Just before Christmas, Universal Music Group, which represents artists like Sam Smith and Katy Perry, announced a global licensing agreement with Facebook, seeking to address major copyright infringements on the latter’s platform. Until now users uploading or sharing videos featuring songs owned by third parties have had their content taken down by Facebook, usually at the request of rights holders (as reported by IP Harbour here, where London busker Charlotte Campbell’s post covering Ed Sheeran’s “Castle on the Hill” was removed).

Whilst the terms of the deal have not been disclosed, Universal stressed in their press statement the need for “empowering users to express themselves through music, share the songs they love and build communities around music fuelled culture”.

Both parties look to make significant gains.

Facebook, with the need to compete against Google’s cousin YouTube, which has already struck deals with major labels and societies (reported by this site here), will not only provide a basis for users to share and stream videos freely without the fear of takedowns but actively encourage “social experiences” by “becoming a significant contributor to a healthy ecosystem for music that will benefit artists, fans and all those who invest in bringing great music to the world”.

Ultimately Facebook needs to build its users’ confidence, allowing them to engage with music on the site. YouTube is the one of the largest streaming services of music worldwide and this deal represents  Facebook’s statement to compete. The social media company is also looking to continue monetising through advertisements which can sit alongside video content relating to the song it features, a successful model led by YouTube.

Universal will also benefit, as artists will be compensated accordingly for use of their work- their press statement noting that “innovation and fair compensation for music creators… [is] mutually reinforcing”.

Importantly, the deal was born in the context of addressing the “value gap”, a term used to describe the imbalanced revenue particular sites like YouTube or Facebook receive for use of works owned by rights holders, in comparison to the royalties those rights holders receive from such sites. A proposed Digital Single Market directive, at Article 13 notes the requirement for such sites to “take measures to ensure the functioning of agreements concluded with rightholders”. Clearly the tide of regulation favours the creative industries and the deal, it would seem, recognises this.

As such rights holders have been given the ability to better control their works. Both Facebook and YouTube are continuing to develop their Content ID services which locate a right holder’s content posted on their sites so holders can manage the use of their work. In this way Universal will be able to more accurately receive money owed.

The new licensing deal will allow Universal’s music to be used on Facebook, Instagram and Oculus, with Messenger to access the catalogue in the near future.