Music labels and publishers have spent much of 2017 wondering what Facebook’s plans were for licensing music. Today the social network announced its first major-label licensing deal, with Universal Music Group.

The companies are describing this as a “global, multi-year agreement” that will license Universal’s recorded-music and publishing catalogues for “video and other social experiences across Facebook, Instagram and Oculus”.

Specifics? How about this? “Under this partnership, users will be able to upload videos that contain licensed music and personalise their music experiences on Facebook, Instagram and Oculus, while sharing videos with friends and family,” explained the announcement.

“In time, functionality will expand to enable access to a vast library of music across a series of social features. Going forward, the companies will experiment hand-in-hand to introduce new music-based products to these Facebook platforms, including Messenger.”

So, on the one hand this is what publishers and labels have been asking for in 2017 – an initial deal to license Facebook for the music contained within user-uploaded videos.

But the bigger picture is just as fascinating: “a foundation for a strategic partnership roadmap that will deliver new music-based experiences online,” as the pair describe it.

This comes at the end of a year when Facebook hired a series of industry veterans for its music team, including former WMG and YouTube executive Tamara Hrivnak, who is now Facebook’s head of music business development and partnerships.

“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,” she said today.

Universal Music’s EVP of digital strategy Michael Nash also had his say, describing the deal as “a dynamic new model for collaboration between music companies and social platforms” and also “an important first step demonstrating that innovation and fair compensation for music creators are mutually reinforcing – they thrive together”.

Universal has certainly been busy on that front: the Facebook announcement comes just days after the company revealed a new licensing deal with YouTube – also a global, multi-year agreement – which is seen as a step towards that platform’s new ‘Remix’ streaming service in 2018.

We have more questions, of course. How far is Facebook off striking similar deals with other major labels and publishers, as well as the independent community? How and when will it “enable access to a vast library of music across a series of social features” and will that be an ad-supported business model or a subscription play?

What sort of advance payment was involved here, given Bloomberg’s claim in September that Facebook had set aside “hundreds of millions” for its initial licensing deals?

What does this mean for Spotify, which has been one of Facebook’s strongest partners in the music-streaming space – how will playlists and other content shared from Spotify rank in Facebook’s news feed algorithm compared to the content bubbling up from the social network’s deals with labels? What will it mean as Spotify makes its debut as a public company in 2018?

What does this mean for Vevo, the music-videos service whose main distribution channel has been YouTube, but whose deal with that platform is up for renewal in 2018 – just as (it seems) Facebook is planning to do a lot more with music video in various forms? While we’re on that topic, what will be the knock-on effects of Facebook’s deals on YouTube’s music strategy?

And the big question – the reason music rightsholders are genuinely excited about Facebook going deeper on music, beyond any big cheques being waved at them – is what can Facebook do that *isn’t* just another $9.99-a-month music-streaming service with or without a free tier?

Can it create new, social-infused music formats – think what did with the 15-second lip-synch clip, although Dubsmash also deserves credit there – that will actually generate revenue for artists, songwriters and their rightsholders? Seeing this as ‘Facebook strikes deal to make its own Spotify’ is missing the bigger opportunity, but it’s very early days.

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Stuart Dredge

Music Ally's Head of Insight

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