Having observed from a distance the mistakes of Myspace, Facebook was very cautious about jumping into digital music – keenly aware of the market risks associated for most new entrants here. It used its f8 conference last year to tentatively step into music, but mainly through third party companies (most notably Spotify) or else let others like RootMusic bring music solutions through its API. Now rumours are growing that it might be building a download store to take on iTunes, Amazon MP3 and Google Play. CNet writes that, fresh from its IPO and just as it closes in on 1bn users, the company is starting to look beyond its ad model to wring out greater ARPUs. It describes Facebook Payment and Facebook Credits as the company’s “Trojan horse” as they helped generated 15% (£557m) of its revenues last year (as it takes a 30% cut of all transitions on its platform). It also now has its own App Centre, indicating a broadening on its ambitions. “A next step would be to unite Facebook Payments and the App Center, creating a full-blown store of digital goods, from movies and books to music and apps, that caters to the growing base of Facebook addicted and media consuming users,” suggests CNet. It adds, “Apple’s iTunes store generated $1.9bn in revenue in the second quarter of this year. It will be hard for Facebook to resist getting into competition with Apple, Google, Microsoft Samsung, Sony and others seeking to become the hub of everything digital.” Facebook batted down these rumours, but that will not stop speculation growing as the company not only moves its pieces around the great online chess board but also slowly introduces whole new pieces as it plans to dominate in as many areas as possible. Earlier this week, Apple CEO Tim Cook hinted that relations between Apple and Facebook has improved in recent years and suggested they could work together if and when Apple scraps or dramatically reboots its Ping social network within iTunes. Should Facebook look to take on Apple directly, that melted water between then could soon harden into ice again. This all does raise some interesting questions about which party needs the other the most. As Ping has proven, Apple still cannot “do” social – not yet, anyway. But with iTunes leading in both the apps and à la carte music downloads market, Facebook trying to muscle in and trying to establish itself on non-iOS devices (should Apple chose not to play along) could prove a rash and risky venture.
Is Facebook planning an iTunes competitor?
June 1st, 2012 by Music Ally