According to Parmy Olson, a Forbes blogger, Facebook is partnering with the ad-free music-streaming service Spotify to provide a music service for the social networking site.
"Spotify on Facebook," or "Facebook Music" (they haven't picked a name yet) will allow users to listen to songs with their friends simultaneously. No money is being exchanged in the deal and Spotify will get no extra advertising with Facebook. It is strictly an integration via Facebook.
Facebook founder Mark Zuckerberg has expressed excitement about the deal, signifying that Facebook is finally getting the music service that Last.FM couldn't provide. But one major part of the deal is still missing:
AMERICA
Currently, Spotify only functions in (hold on to your hats) Finland, France, Norway, Netherlands, Spain, Sweden and the United Kingdom.
Spotify has yet to solidify a deal with the United States market, mostly due to the fact that America remains the No. 1 music market and labels are wary of a full-streaming service with no ad revenue (even if Spotify asks premium users to pay). That's a LOT of cash that labels think they're losing. But what the Big Four is missing out on, similar to the illegal downloading prosecutions in the early and mid-2000s, is the globalization of the digital marketplace, and the numbers prove it.
According to the International Federation of the Phonographic Industry's 2010 report, digital market services increased by more than $4 billion in revenue in six years. Physical distribution revenue is at an all-time low, as more and more chain and mom-and-pop record stores continue to close nationally.
In addition, music videos now make more money than ever with the advent of YouTube and the industry's new embrace with the video service. For X hits on a specific music video, the label receives a small cut from YouTube. Don't think that makes cash? Think of all those Justin Bieber videos with 250 million-plus views.
My question is this: Why can't the music industry offer a similar "YouTube" deal to unlimited music services? For example, every time a person listens to a song, Spotify would give royalties to the record labels for their licenses of the songs.
Countries that use Spotify, Sweden for example, have seen increases in overall music revenue since the illegal download boom. Why? IFPI quotes Jonas Sjöström, chairman of the Swedish independent labels body.
"This kind of growth is achievable when you have a combination of good user-friendly digital services and a deterrent response to piracy," Sjöström said.
And maybe he's on to something. After all, Sweden is the birthplace of torrent masters The Pirate Bay. If they were able to overcome that very simple and vast piracy service, maybe the U.S. could, too.
Now, it is possible that American distribution could falter. Spotify and other streaming services could be the downfall of the American industry. But when the industry is making less money than ever before, maybe it's time for a change-up in the game plan.
