Facebook will now directly share a proportion of ad revenue with music rightsholders for UGC videos. Your move, TikTok…

Mark Zuckerberg

If you’ve been paying attention to MBW this month, you’ll know that there’s an increasingly loud industry debate going on over “emerging” social platforms, and the different models they use to pay music rightsholders.

Leading music execs are starting to call out the likes of TikTok, Meta and others for exclusively paying publishers and record labels via lump-sum licensing advances (or so-called ‘buy-out’ deals) – rather than sharing an agreed proportion of revenue for every monetized play/use of music on their platforms.

Today (July 25), then, is a big day: Meta has just announced that it is changing the way artists and music rightsholders are going to be paid from Facebook – and that it WILL now be moving to a ‘revenue-share’ model for user-generated video content.

Whether the music industry is united in being happy with the size of that revenue share, of course, is yet to be seen.

(Lest we forget, in a potentially unrelated – but also potentially related – move, Kobalt Music Publishing just pulled its 700,000 songs off Instagram and Facebook in the US, having failed to agree a new licensing deal with Meta).

Here’s how the new system works: Meta has confirmed to MBW that video creators who choose to use licensed music in videos over 60 seconds long on Facebook will receive a 20% share of any advertising revenue generated by their creation.

The remaining 80% of that advertising revenue will then be split between the appropriate music rightsholders and Meta itself.

What’s the nature of that split? We don’t yet know – Meta hasn’t confirmed it.

Yet whatever it is, it means, for the first time, that the music industry is being paid a direct share of every bit of money generated by an ad on a UGC Facebook video (that uses licensed music, and is over a minute long).

Interestingly, it also means that users on Facebook – including influencers with lots of followers on the platform – have suddenly become monetarily incentivized (via their 20% share) to promote licensed music they love in their posts.

Meta said today that the move “opens up a new way to earn money for both creators and music rights holders”.

It added: “With video making up half of the time spent on Facebook, Music Revenue Sharing helps creators access more popular music, deepening relationships with their fans — and the music industry.

“Made possible through our partnerships across the music industry, this feature is the first of its kind at this scale, benefiting creators, our partners, music rights holders and fans.”

“Made possible through our partnerships across the music industry, this feature is the first of its kind at this scale, benefiting creators, our partners, music rights holders and fans.”

Continued Meta: “Music Revenue Sharing will start rolling out today to video creators globally. To start, eligible videos will monetize from in-stream ads in the US, with expansion to the rest of the world where music is available on Facebook in the coming months.

“We’ll continue to work with our music partners to expand the Licensed Music library to include more licensed songs from your favorite artists and evolve the experience.

“These efforts will help bring creators and the music industry closer together, leading to more authentic connections with fans.”

Amongst the footnotes to remember here:

  • i) This new payment system only affects UGC: it doesn’t affect plays/advertising on official music videos on Facebook. Licenses for that content are still, we’d assume, being covered by ‘lump-sum’ upfront payments to rightsholders that aren’t tied to consumption; 
  • ii) This is for Facebook only – Meta’s other leading platform, Instagram, is so far unaffected.

Meta says the new launch has been made possible by its Rights Manager tool, which it calls “a video, audio and image-matching tool we developed at Meta to help content owners protect their rights and manage their content at scale”.

According to its latest Music In The Air report, Goldman Sachs estimates that Facebook contributed 29% of all ’emerging platform’ advertising revenues paid to the record industry in 2021.

That 29%, MBW calculates (based on Goldman/IFPI numbers), equated to just over $400 million.

Remember: That’s just for one year, and only covers money paid to the record industry (not the music publishing business).Music Business Worldwide