Facebook’s music deal could give a big boost to its video effort (FB, GOOGL)

Facebook CEO Mark Zuckerberg

On Thursday, Facebook and Universal Music Group signed a multi-year deal that will allow Facebook users to upload music licensed by Universal Music on Facebook, Instagram, and Oculus.
The agreement is the first Facebook has made with a high-profile music company.
The deal could help bolster Facebook's nascent video effort, which it sees as key to its future.

Facebook just took a major step to boost its nascent video effort.

On Thursday, the social networking and Universal Music Group announced what is thought to be a multi-million dollar deal. The agreement will allow Facebook users to upload music licensed by Universal Music to the social networking site as well as to Facebook-owned Instagram and Oculus.

The agreement could have near- and long-term benefits for Facebook's video ambitions. It should make it easier for users to upload videos that include copyrighted music. But it also could help the social network become a destination for music lovers — and help boost use of Facebook's site.

"I wouldn't be surprised if they do more musical licensing deals, because it gives their viewers a way to stay on the site longer if they're showcasing music content, which is obviously a big driver of people's time," said Dan Rayburn, a streaming media expert and consultant at Frost and Sullivan.

Copyright issues have proven to be a thorn in Facebook's side for years. When users post videos that include copyrighted music, rights holders frequently demand the company remove them from its site. Such takedowns not only consume company time and resources, but they can hinder user engagement.

With its Universal Music deal, Facebook will be protected from such demands — allowing videos with music from Universal artists to remain on the site. Although the agreement marks the first time the social media giant has made a deal with a large music company, Facebook is already in talks to strike similar deals with both Warner Music Group and Sony Music, according to The Verge.

"Down the line, you're likely to see more of these deals from Facebook," said Rayburn. He added that Universal Music's rivals are "thinking, Facebook has opened up their wallet for music, we're certainly going to be talking to them now if we're not already."

But such deals likely will be about more than just protecting the social network and its users from copyright claims. Facebook told The Verge it has plans to introduce "music-based products" in partnership with Universal Music. That could open the door for a wide range of things, including music videos and live streaming of concerts.

Facebook has made it clear that it sees video as central to its future. In a 2016 interview, founder Mark Zuckerberg called video a "mega trend" that was "almost as big as mobile." The company sees video is a key way of keeping users engaged on its site and getting them to spend more time there.

"For the next five years, there are a handful of new challenges that we need to figure out, and video is probably the biggest one," Zuckerberg said.

Facebook's deal with Universal Music comes just four months after it launched Watch, its on-demand streaming service that features original videos produced specifically for the site.

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