January 2, 2018
Vivendi’s Universal Music Group, the world’s largest record company, has licensed its music catalog to Facebook. The deal, which focuses on the music in user-generated videos, covers songs that will be used in the background on videos and so-called social experiences on Facebook, Instagram, Messenger and Oculus. For Facebook, the deal is aimed at encouraging users to post more videos, key to the company’s current video-centric strategy. A day before this deal was struck, Universal also reached an agreement with YouTube.
The Wall Street Journal reports that, “most Facebook users aren’t aware of how to license music for their personal videos, and the burden has fallen on labels to track and request that non-licensed content be taken down.”
A source says that, Universal “hopes the deal with Facebook will pressure YouTube into ‘cleaning up its act’ on its free video-sharing service, where the bulk of its listening happens and where royalties paid to creators skew comparatively lower from other streaming platforms.”
“One way to get people to behave is to make a contract,” said that source. “The other is to enable a significant competitor and the only company that YouTube fears is Facebook.”
Facebook is also working to “secure deals with the other two major recording companies and major music publishers … and is willing to pay hundreds of millions of dollars to do so,” say other sources.
“Music lovers, artists and writers will all be right at home as we open up creativity, connection and innovation through music and video,” said Facebook head of music-business development Tamara Hrivnak, a former music industry and YouTube executive. The deal won’t “enable Facebook to start a music-streaming service, which would require a different licensing agreement.”
As Recode describes it, the new deal between Facebook and Universal Music Group is another way for the former to “to encourage people to make and share content on its services” and, for the latter to create “a significant new revenue source” — without giving Facebook “the right to create its own version of Vevo, the music video service owned by the music labels that generates most of its views on YouTube.”