Published on February 26th, 2018 | by Alan Cross1
Is Facebook preparing its own streaming service?
Streaming music is huge and getting huger. According to a report called Music in the Air prepared by Goldman Sachs, the market is going to grow from $1.4 billion today to $14.1 billion by 2030.
While there are plenty of streaming music services to choose from (Spotify, Apple, Google, Deezer, Tidal, Napster, Qobuz, etc.), there are probably too many. And since all of them are still losing money, there’s bound to be a period of consolidation in the near future.
But before that happens, the field might get a little more crowded. Rumours have started to bubble up that Facebook will soon launch its own streaming music.
The evidence is Facebook’s deal with ICE Services, a music licensing group and copyright database. Why would they need that company?
Then there’s the deal Facebook made last fall when it paid “hundreds of millions” to music publishers and record labels which allowed Facebook users to post copyrighted songs without fear of them being taken down for one violation or another. This led to yet another licensing deal which involves the use of no-name generic music to user videos and posts.
But is this a good idea? Sure, Facebook has 2.1 billion monthly users (compare that to Spotify’s 70 million paid subscribers and Apple’s 36 million), but streaming music is still a money-losing proposition because the business doesn’t scale like others. As you acquire more users, your costs go up in lockstep. Under the current licensing regimes, at no point can you scale to a point where your margins begin to increase.
Facebook does have to do something, though. There are indications that it’s hit a wall when it comes to subscriber growth, so the company has to do something to keep users engaged longer.
Read more at The Motley Fool.