There’s no secret here: Facebook doesn’t hold a grand plan for its involvement in the record industry. Similar to
Microsoft,
Softbank, and
Walmart vying for control of TikTok, one can contort into a knot hypothesizing a strategic reason for the purchase, but it’s more likely that nobody wants to miss out on such an opportunity put on the table. An assumption of a more refined strategic plan, I’d suggest, would be a poor way of reading the moment. A contrast can be made with Spotify’s conscious shift towards podcasts which is mirrored in multi-million dollar acquisitions (see: Gimlet, Anchor, etc.) and public rhetoric. However, this isn’t to say that there aren’t problematic issues with Facebook’s increased role in the record industry (I’ll certainly point them out). Rather, I’ll argue it’s the major labels partnering with Facebook that are using, at this point, a well-established business strategy.
Our partnership with Facebook will help expand the universe of music streaming and create supplementary revenue for artists. Fan-created video is one of the most personal, social, and often viral ways that music is enjoyed, but its commercial potential is largely untapped.
Explicitly, the goal of partnering with Facebook for Warner Music Group was simply to create an additional revenue stream. Not exactly a lot to get excited about there. Even more so when these are the deals that artists for years have bemoaned as not providing them a sustainable income.
Rereading what I wrote in 2018 for Music Business Worldwide, I conflated Facebook’s mission (a potential YouTube competitor) with the record industry’s (another potential partner for licensing agreements). This might explain why Facebook has continued to cycle through new video formats and record labels don’t appear too concerned about what is or isn’t working once the deals are in place. At least publicly there isn’t the same level of consternation as with YouTube, though reports about Facebook
limiting live streaming would imply that record labels are certainly turning a blind eye to new emerging behaviors in Facebook’s universe.
A few weeks ago,
when I wrote about Apple and how record labels eventually got on board with iTunes, I mentioned that this was the moment when record labels begrudgingly accepted that they’d be shut out of owning the format of distribution (unlike Sony with CDs). Previous less coordinated actions of record labels led to the creation of two major label-backed streaming services like Pressplay and MusicNet, and even EMI at one point internally teased the idea of its own digital download store in the early 00s. However, it was after the Apple deal and the sudden success of iTunes, that a new roadmap appeared for major labels. Either invest in music tech (Spotify/Triller) or constantly scrap with companies like Pandora over licensing deals. That strategy has worked out well as the record industry reversed over a decade of falling revenue. Yet, there continue to be forward-looking concerns for the industry.
Industry analyst Marc Mulligan, who
pointed out slowing industry growth prior to coronavirus, champions solutions of diversification of revenue sources for the industry. Often these
ideas lean on more artist-to-fan connections that borrow from Tencent Music and other industries like gaming. That runs counter to how Facebook is viewed by major labels, as simply another way of importing a nearly two-decade-old way of doing business with a tech company, rather than pushing for a larger shift in the industry. A recent example is that while Facebook is
rolling out more
Twitch-like live streaming features across
its platforms, its biggest music-specific announcement this year was that it finalized agreements with record labels and publishers
to allow music videos. A move to find a new home for already-established content.
A March 1975
Cash Box ran the alarming headline “
Is The Industry Committing Suicide By Writing Off Adult Market?”, which decried the lack of appeal across age demographics in the industry. The story correctly observed the self-imposed ceiling that the record industry was constructing by only targeting a younger, more narrow, target demographic. This is an issue that the record industry has addressed in a number of ways (Adult Contemporary, American Idol, Adele) since the 70s but the 21st century has opened up an easier solution to such concerns.
There didn’t need to be a concern about how a record will sell to older music fans if the record industry could just meet them directly on whatever platform they congregate. When a new technology platform catering to a potential new audience arrives, the record industry can just impose what is effectively a tax to keep their content on the platform. This, in a way, is a reasonable solution to head off an eventual problem but it’s one that leaves artists completely abandoned. Now if Facebook is just an accomplice here, along with other tech firms, then what else is it directly doing?
Instagram’s most notable contribution to the record industry in 2020 is probably the Verzuz series, which pits rappers, producers, and singers against each other playing their own songs and stroking the nostalgia of 90s babies everywhere. Now, the show’s popularity certainly isn’t at the levels of the early days of
American Idol, or even
The Voice, but it certainly does feel like a more tangible impact than
anything happening in the live streaming concert space right now. Yet, instead of Instagram trying to connect with its creators and start to make a claim on this space, Apple
stepped in to fold Verzuz into the Apple Music experience. This mirrors Apple’s relationship with the music industry, where it’s willing to embrace eating marketing and production costs for the record industry in order to allow it more direct access to the music’s cultural capital.
Considering how much music flourishes on TikTok, YouTube, and even previous spaces like Vine, perhaps Facebook’s moment with music already passed, even if it keeps trying to relight the flame. See Facebook’s current
awkward TikTok-clone Reels and don’t forget its
former TikTok-clone Lasso. Apple certainly isn’t a Hollywood studio but its connection to the record industry is better aligned with the company’s goals than Facebook’s odious goal to serve ads to every single living human.
Now, if this is a potential audience mismatch, then it’s worth eyeing another financial move made by the company. Facebook
invested $5.7 billion in the Indian telecommunications company Reliance Jio, the owner of JioSaavn, one of India’s largest streaming platforms. The Music Ally write-up aggressively stated this wasn’t about Reliance Jio’s connection to JioSaavn. Even if taken at face value, there is something that should be asked about how Facebook got to a point where a telco investment would spark questions about how it might impact an Indian music streaming platform.
The record industry continues to enact light shakedowns of tech companies in place of needing to sustain its own political economy. In a way, the bullish projections for the record industry are just following the increase in tech stocks, as streaming in America is at least
80% of industry revenue. A 2014
Billboard industry headline (“
Is Another Tech Bubble Forming Around Music Streaming?”) in a way feels quaint. Not that one shouldn’t be concerned about such investments and the bubbling-like characteristics of this moment
but that even if there was a bubble, the last couple of decades of major-label moves, in particular, suspended a previous decade-plus revenue freefall. Major labels figured out a way to negotiate better, even if not on the terms they most enjoy, with the tech industry. Even as one of the world’s biggest tech firms, Facebook is just fulfilling the same role of tech firms prior.
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