The integrated service is currently going through testing, but when launched, Facebook users will see a Spotify icon appear on the left side of their newsfeed, along with the usual icons for photos and events.
Clicking on the Spotify icon will install the service on their desktop in the background, and also allow users to play from Spotify’s library of millions of songs through Facebook. The service will include a function that lets Facebook users listen to music simultaneously with their friends over the social network, one of the sources said.
The partnership is another indication of how Facebook is moving towards becoming a hub for media like movies and music. Last March for instance, Warner Bros. announced it would make movies available to stream and rent through Facebook using Facebook credits.
It has yet to be decided if the new service will be called “Facebook Music” or “Spotify on Facebook,” but it will only be available for Facebook users in countries where Spotify has a presence, excluding the all-important United States.
While news reports have suggested some success to Spotify’s recent negotiations with music labels about bringing its streaming service to the U.S., those talks are still ongoing. Once completed, however, Facebook’s Spotify will be launched Stateside too.
A Spotify spokesperson claimed to have no knowledge of the new music deal with Facebook: “We have a Facebook integration. We’re continuously working with them to make that as good as it can be. But that’s the extent of our relationship.” Spotify’s co-founder Daniel Ek did not wish to comment.
Spotify already has Facebook Connect integrated into its own desktop interface, allowing users to see what their friends on Facebook are listening to, and opt to have music choices show up on their news feeds. The new service on the Facebook platform will have similar social features.
No money is changing hands with this partnership, but the benefits to both are obvious: Facebook gets the music service it has wanted for years, having reached out to the likes of Last.FM and others way back in 2008. And while Spotify won’t get a cut of Facebook’s ad revenue, it will reach millions more users, offering them the option of its premium service which costs £10 per month in the U.K. and 10 euros in parts of continental Europe like France, Spain and the Netherlands. Spotify has a free service, but it only allows 10 hours worth of listening time per month.
The partnership with Spotify signifies how Facebook is flexing its muscles in the media space, offering services that keep people within the social network, rather than scouring other parts of the web for content. With movies and now music being integrated into the social network, TV shows are bound to find their way in too, as people become more inclined to consume their content in a social way. (Why listen to a great new song by yourself when you can hear it with your friends too?)
Facebook initiated this social aspect of entertainment with social gaming, to the benefit of some games developers. Zynga, which makes the wildly popular social gaming app FarmVille, is now a $10 billion company on the road to an IPO, in large part because of its successful integration with Facebook. Spotify will be looking capitalize on Facebook in a similar way.
The company’s challenge till now has been raising money through advertising and premium subscriptions, to offset the costs of royalty streaming payments to the big four music labels: Sony BMG, Universal Music, Warner Music and EMI. Hopping onto the platform of Facebook should significantly boost its chance of picking up more paid-for subscribers. As the service gets licensed in more countries like the U.S., Facebook will help it compete with other existing music services like Shazam and Last.FM with a unique social element.
Facebook and Spotify share a number of investors: billionaire Li Ka Shing has a stake in Facebook and Spotify. Yuri Milner’s DST Global, which owns roughly 10% of Facebook, is also in negotiations to buy a stake in Spotify. Facebook’s founding president and Napster founder Sean Parker, sits on the board of Spotify.
Facebook’s ability to stream music will also fulfil a long-held dream of Mark Zuckerberg, who was working on a music streaming service around the same time he was first developing Facebook in the dorm rooms of Harvard. Zuckerberg, who has publicly professed his admiration for Spotify, launched a peer-to-peer file-sharing service called Wire Hog in 2004, which was designed to sit on top of Facebook like a software application. Sean Parker allegedly killed the service, which was thought to be ahead of its time.forbes.com