HALF MOON BAY, Calif. – Social networking site MySpace will launch a new music service in September,  CEO Chris DeWolfe announced at Fortune’s Brainstorm Tech conference on Wednesday.

The new offering will enable MySpace members to listen to free streaming music as well as purchase song downloads,  ringtones, T-shirts and concert tickets, DeWolfe told an audience of tech executives during an interview with Fortune senior writer Adam Lashinsky.

MySpace – which was acquired by News Corp. (NWS) in 2005 – became a platform for bands to connect with their fans early on, and the company says that 65% of their members currently embed music on their profile pages. But rival social networking site Facebook has begun to overshadow MySpace. According to new numbers from metrics firm comScore, while MySpace still has more users, Facebook is growing at a faster rate. MySpace is hoping the new music service will boost growth.

“MySpace is more about self expression and individuality,” DeWolfe said when asked for his thoughts on Palo Alto-based Facebook. “One of the reasons why we’re investing so heavily in music is that self-expression and music go together so well.”

But MySpace isn’t the only company trying to find new ways to make money off the digital music industry, dominated by Apple’s (AAPL) iTunes.

Robert Kotick, chief executive of game publisher Activision Blizzard, said his company’s popular Guitar Hero game (which lets users play along to their favorite music by pressing colored buttons on a guitar-shaped controller) will soon start selling songs tracks via an iTunes-like music store.

“People are already coming to us for music,” said Kotick, whose Guitar Hero series has reportedly surpassed $1 billion in sales to date. Kotick said that he’s got four or five teams already working on the upcoming music store, but he also added that there are still kinks to work out when it comes to copyright-protection issues.