Facebook, Ready To Make Music, Lands Licensing Deal With Universal Music Group

With its latest move, Facebook has made nice with one of the recording industry’s most notable entities and has announced itself as a notable force in the world of streaming music. The social giant has inked a licensing agreement with Universal Music Group, the largest label in the United States.

The UMG deal will allow Facebook videos to include music from UMG’s artists; the label’s clients include Taylor Swift, Adele (pictured above), and Kanye West. The agreement also extends to several of Facebook’s subsidiaries, including Instagram and Oculus.

As its video efforts expanded in 2014, Facebook maintained a tenuous relationship with labels. Clips that used licensed music did so in an unauthorized manner, forcing rights holders to claim those clips using Facebook’s rights management tool. On YouTube, claimed videos can be monetized by labels, but on Facebook, without a proper deal in place, that revenue stream was cut off.

Facebook has spent most of 2017 making overtures to the music industry. In January, it hired Tamara Hrvinak, formerly of YouTube, to lead its music strategy. A month later, a Bloomberg report indicated that Facebook would look to make deals with record labels. By September, those deals had begun to take shape, with Facebook paying “hundreds of millions of dollars” to put licensing agreements in place. Now, in December, the Universal pact has been inked. It will last for multiple years.

Two questions remain. Firstly, will Facebook’s negotiations with labels have an effect on YouTube? The world’s top video site has long feuded with the music industry, which has accused it of delivering substandard royalties to artists, and that enmity could cause Facebook could emerge as a viable competitor. Recently, though, YouTube has strengthened its relationship with “Big Three” labels Universal, Sony, and Warner. It has signed new contracts with all three of them as it looks to launch a new streaming service, which is tentatively titled Remix.

The second question: Will more deals follow this one? Facebook probably wants to make nice with Sony and Warner, too, so we’ll keep an eye out for more announcements.