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Facebook is attempting to enter the music industry

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The battle for music platform supremacy wages on in the Wild, Wild West of the Internet.

As Apple Music vies to usurp Spotify as the premier streaming service, Google allegedly considers a SoundCloud acquisition, and Sprint steps into the fray as a majority TIDAL shareholder, a new sleeping giant has awakened. Facebook is reportedly attempting to enter into the music industry as an alternative licensing platform to YouTube.

According to Bloomberg, “The world’s largest social network has redoubled its efforts to reach a broad accord with the industry … A deal would govern user-generated videos that include songs and potentially pave the way for Facebook to obtain more professional videos from the labels themselves.”

The motivations for Facebook to enter into the music industry through the medium of video are clear. The social network has pushed a dramatic shift in focus toward prioritizing video content of late, with major plans for further monetization. Stepping into the music licensing arena within this format could potentially give the company a strong bolster against their primary competitor, Google, which owns YouTube. With an active user base of 2 billion, Facebook has an unparalleled opportunity to potentially rival the industry leader.

The implications of such a pivot, however, are less clear.

Facebook entering the music industry would have major impacts across diverse fields. The social network’s trajectory would aggressively threaten televised advertising – a $70 billion/year industry from which Facebook would be looking to poach revenue.

Conversely, Facebook providing an alternative platform to YouTube could greatly benefit the music industry. The site has potential to match, or even exceed the $1 billion in ad revenue which YouTube delivered labels in the past year. Dismantling YouTube’s monopolistic status would also help major labels to light the fire under the video platform for their “lax” methods of copyright enforcement. A marriage between Facebook and majors would also open the door for analogous deals with platforms like SnapChat and Twitter.

However, the effects on the music industry that Facebook’s hopeful transition would incur are not entirely positive. Firstly, licensing rights to a second tech giant to provide free streaming could negatively affect labels’ revenue streams from paid services like Spotify and Apple Music. Secondly, the way in which Facebook presents video content and enforces copyright protection is a complicated matter. Bloomberg notes the following regarding the latter concerns:

“For Facebook to obtain professional video — both music and otherwise — it may have to alleviate concerns about how clips will be presented. At the moment, most Facebook users see videos in their newsfeed, where a clip from a TV show may be followed by a baby photo and then a friend complaining about romantic frustrations.

Facebook must also finish a system to police copyright-infringing material akin to Content ID, the system used by YouTube. Videos on the site already feature a lot of music for which artists don’t receive royalties — a major source of tension.”

The way in which Facebook goes about addressing the issues of content presentation and copyright prevention will play an important role on their relationship with major labels. With a stock price just over $134/share at press time, the company has more leverage than SoundCloud did when inking deals with majors in 2016, which will grant Facebook more freedom to avoid the stringent takedown policies enforced by the German streaming platform if they so choose.

However, for Facebook to achieve their musical goals to fruition, they’ll have to play ball with the majors to a certain degree.

David Israelite, President of the National Music Publishers Association (NMPA), expressed to Bloomberg his hopes for Facebook to move “towards licensing music for the entire site.” Israelite, however, voices his skepticism toward a Facebook deal due to their Digital Millenium Copyright Act protection. Many in the music industry view the DMCA, which absolves sites like Facebook and YouTube from responsibility for hosting pirated material, as a loophole through which tech giants can profit off of infringing content without properly compensating artists and labels.

Israelite continues, “Facebook is a very valuable company, making a lot of money, and in part because of the music on the site…We are looking forward to being business partners with Facebook. If that doesn’t happen, you’ll see the situation turn very quickly.”

Music industry consultant Vicki Nauman commented to Bloomberg on additional concerns regarding Facebook’s integration into the field, acknowledging that while the site has more than ample reach to become a player, its base isn’t focused properly:

“Facebook definitely has the size and scale, but the tribal nature of music preferences is different than a feed or news stories or cute cat videos…To be successful, it will not only need to envision a great music experience but also have to navigate the web of label and publisher rights and relations. No small feat.’’

Whether (and how) Facebook will successfully enter the music industry as a YouTube competitor remains to be seen, as do the implications that such a move would have on consumers. For now, only one thing can be asserted with certainty.

Change is imminent.

Via: Bloomberg

Featured Image by Alice Truong/Quartz Media. 

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