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US Internet Industry: What Alphabet, Facebook, Amazon Are Up To

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Part 3
US Internet Industry: What Alphabet, Facebook, Amazon Are Up To PART 3 OF 15

Facebook in Talks for Music Rights

Avoiding copyright troubles

Facebook (FB) is in discussions with record labels and music producers to secure rights to copyrighted music on behalf of video producers on its platform. According to reports, Facebook is willing to pay hundreds of millions of dollars to music rights owners to secure rights to copyrighted music.

Facebook’s idea is that having rights to copyrighted music would save it the trouble of having to take down videos that violate music copyrights. Owning music rights would also reduce the company’s exposure to legal challenges arising from its video business, especially legal issues relating to copyright infringement.

Facebook in Talks for Music Rights

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New revenue for music owners

For the music industry, Facebook presents a new revenue opportunity as well as peace of mind. Instead of record labels and music producers using up their resources to crack down on violators of their copyrights on Facebook, they would be compensated for such use.

The idea of Facebook paying for music rights on behalf of video creators on its platform highlights how the company views video as crucial to its future. With a music rights acquisition bill for video publishers on its platform, Facebook could end up attracting more talented video creators to its site at the expense of rivals such as YouTube, a unit of Alphabet’s (GOOGL) Google.

Boosting ad sales

Internet companies such as Facebook, Google, Twitter (TWTR), Snap (SNAP), and Baidu (BIDU) are betting on video to enable them to grow their advertising sales. Since most Millennials don’t watch television the traditional way, a growing number of marketers are embracing online video advertising to connect with them on the Internet. Advertising sales represented 99.0% of Facebook’s overall revenue in 2Q17, as shown in the chart above.

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