Facebook Looks for Music Deals as It Tries to Challenge YouTube

Inside The Oculus Connect 3 Event
Mark Zuckerberg, chief executive officer and founder of Facebook Inc., speaks during the Oculus Connect 3 event in San Jose, California, U.S., on Thursday, Oct. 6, 2016. Facebook Inc. is working on a new virtual reality product that is more advanced than its Samsung Gear VR, but doesn't require connection to a personal computer, like the Oculus Rift does. Photographer: David Paul Morris/Bloomberg via Getty Images
David Paul Morris—Bloomberg via Getty Images

Facebook’s passion for video is well known. The giant social network has been pushing more and more of it to users over the past year, and focusing an increasing amount of its resources on producing video content. So it seems natural that it might want to increase its presence in music videos as well—and that requires deals with record labels.

According to a recent report from Bloomberg, the company is currently involved in exactly those kinds of discussions with music publishers and other rights-holders, with a view towards making it easier for music videos to exist on the network without breaching copyright rules.

Facebook reportedly participated in a music-industry event held in Los Angeles just before the Grammy Awards, during which a variety of emerging artists represented by Universal Music (a record label owned by French media giant Vivendi (VIVEF)) performed for representatives from a number of TV networks and streaming services like Spotify, Pandora (P), and YouTube (GOOGL).

The world’s largest social network also recently hired Tamara Hrivnak, the former director of music partnerships at YouTube, to run its global music efforts. That alone suggests it plans to get more serious about its relationship with the music industry.

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The company is said to be interested in making it easier to users to add music to their uploaded videos without getting into legal problems with the major labels. But longer term, it seems obvious that Facebook might be interested in hosting official music videos too (we’ve reached out to the company for comment and will add one if and when it appears).

The social network has had these kinds of talks with various players in the record industry off and on since 2015, when Billboard magazine and the New York Times both reported that it was looking to add music videos into the news feed. At the time, Facebook was said to have held initial discussions with all four major record labels.

There were also rumors at that time that the company was planning to eventually expand onto Spotify’s turf, and launch a full-fledged streaming music service. But Facebook denied those reports, and said it just wanted to host more videos.

For the music industry, having Facebook as a partner would bring a number of benefits. Not only does it reach over 1.8 billion people, but a strong relationship with a massive enterprise like Facebook would also give record labels more negotiating power in their dealings with YouTube and other players like Spotify.

The music industry has gone on record as saying that it believes YouTube in particular doesn’t pay enough for licensing rights for the music it hosts, because it only provides a percentage of the advertising revenue it gets instead of a per-song fee. Facebook has reportedly offered to pay record labels more than YouTube does.

One thing that might be holding up such deals, however, is that Facebook doesn’t have a process for flagging and removing videos that contain copyrighted content in the way YouTube does with its Content ID system.

Last year, David Israelite, the president of the National Music Publishers Association called Facebook out, saying it hosted too many user-generated videos with music in them without paying publishers and license holders. Israelite said “it would be wise to befriend songwriters and publishers as partners now—not pursue the path taken by other digital services who now find themselves at odds with the creative community.”

According to a report in December, Facebook is working on a system similar to YouTube’s Content ID, which automatically flags videos that contain copyrighted music. In the case of YouTube, the system then asks the rights-holder whether they want to leave the content up and monetize it with ads, or whether they want to have it pulled down.

Facebook’s video-advertising business is still in its infancy, so it’s not clear whether music owners would get the same kind of offer from the social network that they do from YouTube, or whether Facebook would just remove the infringing content.

What does seem clear is that Facebook’s interest in music licensing is real, and it appears to be ramping up. Once it has a copyright-detection system implemented, that could open the door for more concrete deals—and could bring Facebook into even more of a head-to-head competition with YouTube for control of the online video market.

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