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Facebook the Latest to Look at Music Streaming

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Tech players looking to provide music streaming services to their users

“Music streaming service” has become something of a catchphrase these days. First Apple (AAPL) generated a lot of buzz by launching the Apple Music service last month. Apple unveiled its music streaming and live Internet radio service during the Worldwide Developers Conference last month.

Then Spotify announced that it had more than 20 million paid subscribers, and it plans to enter Japan (EWJ) soon. In the article Are Investors Overvaluing Spotify? we discussed the last round of funding that gave Spotify a valuation double that of Pandora (P).

More recently, according to a report from The Verge citing multiple sources, Facebook (FB) has held talks with major music labels such as Sony (SNE) Music Entertainment, Warner Music Group, and Universal Music Group. Why? Likely because it wants to launch a music streaming service.

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Facebook wants to leverage the fast-growing music streaming market

In launching such a service, Facebook would clearly be trying to leverage the fast-growing music streaming market. According to a report from the Recording Industry Association of America, the US music streaming market is growing at a much faster rate than the music download market. As the chart above shows, the US streaming market is approaching $2 billion in annual sales. It could overtake the music download market soon.

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