Rumors surfaced again yesterday on Billboard and today in other media outlets that Facebook is in talks with the record labels to launch a music service that will include either free ad-supported music streams or paid downloads. Talk of such a service started last October, but what Facebook ended up launching was simply artist fan pages. MySpace is also preparing its own music service to be called MySpace Music. And other competitors from imeem to iLike to Last.fm are putting pressure on Facebook to respond with its own music offering. Music drives many social interactions, so you can see why Facebook would want to own that area even at the risk of alienating key partners (such as iLike).
But Facebook should really stay out of the music business. If it tries to enter in a big way it risks alienating not just its partners, but musicians as well. Its fan pages for musicians have not really done that well. Look at 50 Cent’s official Facebook page. He’s only gathered 8,213 fans there, compared to his 1,918,372 fans on his iLike page on Facebook (which includes fans across other social networks as well). I noted a similar disparity shortly after Facebook first launched its music fan pages.
In fact, 50 Cent already dissed Facebook once. He took down his official Facebook page for at least a couple months. It just recently went up again. His online efforts are geared towards driving as much traffic to his own fan site that he controls, This is 50. That is why fan widgets like iLike or Kyte.tv appeal to him more than tying himself to any one destination. As iLike CEO Ali Partovi likes to say, “The new opportunity for growth is beyond Facebook.” Partovi just announced this morning that iLike has 23 million users keeping track of 200,000 artists across Facebook, Hi5, Bebo, iLike.com, Ask, and even iTunes.
What is happening with 50 Cent is indicative of a bigger battle brewing in the music industry between artists and record labels over who will get to control future online revenues. Both record labels and artists did not like the fact that MySpace was making money off of their artist pages with ads, so they started negotiating deals to get a cut of the action. The prospect of Facebook becoming a competitor was welcomed because Facebook treats artist pages like any brand or canvas page. The ads on that page belong to the brand or artist or application developer, whatever the case may be.
But with music, Facebook may now be putting itself in between artists and record labels, who both have claims to that page. It is easier for Facebook to negotiate directly with record labels, but in most contracts it is the artists themselves who control their Websites and pages on social networks. Of course, if they want to stream or sell music from those pages, that is where the record labels come in. Facebook is negotiating with the record labels, but the artists may be going elsewhere, as we are seeing with 50 Cent.
As traditional music revenues are drying up, the labels want to transition to online revenues as fast as they can. But if those revenues are associated with advertising on fan sites, the artists themselves may have a greater claim to them. Of course, any fan site would be pretty lame without the music. But who gets what cut is all up in the air right now and the artists are in the driver’s seat because nobody fans a record label. We might be seeing a shift in power between artists and labels. Of course, it helps if you are 50 Cent and you own your own record label.
“What is happening with 50 Cent is indicative of a bigger battle brewing in the music industry between artists and record labels over who will get to control future online revenues”
my question: why does this all even matter, why does this deserve a mention
any financial issues they have are dealed with contracts, end of story.
That graphic is unbelievably terrible. Tell me it’s not real.
um nobody fans a record label? check out the different record label channels @ YouTube:
http://www.youtube.com/user/universalmusicgroup -has 210,615 subscribers making it the #2 most subscribed channel on YouTube
content is still king
Pretty sure this was just announced the other day, but Facebook is using iTunes to sell music. When you visit the site and try to buy music it directs you to the itunes page of the song or album.
http://www.facebook.com/music
Ze’ev,
You do realize that there is a difference between being the fan of what a label produces and being a fan of the label itself. No one likes Universal Music Group. The name is meaningless. You don’t head out to Best Buy to get whatever UMG put out this week. But there are thousands, maybe millions of people would buy ANYTHING that 50 Cent releases. That’s the difference. People are fans of Michael Moore, no one cares about Dimension or New Line or Time Warner.
Facebook this, Facebook that, Facebook blah blah blah . . .
Jeez I’m tired of seeing Facebook mentioned over and over and over again.
No offense to you Erick, but I thought Michael should have posted this article. He really tracked all the updates on new possible music model on the web and brought great insights. Expected same on this big news.
I’m glad that Facebook is getting into this. I HATE visiting artists’ pages on MySpace to listen to a few mp3s, etc. MySpace’s designs are just awful. However there are some drawbacks to Facebook getting into this “business”. Facebook is becoming too popular and as a result there is becoming an access amount of spam. Which includes fake artists pages. For instance, search for “Eminem” (if you don’t know he’s a VERY popular rap artist). You’ll notice there are 10 pages that are displayed as a result of searching for “Eminem”. However all the results are garbage. There is “Eminem Fans”, “The KING of Rap: Eminem”, and my favorite “JAILBIRD= TIGHTER THAN EMINEM, PAUL WALL” which has 4 results and they all claim to be Musicians. Facebook needs to be able to limit special pages like artist pages to ensure they are legit. For now I will continue to visit artists’ pages on MySpace until someone else can fix these issues, unfortunately.
i agree - social network should stay out of the music business, lest they make some money.
Sound Beast Digital Music Definitely Won’t be dissing 50 cent or ANY other music artist for that matter.
-iTunes, eat your heart out…
http://www.myspace.com/soundbeastdigital
Anti-Facebook application video. Cute. http://www.youtube.com/watch?v=3ZzP_69ZTFk
50 Cent hasn’t even sold out half his Hawaii show… I think he is old news…
Facebook may find itself squarely in between its users and the content providers… just like, let me think — oh, the other content channels. Good luck to them; maybe it will add more pressure in the anti-DRM discussions, because at least the ad-supported content is built-in.
BTW, Kuldeep, think it’s fine that Erick reported this. He’s there, he’s good, he can write it. No biggie.
And wasn’t 50 Cent supposed to retire after losing the CD war with Kanye West? Just a thought…
This is Yahoo? http://fireeagle.yahoo.net/
This is 50 http://thisis50.com/
Is this a New Trend?
So how about the white elephant in the room (or the article)?
Does it not strike anyones funny bone that Facebook is competing with Applications already on Facebook (say iLike)? Either Facebook is a platform or it is not. If they keep competing with application on Facebook then what incentive does someone have to write a cool and successful app if Facebook is just going to duplicate it? Don’t they also have a movie services coming out? Wait that be Flixter they are going after… At least with Microsoft (the other not just a platform company) you know you are safe outside of Office… With FB it looks like open season…
[Michael or whoever] Stir it up… Write about the White Elephant… It will be far more controversial and entertaining
This is a very confusing post. You seem pretty confused yourself. Did you have a clear argument to make, or did start with the conclusion that facebook should stay out of music and then come up with a crutch to support it?
Sometimes it’s ok to just report the news, especially when not many details are known.
It seems actually that MySpace is way ahead of Facebook in terms of technology. Just check out their latest features, they have games, books, horoscopes, classifieds, and even some dating components. Meanwhiles Facebook is struggling to churn out this ONE feature that is music. They should be churning out tons of these to match the rapid feature developments that MySpace has seen. Speaking of which, MySpace has also made its presence known in many fairs and venues where you’ll see their white tents with computers set up, and I’ve yet to see a Facebook tent.
http://humanpets.com/ - Flirting and dating community