Social Networking Sites: The New Music Platform?

In an earlier post, I discussed the cultural shift away from record labels and hard-copy CD sales toward the world of digital downloads. Expanding on this topic, Facebook unveiled a new music section last week, allowing artists to post videos and songs for fans to stream, promote upcoming shows and sell tickets, as well as link fans to the iTunes store to buy their songs (sample Facebook top artists page, below right). Using the site, which is comparable to MySpace Music pages (see logo, left), musicians can create free profiles, and fans can “friend” their favorites on the popular social networking service. While the site is still in its implementation stage with many details yet to be revealed, Facebook Music's representatives are currently in discussions with several major labels to launch its companion, an additional music acquisition service.

However, Facebook is not the first social networking site to propose such a music platform. Record label representatives say that a new MySpace service will likely involve free ad-supported on-demand streaming, similar to popular internet radio sites like Last.fm, with the option of DRM-free downloads as well. It is this downloading option that will set the service apart from current on-demand radio sites, supported heavily by advertising, such that every artist page can become its own music store that sells music from friend to friend. And, since MySpace's overall advertising revenues reached close to $525 million in 2007, the site is in an advantageous position to try such a bold move as an ad-supported music service. Interestingly, however, digital business blogger Bill Houghton notes that were MySpace truly successful in their advertising, according to their number of ad impressions per year, this figure should actually be closer to $4.8 billion. The new platform has the potential to make up for this loss, strengthening and grounding MySpace's ad business as a whole because advertising on the music pages could be tailored to the target audience for each artist or to the personal hobbies, interests, and tastes named on each user's profile. Although this sounds like a feasible and valuable idea, it is important to note that MySpace executives seem, in CNet News blogger Greg Sandoval's words, only to be "taking the record industry's temperature" regarding such a service. Especially since MySpace's parent company NewsCorp still needs to make amends with Universal Music Group, which sued MySpace in 2006 for copyright infringement.

However, if all plays out in MySpace's favor, how well will Facebook be able to handle and counter the competition? Its sixty-six million members cannot easily compare to MySpace's 110 million users and three million registered bands. Then again, Facebook's smaller numbers may actually serve as an advantage, as artists want to go where there is less competition and a greater chance of being heard and discovered. I would expect Facebook to do something clever with the external applications that already dominate their non-music user profiles to create a tightly networked and personalized user experience, perhaps finding top-notch music companies to fund and invest in the new platform. Current applications include a Facebook music player, a MusicShop that allows artists to display their merchandise for fans to purchase, and iCast, a bulletin system that sends artists' multimedia blogs and bulletins across ten networks to engage with their fan bases, although comparable applications are already available on MySpace artist pages. If Facebook hopes to present itself as a worthy player in the digital music-networking world, its executives will have to find new ways to connect its users both with the platform and the artists. One suggestion I have would be to incorporate fans' RSVPs to upcoming shows so that users can see which of their online friends are attending or would like to go to various concerts in their area, something that the application iLike has already initiated.

Nonetheless, having both MySpace and Facebook involved in digital music distribution is an exciting new move that already has a potential 175 million members and will likely attract more. Combined, these networks have made unlimited, free exposure possible for millions of emerging and prominent artists alike, making significant contributions to the ways in which we consume and discover new music and helping guide music culture into its present digital stronghold. Ultimately, the timing is beneficial as the record labels can currently use the help and youthful appeal of social networking sites to win over the growing community of online consumers, in return providing the sites with the labels' support to share and stream the music. As negotiations continue, I am curious to see what the impact of these changes will be on the record companies, artists, and their fans.