Recently, Facebook and Warner Music Group inked a partnership that would allow the use of the major label’s recorded music and music publishing catalogs in videos and messages across Facebook’s platforms, including Instagram, Occulus, and Messenger (WhatsApp isn’t part of the deal yet). Users can create, upload and share videos that feature licensed music from Warner without the fear of being muted or taken down, a more common situation now as labels are more aggressive in protecting and monetizing their content. Previously, Facebook closed deals with Universal Music Group and Sony Music Publishing for their libraries, rounding out the “Big 3” labels controlling a majority of the music market.
“Our partnership with Facebook will help expand the universe of music streaming and create supplementary revenue for artists,” said Ole Obermann, Chief Digital Officer at Warner Music Group. “Fan-created video is one of the most personal, social and often viral ways that music is enjoyed, but its commercial potential is largely untapped. This collaboration will lead to new possibilities for our artists, while enhancing the user experience across Facebook, Instagram and Oculus, and enabling people to communicate and express themselves using the music they love.”
All these strategic moves probably foreshadow an eventual entrance into the streaming music space by the social network to stay competitive with its Goliath-sized competitors in Apple, Amazon, and Google. But baby steps first. Facebook’s growth has been slowing down, so these deals could potentially inject some energy. In its Q4 2017 earnings report, Facebook reported 1.4 billion daily users, an increase of 2.8% from the previous quarter. This falls in comparison to the 3.8% growth in Q3 2017. Daily users actually dropped by 700 thousand in the United States and Canada and could be the result of fewer individuals below the age of 18 using it. It’s a super competitive market for share of eyeballs, as there are too many options to spend (or waste time) be it YouTube, Netflix, Twitter, or Snapchat. The more users and time spent on a platform, the more potential advertising revenue. The social platform launched it’s Watch online video channel last year, extending its presence as a content hub and has converted 40% of its userbase into viewers.
The deals with Warner, Sony, and Universal will only broaden the type of content that could be produced, which in turn can help re-engage users, like myself, who find Facebook to be boring now or encourage more content creation. For the labels, it’s another means to monetize their content. The Big 3 make almost $14.2 million a day from streaming music. By partnering with Facebook, they can potentially uncover a new revenue stream (like how they monetize YouTube content) through a massive user base.