Dive Brief:
- Facebook and Universal Music Group have signed a first-of-its-kind multi-year partnership for the social media giant, per reporting by TechCrunch and Bloomberg.
- The licensing agreement will allow Facebook users across its properties including the flagship platform, Instagram and Oculus to use Universal’s music for self-made videos to upload and share, and includes a provision that allows Facebook to create “music-based products” across its properties, including Messenger, according to TechCrunch.
- The deal sets Facebook up to better compete with YouTube as a destination to listen to music online. It also gives labels additional leverage over Google to cut deals that address copyright issues on YouTube content, per Bloomberg.
Dive Insight:
The Facebook deal with Universal, as well as just-signed agreements between Google and Universal Music and Sony Music Entertainment are a signal that the music industry and online platforms, including music streaming platforms like Spotify and Pandora, are coming to at least something of a truce if not growing into agreement following years of strained and contentious relationships.
For Facebook users, the partnership gives them the green light to tap into Universal Music’s catalog for their own user-generated videos without fear of those videos disappearing after a copyright takedown. This is the latest sign that the platform is looking to expand beyond the sharing of news and personal updates in its News Feed. Music is a significant draw for consumers looking to create videos and Facebook is clearly willing to invest in providing the kind of content that will keep users on the platform. The news also suggests Facebook could be eyeing a music streaming service, an area where there's a significant amount of competition. At the same time, Facebook has been trying to build its premium video content strategy through its Watch tab, although those efforts reportedly have not gained much traction so far.
The music industry was one of the first entertainment segments to face widespread disruption by digital media when Napster and other platforms offered free downloads of pirated MP3 files in the early days of the internet. After years of struggling with how to address the issue, the music industry increasingly recognizes that the internet is where it needs to markets itself and where the most growth is coming from. New and established artists are even willing to give away their music online as a way to build audiences and drive concert and merchandise sales.