By CultureBanx Team
- Snap wants to license music for users to embed in posts
- Universal Music Group’s roster includes Rihanna, Drake & Migos
Snap (SNAP -0.73%) the parent company of Snapchat wants to license music for users to embed in posts and possibly even launch hit songs. With R&B and hip-hop being music’s most consumed genre, the Wall Street Journal reported the company is in talks with Sony Music Entertainment, Universal Music Group, and Warner Music Group as they have the biggest artist in this category signed to their labels. Will these music bops be enough to impress investors and fend off Facebook’s (FB -3.03%) territory poaching Instagram?
Why This Matters: Competition in this space is quite steep but holds a lot of upside. Case and point look at Lil Nas X’s “Old Town Road” song with Billy Ray Cyrus, the song first caught on with TikTok as a meme and now has spent eight weeks at #1 on the Billboard Top 100 chart. Last year, Facebook cemented licensing deals with major labels, once again beating Snap to what could be another way to increase advertising sales.
Licensing music from these labels could be the best way for Snap to monetize its 186 million daily active users and grow advertising revenue. E-Marketer forecasts that Snapchat’s U.S. video ad business is estimated to grow 19.9% year over year in 2021, reaching $727.4 million.
Lil Nas X’s “Old Town Road” song with Billy Ray Cyrus, the song first caught on with TikTok as a meme and now has spent eight weeks at #1 on the Billboard Top 100 chart
When it comes to record labels securing these licensing deals is imperative for Snap. For example, Universal Music Group and its family of labels which include Capitol Music Group, Island Records, and Def Jam just to name a few own music rights to some of the biggest hit makers in the industry. They have a deep roster of heavy hitters like Rihanna, Kendrick Lamar, Drake and Migos.
Situational Awareness: The main reason Snap is focused on music licensing is the shifting viewing behaviors of younger generations. African American teens are the first-movers in many ways when it comes to deciding what’s going to take-off on social media. Teenagers and their technology are inseparable with 9 out of 10 black teenagers using Snapchat, according to a survey by The Associated Press-NORC Center for Public Affairs Research.
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