In a few days you will be able to watch top music videos in your Facebook feedsUniversal, Sony and Warner Music declined to talk about the discussions with Facebook.The social network has made its video ambitions quite clear.
The New York Times has reported that rather than joining the crowded streaming landscape, Facebook has its sites set on music videos, a territory which has been dominated for years by YouTube. Facebook, The social-networking giant has held licensing talks in recent weeks with major recording labels to insert music videos directly into users’ feeds, the newspaper reports, citing anonymous sources described as being brief on the talks. Over the last few years, Facebook has been trying to encroach on YouTube’s territory as a go-to outlet for online video, showing popular content from publishers like BuzzFeed and Vice and a growing number of user-loaded clips. Now Facebook is considering going after another piece of YouTube’s signature turf: music videos. In recent weeks, Facebook has held preliminary discussions with the major record companies, seeking licensing deals to insert music videos into Facebook users’ feeds, according to four people briefed on the talks who spoke on the condition of anonymity. According to these people, Facebook has proposed adding a limited number of music videos, all of which would be chosen by their labels, to the feeds. Facebook has told the labels that it wants to begin adding the videos in coming months and monitor their performance through the end of the year, these people said. Facebook would share advertising revenue with the labels according to terms that have not yet been set. Facebook has declined to comment on its video plans, which were first reported in detail by Billboard. But the company directly denied another report from Music Ally, a news site that said Facebook was working on a streaming service comparable to Apple Music or Spotify. “We have no plans to go into music streaming,” a Facebook representative said. Facebook’s plans are said to still be in an early stage. But its talks with record companies highlights the inner motives of company’s eagerness to expand its video offerings and compete more aggressively with YouTube, the online video giant whose most popular content is music videos. Given Facebook’s vast size — it has 1.4 billion users around the world — it is one of the few online outlets that could seriously challenge YouTube’s dominance, media executives say. Facebook has offered the music labels better revenue-sharing deals than YouTube, according to one of the people briefed on the talks. In another enticement to the labels, Facebook is also promising to police the platform more thoroughly for unauthorized content, this person added. Music is just the latest video-related frontier for Facebook. For months, the company has been urging outside publishers like BuzzFeed, Vice, CNN and ESPN to publish original videos directly to its platform, and it has been satisfied with letting those publishers post the clips on sites like YouTube and Vimeo and then link to them on Facebook. It has also encouraged its users to upload their own videos. But by building up its own video platform, Facebook could keep users within its system and also capture more advertising revenue. So far, its strategy seems to be working: Facebook had an estimated 315 billion video views in the first quarter of 2015, according to Ampere Analysis, an independent video analytics firm. If Facebook were able to build a stronger presence for music videos, it would put pressure on YouTube, which is owned by Google and has long had a complex relationship with the music industry. YouTube, by most accounts, is the most popular online outlet for young people to consume music. Yet its royalty rates are considered low, and record executives have frequently complained that by making virtually all music available free, YouTube — along with Spotify — has made it more difficult for paid services to grow. By hosting music videos, Facebook would also compete somewhat with Vevo, a company set up by the labels Universal and Sony for their music videos and other official content, which is accessible through YouTube and various other platforms. By offering only professionally made videos, Vevo is able to reap higher ad rates than YouTube can for its typical videos, but most of Vevo’s viewers still reach it through YouTube. Warner Music, the third major music label, is not a part of Vevo.
Universal, Sony and Warner Music declined to talk about the discussions with Facebook.
Although Facebook plays a powerful role in the music world as a promotional outlet for artists, it has not been a major outlet for music itself. The company has considered various approaches to this problem for years, according to people involved in Facebook’s internal discussions, vacillating between ideas such as potentially acquiring Spotify to forming partnerships with these companies. Four years ago, Facebook teamed with online media services like Spotify and Netflix, letting those companies’ customers use their Facebook accounts to alert friends to what they were watching or listening to. The integration helped the outlets grow, but also drew complaints from Facebook users about the resulting river of notifications. Spotify is a proprietary peer-to-peer music streaming service that allows instant listening to specific tracks or albums, with virtually no buffering delay. Music can be browsed by artist, by album, by record label or by created playlists as well as by direct searches. A link allows the listener to purchase selected material via partner retailers. The service is currently only available from IP addresses assigned to providers in Sweden, Spain, Norway, Finland, the United Kingdom and France, although after signing up you can use it from any country. “Facebook is a hugely important strategic partner to us, and we plan to continue working together on finding new ways to deliver music,” said Jonathan Prince, a Spotify spokesman. Facebook is proposing revenue-sharing deals that would be more lucrative than YouTube’s and has also promised to do a better job of preventing unauthorized videos from appearing on the site, sources told the Times. The report differs from an earlier story by music business news site Music Ally that held that Facebook was planning to develop a music-streaming service that would compete directly with Spotify, Rdio and newcomer Apple Music. But Facebook denied the report, telling various news outlets that it had “no plans to go into music streaming.” The talks, first reported by The Information in June, are described as still being in the early stage but suggest that Facebook is looking to ramp up its competition with YouTube, the Web’s de facto home for video. With 1.4 billion monthly users, Facebook would appear to be best platform to mount an assault on YouTube, which claims more than 1 billion monthly users. Following on Facebook’s success with Instagram and WhatsApp, the talks with record labels would appear to be the latest effort by the company to expand beyond its core social network into a one-stop destination for sharing and consuming content such as photos and videos.
The social network has made its video ambitions quite clear.
“Video is a big opportunity for us,” Facebook COO Sheryl Sandberg said during an April earnings call with analysts. During the same call, Facebook CEO Mark Zuckerberg proudly declared that Facebook was serving up 4 billion video views daily, an increase of about 30 percent since January, when 3 billion videos were viewed daily on the site. More than 75 percent of those views were by people using mobile devices. The trend has been drawing in advertisers as large as movie makers, fast food chains and consumer electronics chains to small-and-medium sized businesses, 1 million of which Facebook said have created videos and bought ads on the service. That interest seems to be paying off for Facebook. Of Facebook’s $3.32 billion in revenue derived from advertising for its first quarter, ended March 31, the company said that 73 percent came from ads shown on mobile devices. That figure was 59 percent a year ago. A shift into music videos would make more sense for Zuckerberg’s company. Facebook has already experimented with the medium, having provided the platform for Jay-Z to premiere the video for his song “Holy Grail” in 2013, and it has made heavy use of short clips in its new instant articles. The music video sector is huge, too, making up by far YouTube’s most popular content — of the site’s top 30 most-viewed clips, all but three are official music videos — and Facebook is one of the few internet entities to have a user base big enough to challenge YouTube’s position. For now though, the social network has yet to comment whether it is indeed planning to pepper your news feed with pop hits.
