It’s obvious that Facebook has been gunning for YouTube for some time now, and the service now claims that it now has more video viewers (although that’s debatable). That’s not enough though, as Facebook will soon introduce a feature called Slideshow that will allow users to create their own soundtracks from a list of licensed popular songs.
Although only Warner Music has signed on currently, all the major labels look to Facebook as a higher paying alternative to YouTube. Having another competitor in the music video streaming space could also force YouTube to reconsider it’s 55/45 payout schedule which has been the bane of record labels for some time. With the rest of the streaming industry paying 70% or more of collected revenue out on royalties, the major labels view YouTube as the thing that’s holding back users from subscribing to the paid tier of streaming networks, since it’s difficult to compete with free.
The labels would still be OK with YouTube if it paid a higher royalty, but since that doesn’t look to happen soon, Facebook’s Slideshow could be their dream scenario.
Facebook, Instagram and Messenger users currently spend 50 minutes a day using the services, CEO Mark Zuckerberg revealed on the company’s last earnings call. It also reported an surprising 57 percent increase in ad revenue to $5.2 billion, and the music industry would certainly like to get a larger piece. That said, the average person spends about 1 hour and 12 minutes viewing online videos, and much of that is still on YouTube. Facebook would like to be part of that daily experience, which is why it views Slideshow as important.
Slideshow better be easy to use and even easier to search, as that’s the secret sauce of YouTube. It’s the second largest search engine in the world (and owned by the largest, which is Google), and that basic ability shouldn’t be underestimated.