Inside Facebook

Last week, there was a lot of talk in the tech blogosphere about rumors originally reported by the NY Post that Facebook is stirring the music pot again by talking to potential partners about putting together a deal to integrate their music experience inside Facebook.

Facebook is rumored to have had conversations with Rhapsody, iLike, imeem, and Lala. Obviously, potential partnerships with these would look quite different depending on the partner, since some (Rhapsody and imeeem) have streaming music deals with record labels, others (like iLike) don’t (iLike actually has a deal with Rhapsody).

When asked about Facebook’s music plans, a Facebook spokesperson issued the following statement: “Facebook is committed to its mission to give people the power to share and make the world more open and connected, and we recognize that music sharing plays a part in that as well. We cannot comment on specific initiatives, but are always talking with potential partners to pursue opportunities that help us deliver on our mission.”

Ultimately, the potential business opportunity that an in-house music service offers Facebook is enticing but must be carefully weighed and managed in light of the trust that Facebook has built with the application development community, many of whom have built music-related applications. The business questions are complex, and it will not be simple for Facebook to navigate these waters if it moves forward with a big in-house music service.

Which application developers would be most affected by Facebook Music?

1) iLike – iLike, one of the most popular applications on Facebook since day 1, is the biggest developer of music apps on Facebook by far. Its Facebook business shows over 5 million active users per month of the core iLike application alone, with many more users to its applications designed for artists with Facebook Pages. It’s also one of the companies Facebook is reportedly talking to about a partnership.

2) Playlist.com – Music Playlists is the second largest music app on Facebook, with over 500,00 monthly active users.

3) ReverbNation – ReverbNation’s family of apps reach nearly the same amount of monthly users, serving bands and fans alike.

4) Fendoo – Fendoo’s Music Player lets users stream music for free on Facebook.

5) Qloud – Qloud’s My Music app lets users play music from their iTunes library inside Facebook.

Facebook application developers will be following the possible creation of Facebook Music closely to see how the company’s decisions might affect their opportunities on the Platform. We will of course have all the details as Facebook makes its plans over the coming year.