Facebook Said to Seek Music Video Licensing Deals

Over the last few years, Facebook has slowly encroached on YouTube’s territory as a go-to outlet for online video, showing popular content from publishers like BuzzFeed and Vice and a growing number of user-loaded clips. Now Facebook is considering going after another piece of YouTube’s signature turf: music videos.

In recent weeks, Facebook has held preliminary discussions with the major record companies, seeking licensing deals to insert music videos into Facebook users’ feeds, according to four people briefed on the talks who spoke on the condition of anonymity.

According to these people, Facebook has proposed adding a limited number of music videos, all of which would be chosen by the labels, to the feeds. Facebook has told the labels that it wants to begin adding the videos in coming months and monitor their performance through the end of the year, these people said. Facebook would share advertising revenue with the labels according to terms that have not yet been set.

Facebook declined to comment on its video plans, which were first reported in detail by Billboard. But the company directly denied another report from Music Ally, a news site, that said Facebook was working on a streaming service comparable to Apple Music or Spotify. “We have no plans to go into music streaming,” a Facebook representative said.

Facebook’s plans are said to still be in an early stage. But its talks with record companies highlight the company’s eagerness to expand its video offerings and compete more aggressively with YouTube, the online video giant whose most popular content is music videos. Given Facebook’s vast size — it has 1.4 billion users around the world — it is one of the few online outlets that could seriously challenge YouTube’s dominance, media executives say.

Facebook has offered the music labels better revenue-sharing deals than YouTube, according to one of the people briefed on the talks. In another enticement to the labels, Facebook is also promising to police the platform more thoroughly for unauthorized content, this person added.

Music is just the latest video-related frontier for Facebook. For months, the company has been urging outside publishers like BuzzFeed, Vice, CNN and ESPN to publish original videos directly to its platform, and it has been satisfied with letting those publishers post the clips on sites like YouTube and Vimeo and then link to them on Facebook. It has also encouraged its users to upload their own videos.

But by building up its own video platform, Facebook could keep users within its system and also capture more advertising revenue. So far, its strategy seems to be working: Facebook had an estimated 315 billion video views in the first quarter of 2015, according to Ampere Analysis, an independent video analytics firm.

If Facebook were able to build a stronger presence for music videos, it would put pressure on YouTube, which is owned by Google and has long had a complex relationship with the music industry.

YouTube, by most accounts, is the most popular online outlet for young people to consume music. Yet its royalty rates are considered low, and record executives have frequently complained that by making virtually all music available free, YouTube — along with Spotify — has made it more difficult for paid services to grow.

By hosting music videos, Facebook would also compete somewhat with Vevo, a company set up by the labels Universal and Sony for their music videos and other official content, which is accessible through YouTube and various other platforms. By offering only professionally made videos, Vevo is able to reap higher ad rates than YouTube can for its typical videos, but most of Vevo’s viewers still reach it through YouTube. Warner Music, the third major music label, is not a part of Vevo.

Universal, Sony and Warner Music declined to talk about the discussions with Facebook.

Although Facebook plays a powerful role in the music world as a promotional outlet for artists, it has not been a major outlet for music itself. The company has considered various approaches to this problem for years, according to people involved in Facebook’s internal discussions, vacillating between ideas such as potentially acquiring Spotify to forming partnerships with these companies.

Four years ago, Facebook teamed with online media services like Spotify and Netflix, letting those companies’ customers use their Facebook accounts to alert friends to what they were watching or listening to. The integration helped the outlets grow, but also drew complaints from Facebook users about the resulting river of notifications.

“Facebook is a hugely important strategic partner to us, and we plan to continue working together on finding new ways to deliver music,” said Jonathan Prince, a Spotify spokesman.