All told, such licensing deals with the social media giant could generate roughly $1 billion for the music industry over the next two years, sources said.
Over the past few years, Facebook has been more aggressive with removing videos with copy-written music, but this could allow the rules to be slightly more lax while having UMG taking a cut of ad revenue. "In time", a press release on the partnership noted, "functionality will expand to enable access to a vast library of music across a series of social features".
YouTube is expected to launch a new paid music service next year after striking three deals with major labels this year, including UMG, which signed a second global, multi-year agreement with the site this week. While UMG is the first label to sign a licensing deal with Facebook, it won't be the last, as Facebook has been in talks with Warner Music Group and Sony Music Group as well, according to multiple sources.
It was not immediately clear, however, how Universal and its artists would be compensated for the use of their music.More news: Pentagon Admits to Funding Alien Research Program
"There is a magnetic relationship between music and community building", said Tamara Hrivnak, Head of Music Business Development and Partnerships, Facebook.
Of course, Facebook users could previously create videos with copyrighted music and share them to the network.
With this deal, the companies hope to "advance the interests of recording artists and songwriters while enhancing the social experience of music for their fans", says Michael Nash, UMG's Executive Vice President of Digital Strategy, in a statement. Spotify and Apple Music also offer streaming music services. On Facebook and Instagram, that might involve new groups built around specific artists or genres, which will now be able to legally share videos - just as long as they're from UMG's catalog.
With those tools in place and this new deal, Facebook is another step closer in its quest to be a destination for high-end video.