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Music Executives Find a Facebook Friend to Fight YouTube

The music industry was battered, bruised and nearly defeated by the surging popularity of digital music. But record executives haven’t forgotten how to be savvy negotiators. 

Record labels and other music-industry players have been talking with Facebook Inc. for months to get paid in return for permitting the social network’s users to legally upload videos featuring music. The latest deal was last week, when Warner Music Group became the second of the big three record labels to announce a licensing contract with Facebook.

Facebook has its own interests here. Namely, the company wants its more than 2 billion users to be able to post videos featuring recorded music without fear the industry might sue them for copyright infringement or bombard Facebook with requests to strip the videos off the internet. 

The proxy war behind these Facebook music negotiations is where the record labels’ savvy is showing. The Facebook deal negotiations are part of the music industry’s long game against its greatest adversary: YouTube.

Friend or Foe?

YouTube is the world’s most popular music outlet, but it generates less revenue for the U.S. music industry than CDs do

Data: RIAA; graphic by Bloomberg Gadfly

The record labels have a complicated relationship with YouTube, owned by Google parent company Alphabet Inc. By some measures, YouTube is the most popular single hangout for listening to music. Many popular music videos on YouTube are uploaded there by Vevo, a joint venture of the record industry’s big three, which are Universal Music and Sony in addition to Warner

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