Recently Facebook (tkr: FB) signed an agreement with Universal Music Group to license UMG’s music library so that Facebook users may incorporate UMG music into user-generated content. Facebook’s Instagram platform is the hottest social media platform at the moment. Instagram kneecapped Snapchat (tkr: SNAP) earlier this year when the former rolled out its “stories” feature. Instagram has further extended its lead over Snapchat and Twitter (tkr: TWTR) by making music available to users – who essentially may create mini soundtracks for each post. Facebook’s limitless balance sheet makes the company an attractive prospective customer/partner for cash hungry music labels. We expect that UMG will be the first in a string of music licensing agreements for Facebook – effectively putting the squeeze to Twitter, Snap and any upstart social network. Snap plans to respond by rolling out a “stories”-like feature called “stories everywhere” which will extend beyond the Snapchat network.
