The ever-expanding Facebook about to make its way into the music services industry
Facebook is about to make yet another merger, this time with a group of small radio music services. Two cloud-based digital music services, Spotify and Rhapsody, stream millions of songs are lacking of a large clientele of paying users. They figured that merging with a national networking billion dollar company in Facebook would give them the clientele they were searching for. Facebook, which has more than 750 million users, plans to introduce music services to numerous audiences. It has been said that Facebook has already made agreements with many media companies to develop a way for a user’s profile page to display whatever entertainment he is consuming on those outside services. The links to the music would appear on a widget or as part of the user’s news feed, which would direct a curious friend to click on the content. Spotify, Rhapsody, and their smaller competitors Rdio, MOG, and Deezer, are among 10 music services that will be part of a tentative plan to join the merger with Facebook. Vevo, a music video site, is another that will possibly be a part of Facebook’s new mega music services division. Rdio and MOG which used to charge $5 and $10 a month for music subscriptions, decided to cancel the subscription fee to compete with Spotify. Even though Rdio and MOG are able to support their users with free music (which is supported by advertising), they have to make royalty payments to record companies. The 10 year company Rhapsody, which out the small companies has the largest clientele, have said they will continue to charge a monthly subscription fee. The CEO of Rhapsody believes that the cost of content cannot fully be compensated by the advertising dollars generated.
This topic relates to the course in two ways. The first being that joining under Facebook facilitates the networking process as users will be frequently seeing what their friends are up to via newsfeed and their profile pages, clicking on links of music that their friends have listened to. The second way that this story is related to networks is the fact that companies will make decisions based on their most dominant strategies. This may result in small companies merging with a large company such as Facebook because they want to maximize payouts. The idea of Facebook music favors the big company over the little company. Facebook’s ability to network between almost 800 million users gives free music services the incentive to join under their wing. These small companies simply do not have the clientele to compete with the bigger ones. They cannot afford to charge subscription fees in a competition against companies such as Spotify and Rhapsody because they do not have as many songs to offer their customers. But the smaller companies cannot withstand the loss of revenue by not having a subscription fee. Thus, it is in their best interest, or you can say it is their most dominant strategy, to choose to merge with Facebook. Facebook provides these smaller companies with the users they could not find if they stayed as individual firms. These firms believe that they will be able to increase their profit margins, even without having a subscription fee, based on the sheer volume of Facebook users there are in the world.
We have 22 music tracks of royalty free production music. We have a free music category with several music tracks available for those who can’t afford or don’t have the ability to buy online. More Free music tracks become available every month. We also work with universities with free music for students on our website.