Music Business News, September 6, 2017

Facebook proposed a deal with rights holders to allow use of music in videos on the platform. Also, Eventbrite’s acquisition of Ticketfly was completed. And a report predicted the music streaming market will be worth $28 billion in 13 years.

 

Facebook Offering Hundreds of Millions to Music Rights Holders

 

Facebook indicated it is offering hundreds of millions of dollars to labels and publishers for global licenses, reported Music Business Worldwide. If accepted, the advance will allow the platform’s two billion users to start legally using music in videos.

 

The social media company has been working with the music industry to create an elaborate system that identifies and tags the copyright information of tracks. However, creating this system may take as long as two years.

 

As a workaround, Facebook has proposed paying hundreds of millions of dollars to cover use of music as soon as possible.

 

While the exact amount of the proposed deal was not revealed, experts noticed that the IFPI had recorded music rights holders getting $553 million from video streaming services in 2016. If Facebook could promise to double that figure in 2017, it may draw more rights holders away from YouTube.

 

Former Warner Music Group/YouTube executive Tamara Hrivnak joined Facebook in January and has been leading music industry negotiations.

 

According to sources, Facebook is intent on getting a music licensing deal together prior o the launch of its new video hub, Watch, which will likely launch with original TV series.

 

Facebook has been more aggressive than before about its move into the music industry during 2017. Facebook began advertising for three music-focused licensing positions earlier in the year: North America Music Publishing Business Development Lead; International Music Publishing Business Development Lead; Label Music Business Development Lead. The company also advertised for additional positions and acquired copyright identification platform Source3 – launched by co-founders of music IP rights management tool Rightsflow – in July.

 

Eventbrite Acquisition of Ticketfly Completed

 

The Eventbrite/Ticketfly merger completed this week, said Complete Music Update.

 

The U.S.-rooted ticketing company was previously owned by Pandora, but was put up for sale by the streaming firm as part of its shift in digital strategy.

 

Eventbrite acquired Ticketfly for $200 million in order to build a platform that will “deliver the market-defining solution for independent venues, promoters and festivals.”

 

Eventbrite also acquired European entity Ticketscript in early 2017. The deal with Ticketfly will boost its presence in the U.S. concert ticketing market. Ticketfly co-founder Andrew Dreskin will come to Eventbrite as the leader of music efforts as part of the deal.

 

Julia Hartz, Eventbrite CEO explained, “The union of Eventbrite and Ticketfly changes the game for the music industry. Our respective customers will benefit immensely from access to the best of what each company brings to the table. Eventbrite’s proven track record of innovation and global scale combined with Ticketfly’s deep industry relationships and domain expertise is underpinned by a shared commitment to independence, and unparalleled service to our customers.”

 

Dreskin also weighed in on the deal: “We are happy to be teaming up with our friends at Eventbrite. This deal brings together the two most progressive live event technology companies to form a powerhouse for independent music venues and promoters the world over. We will combine the best of both our platforms into one game-changing solution, the likes of which has never before been seen. This is going to be a heck of a lot of fun!”

 

Goldman Sachs Predicting a $28 Billion Streaming Music Market

 

Goldman Sachs forecasted that the streaming market will hit $28 billion by 2030 in its Music In the Air report.

 

But according to music industry analyst Bobby Owsinski, Goldman’s figure “might be more than a bit optimistic.”

 

In a piece for Forbes, Owsinski noted reasons people in the music business should be cautious about this prediction, especially since, during its best year, 1996, the music industry as a whole only brought in $27.4 billion.

 

Owsinski pointed to figures brought up by industry consultant Mark Mulligan: The current annual average revenue per user for streaming music is about $33 ($3.5 billion in streaming revenue from 106 million paid subscribers in 2016, based on a $9.99 per month subscription rate). With this as a benchmark, there would need to be 853 million paid subscribers in order to reach the predictions.

 

Most experts agree that in order to make subscriptions appealing to consumers going forward, Spotify and other streaming services will have to lower rates to $4.99 per month. Still, Owsinski notes that while reaching the $28 billion mark/850 million users at this price point, when there are only 7 billion people total in the world, may seem unattainable, a platform like Facebook has managed to hit two billion in a relatively short time.

 

Still, Owsinski added that major record labels’ resistance to lower-cost music and licensing constraints will pose a problem for streaming services trying to lower the monthly subscription rates. And it is likely that the streaming music boom will slow before record labels and other rights holders change their minds.

 

As a final point, Owsinski noted that “the disruption will surely come.” A lot can happen with technology advances in 13 years, and the music industry is an early adopter of new technology. A new format or a new music delivery system may very well come out before 2030 that will raise or lower annual revenue significantly.