Inside Facebook

There were a lot of rumors about Facebook’s music efforts last year — including the possibility of streaming full-song playlists on the site. But the rumors ended rather quietly. Last we heard, back in December and January, Facebook was talking to music site Lala about some sort of service. Now, we know a little more about what that is.

Lala is going to be offering virtual gifts in Facebook’s gift store, The New York Times reports. The service, as we’ve covered, has already been available for third-party developers since August. From the Times:

But adding songs from Lala is clearly the most interesting step. People can give friends, say, Elvis Costello’s aging ballad, “Veronica” for their 40th birthday. And Lala is the perfect partner for this. It charges 10 cents (or one Facebook credit) for a “Web song” which can be played online in perpetuity; for full price, usually around 10 credits, the recipient of the music gift will be able to download the song and transfer it to their iPod.

The Times report didn’t give any indication of what regions virtual gift songs on Facebook would be available in, and whether prices would vary internationally (prices for normal Facebook gifts don’t vary from region to region, but music licenses can vary significantly by country). Currently, Facebook requires all users to first buy Facebook Credits in one of 14 local currencies. Most Facebook gifts cost 10 Credits, or USD $1, but the “Web song” version of Facebook’s music gifts will only cost 1 Credit.

Facebook says it is indeed still looking at music initiatives, but isn’t revealing more. The statement from the company:

We recognize that sharing music plays an important role in how people stay connected and express common interests on Facebook. We are always talking with potential partners about new ways to provide users a richer experience on Facebook, but we don’t have anything to announce pertaining to music at this time.

So the Lala deal isn’t streaming playlists, but this move sure sounds interesting. The addition of music gifts could help drive revenue for a lot of people: The record labels, Facebook, Lala, and even musicians. We estimate that virtual gifts are still a small minority of Facebook’s overall revenues this year.