Universal Music Group And Facebook Strike Major Licensing Deal

Future Business

The two companies, in a joint statement, said they were developing more personalized functions in a bid to "develop the next generation of music products that best engage social consumers".

Facebook is finally getting into the music business.

With this deal, the companies hope to "advance the interests of recording artists and songwriters while enhancing the social experience of music for their fans", says Michael Nash, UMG's Executive Vice President of Digital Strategy, in a statement. On Facebook and Instagram, that might involve new groups built around specific artists or genres, which will now be able to legally share videos - just as long as they're from UMG's catalog. Based on the partnership announced between the music group and YouTube, it sounds as though this agreement is a method to curb financial losses and the new products are a byproduct.

The partnership is the first of its kind for Facebook, whose almost 2 billion users regularly share videos on the service with their friends and family.

YouTube, which is part of Google, said it reached a long-term agreement with the Universal Music Group, months after a deal with competitor Warner Music.

And for Universal, the deal means that the company now has a significant new revenue source - neither side is commenting on financials for now, but industry sources assume Facebook wrote the music a label a very large check as an advance, and that Universal can make more over the course of the multiyear deal. In the pipeline, it also paves the way for a potential Facebook Music service, which could rival Spotify and Apple Music for on-demand streaming playback.

With those tools in place and this new deal, Facebook is another step closer in its quest to be a destination for high-end video. Facebook's aggressive push into video has intensified competition with YouTube.

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