Business News Deals Digital Labels & Publishers Top Stories

Universal signs licensing deal with Facebook

By | Published on Friday 22 December 2017


After a year of chatter about quite how Facebook would go about legitimising the music that swims around its platform, Universal Music has signed a multi-year licensing agreement with the social media giant, covering the use of its recording and publishing catalogues. So maybe Facebook isn’t going to take the music industry enemy number one position from YouTube after all. Not quite yet, anyway.

The new deal will also cover the appearance of Universal-owned music in videos on Facebook’s other social network Instagram and its virtual reality set-up Oculus. It will “serve as a foundation for a strategic partnership roadmap that will deliver new music-based experiences online”, the two companies reckon.

Talking up the deal, Facebook’s Head Of Music Business Development And Partnerships Tamara Hrivnak says: “There is a magnetic relationship between music and community building. We are excited to bring that to life on Facebook, Instagram, Oculus and Messenger in partnership with UMG. Music lovers, artists and writers will all be right at home as we open up creativity, connection and innovation through music and video”.

Universal’s EVP Digital Strategy Michael Nash adds: “Together, Facebook and UMG are creating a dynamic new model for collaboration between music companies and social platforms to advance the interests of recording artists and songwriters while enhancing the social experience of music for their fans”.

“This partnership is an important first step demonstrating that innovation and fair compensation for music creators are mutually reinforcing – they thrive together”, he goes on. “We look forward to Facebook becoming a significant contributor to a healthy ecosystem for music that will benefit artists, fans and all those who invest in bringing great music to the world”.

With Facebook having been negotiating with the big music companies for quite some time now, while concurrently beefing up its in house music licensing team, earlier this year it was reported that the social media firm was offering hundreds of millions of dollars in advances in order to try to get labels and publishers on board.

Facebook has long claimed safe harbour protection when it comes to the user-uploaded content on its platform that features other people’s music. The music industry – not too keen on that whole safe harbour thing at the moment – has become increasingly tetchy about this, as Facebook’s video ambitions have grown in recent years. Although with the music industry also in the midst of its battle with YouTube, some labels saw an opportunity in the rise of video on Facebook, if only a licensing deal could be agreed.

One of the reasons it’s thought big advances were on the table is that the role of music on Facebook – let alone Instagram and Oculus – is still evolving, and this isn’t a straight streaming service deal. Facebook wants time to work out how it will monetise music content on its platform and wants the music companies to experiment with it.

A big upfront cash boost always makes music companies more willing to experiment. Though advance-heavy deals create problems when it comes to working out how income is shared between labels and artists, and publishers and songwriters. Even straightforward streaming deals are too often shrouded in secrecy. More complex deals make it even harder for artists to work out how they share in the money.

Although, if this deal does kickstart new products and revenues in the streaming and social media spaces, then ultimately everyone could be a winner. Either way, the other majors and indie label repping Merlin, alongside the distributors and collecting societies, will need to agree their deals too for the big experiment to truly begin.

Meanwhile, with the music industry signing up to new deals with safe harbour dwelling sites like SoundCloud, YouTube and Facebook, perhaps there’ll be less shouting about the ‘value gap’ in the coming year. Maybe. If so, attention will likely to return to good old fashioned piracy, which has been busy evolving while everyone’s been focused on the user-upload sites. As we discuss in this new CMU Trends article.