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April 18, 2018

Years of Negotiations Finally Allow Facebook to Creep into Music

Facebook has been working for years to gain its share of the music industry. Music on the social media site is extremely popular, garnering the most shares of any subject on the site. The problem with that popularity is that music posts and videos link users straight to YouTube, Facebook’s biggest rival. With more than two billion registered users, Facebook could make a tremendous impact on streaming music, and many expect the social media giant to release a Facebook music streaming service in the very near future.

Recent Facebook Licensing Deals

In February of 2018, Facebook closed negotiations with ICE, a European online rights hub. ICE remarked that the deal was of “landmark” significance as it is the first music licensing partnership for the social media giant. The deal covers 290,000 rights holders in 160 territories and allows Facebook to license these properties on Facebook, Messenger, Instagram, and Oculus.

The ICE deal follows several deals Facebook has previously completed with record labels and publishing agencies. In December of 2017, Facebook signed a multi-year licensing deal with Universal Music Group and a separate licensing agreement with Sony. Facebook also has licensing agreements with Global Music Rights, HFA/Rumblefish, and Kobalt Music Publishing. While these deals indicate Facebook is heavily investing in music streaming on their existing applications and will likely want to start producing more original content, many speculate that these deals are signs of a Facebook music-streaming service in the works.

Why Make These Moves Now?

The streaming music market value could hit $14 billion by 2030, and Facebook is likely gearing up to be a competitive force in this quickly growing market. Currently, major music streaming services like Spotify, Pandora, and Google Play Music have vastly more free subscribers than paying subscribers, and converting free users to paying users seems to be a hurdle for every music-based streaming service. However, Facebook may have an advantage due to its already staggeringly large user base. If even a small fraction of Facebook users convert to a paid music streaming service it could disrupt the music streaming service industry tremendously.

Negotiations between Facebook and various rights holders, publishing agencies, and record labels have lasted for several years at this point, and deals of this magnitude take time to close. Facebook needs to build an extremely competitive offering of streaming music to make a dent in the existing industry and encourage users to convert to paid subscriptions, but if they pull it off it could restructure the entire music streaming industry.

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