According to reports, MySpace is in talks with the major labels to launch a free, ad-supported digital music service. Last month, another planned free, ad-supported service called QTrax was supposed to launch, but the labels agreed that there was no deal in place, and QTrax has since been stuck in a state of suspended animation. While MySpace has proven to be fertile grounds to listen and discover new music, it hasn’t yet shown that it’s a marketable forum to actually sell or distribute music, thanks in part to their low-quality music streams and the mounting competition from social networks like Facebook (which has already linked up with Apple’s iTunes).

EMI has another plan. Rather than bending to preexisting social networks, the label is constructing its own branded social networks where fans can interact with EMI artists. Essentially, EMI is making a bunch of MySpace pages. The label is also planning to pump the extra money it’s accruing after cutting nearly 2,000 jobs to invest in enhancing its digital services. Says a company spokesperson, “Digital technology has moved power into the hands of the consumer. We need to develop models that allow us to get inside their minds.”

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