Rumored Facebook Music Deal Could Hit the Spotify

Facebook users may soon be able to stream, download and share music via the social networking site with a partnership with Spotify, a Swedish music service, according to codes found by software blogger Jeff Rose.

The software engineer examined a code possibly in development that users could use to download what was called “Facebook Vibes,” presumably an app to use Spotify.

Neither company has confirmed a deal, but Spotify did not deny a strong affiliation with Facebook.

“We never comment on rumor or speculation — and there has been a lot of that recently. That being said, we have a good relationship with Facebook in that we have an integration on Facebook Platform that has been valuable in terms of driving engagement with the Spotify service,” said a Spotify spokesperson in a statement provided to the E-Commerce Times by Alison Bonny, head of communications at Spotify.

Facebook did not respond to the E-Commerce Times’ requests for comment by press time.

Building Blocks for Spotify

If a deal is revealed, it will come shortly after Spotify’s announcement of a U.S. launch. Some media outlets have reported the company is projecting 50 million users in its first year of operation, according to promotional materials the site is using to woo advertisers.

The number seems ambitious considering Spotify had 1 million subscribers last March and 7 million active users. That makes the European music service a leader overseas, but the company may need Facebook’s leverage to gain popularity in the more saturated U.S. market.

“The big difference between the U.S. and Europe is competition. In the States, not only do you have Pandora, which has a huge user base, but there’s Rhapsody, Napster is still kind of there, and a lot of other competition, so it needs something like Facebook to really get in front of people’s eyes,” Giles Cottle, principal analyst with Informa told the E-Commerce Times.

Spotify, then, could be the real winner if a deal were to go through.

“The reality is that this probably has a lot more benefit for Spotify than it does for Facebook. If you’re an insider, you’re aware that the general population in the U.S. doesn’t have an idea what Spotify is, so this would be a real opportunity for them to enter the market,” Russ Crupnick, president of NPD Entertainment, told the E-Commerce Times.

The music addition, however, may not bring many new users to Facebook.

“User-wise, Facebook is pretty close to being tapped. It’s mostly ad revenue they would be after here,” said Cottle.

The benefit to Facebook would be increase in the time users spend on the site and more interaction, which can lead to higher ad revenues for the social network.

“For Facebook, this is not only a step along their path of being a potential marketing and discovery source for entertainment, but becomes a way to potentially spend more time on the site, interacting with the music, so it’s good if you’re a record label, promoter or manager from a promotion standpoint, and it’s good from a user standpoint,” said Crupnick.

One way to make sure Facebook can benefit from the deal could be to ensure it has the power to adopt more innovative music-sharing platforms should they come along

“Maybe Spotify will be successful, and maybe it won’t. If somebody else comes along with the next Spotify or iTunes or next big music program, Facebook could add that as well. I think the idea of not getting locked into any one service is probably in Facebook’s benefit,” Crupnick said.

Networking Music

The social networking platform could prove to be a natural fit for entertainment artists, labels and promoters to turn to broadcast their work.

“Social networks are offering a music discovering and listening service, and I think the same thing will happen with video, with gaming. You learn about your entertainment through these networks, they’re promoted and eventually will be served up,” said Crupnick.

Facebook has already ventured into entertainment platforms with gaming and video, with deals with game-maker Zynga and film giant Warner Bros. A Netflix deal is also rumored to be in the works.

It may prove to be a wise move for networking outlets such as Facebook to partner with companies such as Spotify to create a working duo, rather than trying to break into every platform on its own.

“This is something you probably wouldn’t want to go into on your own, it’s a very difficult business model. It’s a great way to encourage people to spend time with the platform without having to create it from scratch,” said Cottle.

The blending of all types of social networking and entertainment media is another sign of the way communication is evolving with technology.

“I think it’s to anyone’s advantage to have a footprint in social networking because that’s where the eyeballs are. What better way to promote a video or music? It’s incredibly difficult and expensive to use traditional ads for a lot of that promotion. This is where everybody is, so they’re intelligently combining,” said Crupnick.