We all know what Facebook is good at, which is creating connections that transcend borders, span the globe and bring people together. At times, this strength manifests into genuine, heartwarming moments. In others, though, people use the platform to express views or band together over issues that aren’t so heartwarming.
This latter point has been the company’s downfall, along with its inability to protect personal information. Facebook simply can’t – or, perhaps because of its boundless thirst for data to leverage into advertising revenue, doesn’t want to – police the content that permeates its site.
These failings have led to a brain drain at the executive level, increased regulatory risk, less engagement and slowing user growth – all of which has combined to produce not only a huge hit to their reputation but provoke a sell-off of the company’s stock, with shares off by more than 30% since July.
It’s time for Facebook to embrace its purported mission of creating communities and connecting people in positive, constructive ways. This is not a revolutionary idea. The company itself acknowledges the need to do better. The big question is how they will do that.
What about music?
Very few things bring people together like music. Politics, of course, doesn’t. If we’ve learned anything over the last two years, it’s that. Neither does television, as the reboot of “Roseanne” and its eventual cancellation showed.
Sports, too, is no stranger to divisiveness. That’s even if you ignore last year’s national anthem-related kerfuffle in the NFL, with fans often behaving badly, including a recent bomb threat after a prominent alum of the University of Louisville rejected the school’s offer to become its head football coach.
Music, though, is different. While it can be emotional, it rarely, if ever, pits people against one another. In fact, it often does the opposite, bringing groups of people together who otherwise have very little in common.
Unlike politics and sports, music is not a zero-sum game. There is no winner or loser. It’s about the experience, whether its streaming a song, a playlist or attending a show. Facebook should take advantage of this unique social dynamic.
The company certainly has the resources to build a vertically integrated music business: a platform that plays videos, streams music, sells merchandise and acts as a ticket broker, all in one place. Conversely, it could also form partnerships with a handful of firms, including Live Nation, Eventbrite, Spotify and Shopify, to do these same things.
Today, all these services are fragmented, which, along with the skewed economics of the streaming model, is the reason it’s nearly impossible for any musician to make money, save large, mega acts like Taylor Swift, Beyonce or the Rolling Stones. In an era where royalties are measured in fractions of a penny, a Facebook music business could breathe new life into the industry, paving the way for hundreds of now struggling acts to make a better living.
From Facebook’s perspective, however, the much larger upside is creating positive experiences for users, which has the potential to boost flagging levels of engagement and reinvigorate the company’s tattered reputation. It would, in effect, be a loss leader, much like Amazon Video and Amazon Music.
Amazon gives away these services to keep people within its ecosystem, knowing that they’ll spend more money on retail items. A Facebook music app, while likely not profitable, would similarly further the company’s larger goals.
For years, Facebook has provided a home to forces that seek to sow division, while also doing a poor job of protecting our data. That’s led to an erosion of trust. By promoting music, which unites people across the world from diverse backgrounds, it could take the first step toward sanitizing its product and becoming a positive force for good.
That’s something the company has always claimed is in its DNA. More importantly, it could also make Facebook an attractive investment again.
Ross Gerber is CEO and president of Santa Monica, Calif-based Gerber Kawasaki Inc., a SEC-registered investment advisor with approximately $840 million in assets under management as of 9/30/18. Gerber Kawasaki clients, firm and employees own positions in Facebook. Please seek guidance from an investment advisor before making any investment. All investments involve risk and may not be suitable for your situation.
