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Facebook and Universal Music Group Strike Global Licensing Agreement

Facebook and Universal Music Group today announced a global, multi-year agreement under which UMG becomes the first major music company to license its recorded music and publishing catalogs for video and other social experiences across Facebook, Instagram and Oculus.

According to a press release, the partnership will allow users to upload and share videos that contain licensed music and personalize their music experiences on Facebook, Instagram and Oculus. Eventually, functionality will expand to enable access to a vast library of music across a series of social features; the agreement “is intended to serve as a foundation for a strategic partnership roadmap that will deliver new music-based experiences online.” Going forward, the companies will experiment together to introduce new music-based products to these Facebook platforms, including Messenger, with the goal of developing the next generation of music products to engage social consumers.

As more and more Facebook users have included music or videos in their posts in recent years, the platform has required users to take down posts using infringing content. Facebook has been in negotiations with music rights holders for many months in an attempt to resolve the situation; while Universal is the first to announce a deal, sources tell Variety that Warner Music may be next. Representatives for Warner and Sony Music Entertainment declined Variety‘s requests for comment.

Terms of the deal were not disclosed, although it’s probably safe to assume UMG received a hefty advance.

The move comes just two days after Universal announced a global partnership with YouTube, which has long had a contentious relationship with the music industry over its relatively low royalty payments; sources say that agreement includes components that eventually will help drive consumers toward the platform’s paid music service.

Tamara Hrivnak, Head of Music Business Development and Partnerships, Facebook — who until last year worked in a similar role at YouTube — said, “There is a magnetic relationship between music and community building. We are excited to bring that to life on Facebook, Instagram, Oculus and Messenger in partnership with UMG. Music lovers, artists and writers will all be right at home as we open up creativity, connection and innovation through music and video.”

Michael Nash, Executive Vice President of Digital Strategy, Universal Music Group, said, “Together, Facebook and UMG are creating a dynamic new model for collaboration between music companies and social platforms to advance the interests of recording artists and songwriters while enhancing the social experience of music for their fans. This partnership is an important first step demonstrating that innovation and fair compensation for music creators are mutually reinforcing – they thrive together. We look forward to Facebook becoming a significant contributor to a healthy ecosystem for music that will benefit artists, fans and all those who invest in bringing great music to the world.”

In an internal memo, UMG chairman and CEO Lucian Grainge wrote in part:

“Dear Colleagues:

I’m proud to announce this morning the first partnership between a major music company and Facebook, the largest social media company in the world.  We’ve entered into a global multi-year agreement which licenses UMG’s recorded music and music publishing catalogs for use in video content created by users across Facebook, Instagram and Oculus. As our new relationship with Facebook demonstrates: by continually re-evaluating how to bring our artists’ music and videos to global audiences, by developing new and increasingly progressive business models and by spurring competition among both established tech players and startups alike, UMG has been and will continue to be the most significant catalyst for our industry’s growth.

As with our deal with Spotify earlier this year and our license renewal with YouTube, our deal with Facebook leverages the experience we’ve gained and the wealth of data we’ve amassed to win both greater flexibility as to how our music is offered to the public as well as fairer compensation for our artists—as we continually refine the balance between direct promotion and monetization.

Of course, in an environment this dynamic, our work is never done.  Nor would we want it to be.  Innovation and imagination are critical — in both music and the music business.  As technology keeps evolving, we’ll keep fighting for our artists to ensure that their music earns for them what it so richly deserves.”

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