Is Facebook (FB) Launching A Music Streaming Service?

Shares of Facebook (NASDAQ:FB) gained more than 1.3% in early morning trading hours Wednesday after the company agreed to a new deal with ICE, a pan-European online rights hub. ICE described the agreement as a “landmark” deal, and it marks the social media behemoth’s first partnership with an online music licensing firm.

Facebook’s agreement with ICE covers 290,000 rights holders, across 160 territories. The deal allows Mark Zuckerberg’s company to license these files on Facebook, Instagram, Oculus, and Messenger.

“We are delighted to continue deepening our relationship with music by partnering with ICE in a first-of-its-kind licensing deal,” said Facebook’s head of international music publishing business development, Anjali Southward, in a statement.

While the deal with ICE is Facebook’s first with an online rights distributer, the company has been busy building relationships with major record labels and publishing agencies over the past several months. In December, Facebook inked a multi-year licensing deal with Universal Music Group, which was quickly followed by a separate deal with Sony/ATV Music.

Facebook has also recently agreed to licensing deals with Global Music Rights, HFA/Rumblefish, and Kobalt Music Publishing.

Exactly where these licensing deals fit into Facebook’s growth plan remains unclear. The company has been ramping up its investments in original content and live streaming, and that probably requires some sort of access to music.

But Facebook’s music plans might just be grander than that. Considering the scope of the aforementioned deals, Facebook may very well be gearing up to launch a streaming service that would rival Spotify, Pandora (NYSE:P) , and Apple’s (NYSE:P) Apple Music.

Groups like ICE work to make sure that artists and labels get paid when their music is played online. That could mean managing licensing for video content, but it could also mean ensuring accurate streaming royalties are being distributed.

ICE has already said that it will be collaborating with Facebook to ensure that accurate royalties data is being reported in the early stages of the deal, and the rights hub seems optimistic about the future of its relationship.

“We are excited to work with Facebook to ensure we are delivering value back to creators for the use of their works on Facebook platforms,” said ICE’s commercial direction, Ben McEwen.

McEwen would later say that the “future of music depends on our industries working together” and a closer relationship between Facebook and the music industry could “enable the development of new models for music consumption.”

Could one of those “new models” be a music streaming service that is intertwined with a social media platform that boasts more than 2 billion monthly users around the world? Only time will tell.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>