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Warner Signs Deal with Facebook to Play Music on the Platform

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Facebook is really looking to get into the world of music.  A few weeks ago, they signed a large licensing deal with indy label ICE Services, and now they added Warner Music Group into the mix.  This is the last major label that has yet to join the social network.  This deal covers all of Warner Music’s recorded and published music catalogs.  Music from Warner can now be used in social experiences on Facebook, Instagram, Messenger and even Occulus.  As of right now, WhatsApp is not included in this deal.  Warner has a huge list of names on their roster – like the Eagles, pre-2010 Madonna, Ed Sheeran, Nina Simone and even Jay-Z.

Is this a good thing?  I think it’s a good thing if you’re a Facebook user, but it’s going to cost Facebook a lot of money and it makes you wonder if it’s even worth it.  Facebook has been working on a more comprehensive music licensing policy for months.  Some believe that this is their first step into making a bigger step into music services themselves.  The problem with this?  Well, Spotify might have some lessons to share with Facebook on this front.  That said, the big issue is royalties.  While Warner isn’t disclosing any terms, this could cost Facebook somewhere in the hundreds of millions just to cover the 2.1 billion registered users.

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Warner is the last big hold-out among the world’s biggest labels.  Sony and Universal were the first to sign on with Facebook. This is what Warner had to say about the deal:

“The team at Facebook is creating a truly innovative product and is showing real commitment to its participation in the growth of the music business. We’ve taken our time to arrive at the best possible deal, one that recognizes the value that music creates on social networks while empowering our songwriters to reach audiences around the world, in a way that will spark creativity and conversation among their fans. Our incredible catalogue of songs will be represented throughout Facebook’s platforms and we’re excited to work together to create new opportunities for both our songwriters and Facebook’s users.”

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This is a huge deal.  What this means is that Warner Music will be able to collect royalties on tracks that are used in videos and messages on Facebook or any of their other social sites.  And this is where it gets interesting.  According to Warner, “Our partnership with Facebook will help expand the universe of music streaming and create supplementary revenue for artists.  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.”

This does kind of suggest that they might be trying to get into the streaming business.  Which shouldn’t surprise anyone at this point.  This comes shortly after Facebook alluded to the fact that they might be getting into the smart speaker business.  Could this be part of a larger plan to compete in a bigger way with Amazon, Google, and Apple?