Inside Facebook's Next Billion Dollar Business
Facebook's road to becoming a $100 billion company is to infect every sector of the internet with its social graph, letting other companies build and expand their business on top of it and taking a toll in exchange for that.
Facebook is the enabler of social games, which is now a multibillion dollar industry, and takes a cut through advertising and credits.
But the next big endeavor is music, Giga Om says in a report revealing Facebook's upcoming big social music service.Here's how it will look, according to Giga Om: your Facebook homepage will include a Music tab leading to a Music Dashboard where you will be able to listen to music and see what music your friends are listening to.
Facebook will partner with Spotify but also other services to provide the service. There have long been talks of some kind of big partnership between Spotify and Facebook when it launches in the US, but it seems that it's only a small part of a much broader endeavor to build a huge social music service.The goal is to do for music what it did for games: use its social graph to help Facebook users discover music and help music startups get users.
At eG8 Forum, Mark Zuckerberg said he thought the next industry to get disrupted by social, after games, would be music, and then movies.It's not clear if and how Facebook can make money directly from music. Facebook can take a 30% cut off social games because virtual goods have zero marginal costs. By contrast songs streamed over the internet (at least legally) have high licensing costs; indeed, most internet streaming businesses have unprofitable unit economics. It doesn't seem likely that internet music startups can afford to pay yet another tollmaster.
However, a music dashboard would get Facebook users to stay on Facebook.com all through the day if that's where they stream music from, and so they would see a lot more ads.
Also, it's a nice swipe at Apple if their music service ends up rocking and being really good, given how undewhelming Apple's own social music service Ping has been. The rivalry between Apple and Facebook is heating up in a big way with Apple integrating Twitter deeply into iOS and Facebook trying to bypass Apple's app store with an app platform based on HTML5.