unveiling a joint venture with the world’s top three music labels, according to several people familiar with the matter.

The service, to be dubbed MySpace Music, will be integrated into the popular online hangout, which got its start as a launching pad for emerging bands seeking to connect with passionate music fans.

MySpace Music would provide the labels with a digital outlet to compete against Apple Inc’s iTunes, which has emerged as the second-largest music retailer in the US after Wal-Mart Stores Inc. The service will be a one-stop shop offering music downloads, streams, videos and mobile phone ring tones, along with related items, such as merchandise and concert tickets.

“It will likely give iTunes a run for its money,” said one music industry executive who spoke on condition of anonymity because the deal has not yet been announced. “ITunes is a download store. This venture is not just a store, it is a thriving, growing community of people. So it will have a myriad of products that quite frankly iTunes does not offer.”

News Corp, Sony BMG Music Entertainment, Universal Music Group and Warner Music Group Corp will each take an equity stake in the venture, people familiar with the deal said. The EMI Group, the fourth-largest music label, is still in discussions with MySpace.

MySpace and the music companies separately declined to comment.

“It’s such an obvious idea,” said Eric Garland, chief executive of BigChampagne Online Media Measurement, a market research firm. “MySpace is already a destination for music and music fans. You could argue that MySpace is one of the top distributors of music in the world.”

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