Fresh Off a Big Funding Round, Musical.ly Signs Its First Major Label Deal with Warner Music

Social video sharing app musical.ly, which allows users to create and upload 15-second videos of them dancing and singing along to songs, has been steadily gaining traction with teens since its launch less than two years ago -- and now it's attracting the attention of the major labels. Warner Music Group is the first to sign a deal with the app to allow its music to be licensed for the platform, the company has confirmed to Billboard. Sources say Sony Music is also in talks, and quickly approaching, a deal. Requests for comment from Sony Music were not returned by press time.

It's a significant move for Warner, particularly as musical.ly has exploded to more than 90 million users globally, up from 10 million just last year; for context, Instagram just announced it had passed 500 million monthly active users in five years, while Snapchat, which doesn't release monthly metrics, is rumored to have north of 200 million monthly users since its fall 2011 launch. In May, musical.ly raised $100 million in an investment round, valuing the company at $500 million, and the company claims it has hit No. 1 on Apple's App Store in 19 different countries.

"Musical.ly has taken the art of lip syncing, air guitar-ing and dancing with friends to a new level, making it one of the most compelling apps among young fans," a Warner Music spokesperson tells Billboard. "Our deal is another good example of WMG’s commitment to pioneering new business models and expanding the ways that fans can interact with our artists and their songs."

Last week, musical.ly debuted its live streaming app, live.ly, which became a near-instant success, rocketing to the top of the App Store and passing 500,000 downloads since its release last Friday (June 24). Live.ly gives its parent company a way in to the fast-growing livestreaming space, which is getting crowded of late; YouTube introduced a live streamed mobile functionality last week at VidCon, while Facebook (Facebook Live) and Twitter (Periscope) already have their own platforms.

Warner's deal, which was previously unannounced but has been in place since before the app's funding round last month, is a signal that the music industry is finally paying attention to "where the kids are" -- and that it intends to view it as a potential revenue stream moving forward. Already, artists such as Jason Derulo, Fetty Wap, Meghan Trainor and Ariana Grande have joined the platform; when Grande released her single "Into You" in May, she launched a campaign on the platform that generated 150,000 videos of fans singing and dancing to the song in its first day. With filters, slow motion and backwards video features, it echoes Snapchat in a way, but its social functionality -- and the ability for its videos to go viral as a result -- give it the possibility for artists to break on its platform in a way that Vine and Instagram have in the past.

The deal also comes on the heels of a report from May that Warner was test driving a program with Facebook to soundtrack photo albums with Warner's catalog, called Slideshow. The program is still being tested, a Facebook rep told Billboard.

Musical.ly was founded in Shanghai by co-creators Alex Zhu and Luyu Yang in October 2014. Reps for the company, which has been curiously media-shy as its user base has expanded, did not respond for requests for comment as of press time.

Additional reporting by Andrew Flanagan.