Facebook Embraces Music: How the Social Network Is Friending the Industry by Licensing Content

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George Wylesol
           

"We are enabling billions of users to be the music supervisor for their life story," says Perry Bashkoff, Facebook's global head of label partnerships.

In July 2018, when social media comedian Shiggy posted a 30-second Instagram video of himself dancing to Drake's "In My Feelings," he did more than launch a viral craze that helped propel the track to the top of the Billboard Hot 100 for 10 weeks.

Coming just three months after Facebook launched Facebook Music tools across its online properties, the dance challenge also was a case study for social media's potential as a source of revenue for music rights holders at a time when industry executives are starting to think about when the rise in U.S. streaming subscription numbers might eventually taper off. And now that the industry is moving forward in partnership with Facebook, execs are setting their sights on other platforms without deals in place -- among those being Twitter and Snapchat -- while currently negotiating new licenses with the growing TikTok app's Chinese owner ByteDance.

For the first 14 years of its existence -- as it grew from a Harvard dorm room project to a global behemoth with 2.7 billion monthly active users -- Facebook dealt with user-uploaded music under the "safe harbor" protection of the Digital Millennium Copyright Act (DMCA), which required it to promptly respond to takedown requests from rights holders. But since December 2017, when it reached a deal with Universal Music Group (UMG) for both recordings and publishing, the company has been licensing rights that allow users to include music in personal videos and special features on its platform and its Instagram, WhatsApp, Messenger and Oculus VR services. In April 2018, Facebook started supporting licensed music on its platforms, with new in-app music functions soon following.

For Facebook vp music business development and partnerships Tamara Hrivnak, who joined the social media giant in February 2017, the "In My Feelings" challenge is an example of how Facebook users are integrating music into the kind of videos they share daily -- and, now, legally.

"Historically, if you wanted to share the moment of your first dance at your wedding, that would've been a moment we couldn't support," she says. "And because we're in the business of enabling people to share the things that are most dear to them, the fact that the music industry and Facebook have been able to enable those personal moments to come to life on the product is important."

During the past year, Facebook has expanded its music features for users as it continues to develop a strategy focused on sharing user-generated content (UGC). Beyond integrating music in videos, messages and stories on Instagram and Facebook, it has unveiled music stickers and filters for Billie Eilish, Jonas Brothers and others, plus introduced products like TikTok competitor Lip Sync Live and Songs on Profile, which "pins" a track to the top of a profile page. In February, Eminem developed the 21-minute film Marshall From Detroit, a personalized tour of his hometown, for Oculus. And Facebook has integrated Spotify and Apple Music into its platforms as partners, not competitors.

But the key to Facebook's music strategy is allowing users to incorporate tracks into personal videos. "We are enabling billions of users to be the music supervisor for their life story," says Perry Bashkoff, Facebook's global head of label partnerships, noting how Facebook and Instagram Stories can now be easily set to music in-app. "When there's a new single, we want to support it. But it doesn't mean once that single's over, the song's dead. It might have a perfect meaning for wedding season, or for your boyfriend, girlfriend, children or graduation."

Friending rights holders also gives Facebook a way to avoid more legal problems. By the end of 2015, amid the social network's push into video, CEO Mark Zuckerberg reported that users were watching 8 billion videos a day -- amounting to 100 million hours daily. Many contained infringing content, and labels and publishers sent the company hundreds of thousands of DMCA takedown notices -- a volume that was "instrumental" in pushing negotiations ahead, Jeff Walker, Sony Music Entertainment's executive vp and head of business and legal affairs, global digital business, told Billboard last year. "Legitimate sites come to the table if they want music on their platform and their users not to be frustrated."

Hrivnak also played an important role in bringing Facebook and the music industry together. She joined the company from Google, where she negotiated licenses for YouTube, and worked at Warner Music Group before that. Her hiring marked "the threshold point where they made a commitment" to getting deals done, according to UMG executive vp digital strategy Michael Nash.

By spring 2018, Facebook launched a beta version of Rights Manager, its content-recognition system, for music. But only recently did it start reporting usage metrics to labels, sources say, and that functionality is still forthcoming on the publishing side. (For now, publishing revenue is being divided according to market share.) The program is expanding globally, too: Launched in seven countries, it now operates in more than 40. "Making sure we're able to bring local music that matters to our communities is important," says Hrivnak.

As the company grows its music services worldwide, the industry sees potential for social media licensing to become a significant source of revenue. Now hosting nearly two-thirds of the global internet-using population monthly -- 42% more than users logged in on YouTube -- Facebook has a sizable amount of UGC and online video. UGC already accounts for $1.2 billion of the global recorded-music industry, according to one major-label executive. With that sum driven mostly by YouTube, the executive is bullish about the opportunity for growth from Facebook, estimating that number could grow by four times over the next decade.

To get there, making deals with Facebook was a crucial step. "Getting a license deal in place with Facebook around UGC sets an important precedent for the entire social category," says Nash. "There's no way to go about social without addressing Facebook."

This article originally appeared in the April 27 issue of Billboard.