Facebook to launch integrated music service with Spotify?


Now we know what the recent $100M investment in Spotify may be used for: Facebook has partnered with the online music streaming service on an integrated offering that could be launched in as little as two weeks, according to Forbes. If the deal is real, it will be a sea change in music socialization that will make MySpace’s efforts look tame.

It’s currently going through testing, but when launched, Facebook users will see a Spotify icon appear on the left side of their newsfeed, along with the usual icons for photos and events. Clicking on the Spotify icon will install the service on their desktop in the background and allow users to play from Spotify’s library of millions of songs via Facebook. The service will include a function that lets Facebook users listen to music simultaneously with their FB friends, the story said.

It has yet to be decided if it will be called “Facebook Music” or “Spotify on Facebook,” but it will only be available for FB users in countries where Spotify has a presence, excluding the US. However, a Spotify spokesperson told Forbes of no knowledge of the new music deal with Facebook: “We have a Facebook integration. We’re continuously working with them to make that as good as it can be. But that’s the extent of our relationship.”

Spotify already has Facebook Connect integrated into its own desktop interface, allowing users to see what their friends on Facebook are listening to, and opt to have music choices show up on their news feeds. The new service on the Facebook platform will have similar social features.

No money is changing hands with this partnership, said the story, but Facebook gets a music service and while Spotify won’t get a cut of Facebook’s ad revenue, it will reach millions more users, offering them the option of its premium service (Spotify has a free service, but it only allows 10 hours of listening per month).

Facebook and Spotify share a number of investors: billionaire Li Ka Shing has a stake in Facebook and Spotify. Yuri Milner’s DST Global, which owns roughly 10% of Facebook, is also in negotiations to buy a stake in Spotify. Facebook’s founding president and Napster founder Sean Parker, sits on the board of Spotify.

RBR-TVBR observation: The question should be whether or not the Facebook option for listening to Spotify will allow FB users to stream music free for longer than 10 hours per month. If not, this will likely be a dud (note to Pandora on its  now 40-hours per month free limit). FB users expect their experience to be the same as it has been—free. In-stream and display advertising will likely solve that problem and it should be lucrative with the huge numbers of ears and eyes that will be added. Even royalty streaming payments to the big four music labels (Sony BMG, Universal Music, Warner Music and EMI) should be offset with ad revenue—if the streaming is not limited. Those that want ad-free listening will, of course, be able to take the premium upgrade.