Update: Facebook has no plans to develop music streaming service

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Contrary to an earlier report, Facebook has no plans to launch a music streaming service. While the social media giant plans on moving forward with an ad-funded music video platform, it will not launch a Spotify competitor anytime soon. “We have no plans to go into music streaming,” said an unnamed spokesperson to The Verge. The rumors of a Facebook music streaming service came just days after news that it was planning on taking on YouTube with its own music video platform.

Music Ally initially reported the rumor yesterday, saying that the company planned to build “a Spotify-style audio streaming service.” The report cited that it would first see how the music video platform — which will launch within the next few months — performed before making further decisions on the music streaming service.

Facebook will still move forward with hosting music videos. Labels will choose select music videos to highlight which will then be served to users in their main newsfeed. The company will pay rights holders through ad revenue in the same split as YouTube’s: 45 percent to Facebook, 55 percent to rights holders. Facebook is currently finalizing deals with the major labels and plans to begin a trial period of this service later this year.

That being said, Facebook’s foray into music is still in its very early stages and it sounds like the company is pondering a variety of options. One industry source told Billboard that the company “expressed interest in some type of music integration into its platform,” but nothing as extensive as Spotify. A variety of sources told The Verge that the social media giant “wants to create something unique and unlike any other service currently on the market.” But considering all of its competitors, that will be a difficult task for Facebook.

Original post (7/9/15):

The newly-launched Apple Music may soon have a new competitor to contend with, and its an offshoot of another massive player in the tech scene: Facebook. After widespread reports that the social media giant had begun talking with major record labels, Music Ally now reports that Facebook is set to develop a “Spotify-style audio streaming service.”

The service is in early stages, to say the least, but it is being strategized to be linked to an ad-supported Facebook music video platform. The music video side of the service will debut first, in the next few months, and the audio streaming component will come at a later date, which is yet to be announced.

The planned music video platform, which will directly compete with YouTube, isn’t entirely surprising as Facebook has natively hosted plenty of videos, including music videos (and TV shows) in the past. The service will begin a trial period this year, in which select music videos chosen by labels will be served to users in their main newsfeed. Music Ally notes that the music video trial, in which Facebook will pay royalties to music video rights holders through a YouTube Content ID-like system, will be an “important stepping stone” in making an on-demand streaming service a reality.

“It’s a mass land grab,” said an unnamed source to Music Ally. “Facebook going into the video space was always going to be an enormous, ambitious land grab and no doubt something they’ve been planning for some time as the potential income from ad revenue will be incredible.”

The competitor, which will line up against Spotify, Apple Music, Tidal, and others, is the real surprise here, and it probably won’t launch soon. The Music Ally report explains that both Facebook and record labels will first gauge the success of the monetized music video service before moving forward with the music streaming platform. Further, the social media giant is still deciding whether to buy or build its own streaming platform.

While tech titans like Google, Amazon, and Apple are all invested in the streaming scene, the significance of a Facebook music streaming service cannot be denied. Much has been said about Apple Music aiming to convert some of its 800 million iTunes users, but Facebook has even more users to entice. Spotify (75 million active users) has a significant head start on Facebook, and we don’t know how this service will compare once it hits the open market, but Spotify doesn’t have Facebook’s resources.

Regardless of when Facebook’s new service lands and how it is received, one thing’s for sure: the streaming music wars aren’t ending anytime soon. We’ll keep you updated on new developments.

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