Facebook Offers to Pay Hundreds of Millions of Dollars for Music Rights

Facebook is offering major record labels and music publishers hundreds of millions of dollars so the users of its social network can legally include copyrighted songs in videos they upload.

The social networking giant is looking for a way to allow its users to use copyrighted music in videos they post as it is reportedly offering hundreds of millions of dollars to music labels to get a deal done.

The posting and viewing of video on Facebook has exploded in recent years, and many of the videos feature music to which Facebook doesn’t have the rights. Under current law, rights holders must ask Facebook to take down videos with infringing material.

Sources state music owners have been in talks with Facebook for months, as Facebook pledges to create a system which will identify and tag any music infringing on copyright.

However, the system will take over two years to complete, which reportedly is too much time for either party to wait.

Facebook is said to be eager to ink a deal as soon as possible, in a bid to stop frustrating; users who are forced to take down videos, partners, and advertisers.

The agreement would boost Facebook’s efforts to rival YouTube, a unit of Alphabet Inc.’s Google, as the world’s premier user-generated video platform.

“Watch” New Home

The latest discussions will guarantee Facebook members the ability to upload videos with songs just as it’s rolling out Watch, a new hub for video, and funding the production of the original series.

Facebook is attempting to attract billions of dollars in additional advertising revenue and challenge YouTube as the largest site for advertising-supported video on the web.

Facebook Chief Executive Officer Mark Zuckerberg said on the company’s second-quarter earnings call that for the next few years video will drive Facebook’s business and determine how well the company performs.

He told investors to expect the company to continue to increase its investment in the format, as it sees video sharing overtaking text and photo sharing in the future.

While Facebook can still pursue professional music videos, the company chose to prioritize clearing user-generated material. Most of the videos being uploaded to Facebook are from individuals (as opposed to media companies).

Tamara Hrivnak, a former YouTube executive, has been leading negotiations for Facebook since joining the company earlier this year. Also a former executive at Warner/Chappell Music Publishing, Hrivnak is well-liked by her former peers.

In July, Facebook reported it reached 2 billion monthly active users for the first time, as it again beat analysts’ forecasts on revenue and earnings. Facebook shares are up 48% year to date.