Facebook's (NASDAQ:FB) Instagram service has so many opportunities ahead of it that it's hard to keep track of them all. From expanding into emerging markets to e-commerce to long-form video, the popular photo- and video-sharing service has no shortage of growth levers it can pull. In many ways, Instagram has been relatively insulated from the controversies plaguing its parent company, allowing it to better focus on these initiatives without being distracted.

Investors should now consider another opportunity Instagram has: music.

Abstract visualization of musical notes

Image source: Getty Images.

An Instagram exclusive

Music Business Worldwide points out that Jaden Smith recently released an album as an exclusive for Instagram on its new IGTV service. While almost always time-limited, artists' exclusives are often a differentiating factor that music-streaming services compete over, so releasing content as an exclusive on a photo/video-sharing service is quite the departure -- and a new model worth exploring.

Keep in mind that Facebook recently inked deals with all three major record labels -- Warner Music, Sony/ATV Music Publishing, and Universal Music -- that give it the rights to include copyrighted music in user-generated content. All of those deals notably included Instagram. It seems unlikely that Facebook or Instagram would try to launch a pure music-streaming service anytime soon, but it undoubtedly has an opportunity to encroach on YouTube's dominance as a popular destination for music videos and other free music content.

Incredibly, Instagram's user base is catching up with YouTube. The Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) property was originally launched in 2005 and now has roughly 1.8 billion monthly active users (MAUs). Instagram was launched in 2010 and recently hit 1 billion MAUs.

Instagram's unique value proposition to the music industry

The key will be whether Instagram or IGTV can offer better monetization options to artists and record labels, who have long argued YouTube erodes the value perception of music in consumers' minds. Just look at the paltry payouts compared to music-streaming services. Of course, YouTube's ability to pay more is largely constrained by its own ad-based revenue.

While Instagram is similarly monetized with ads currently, some of the other opportunities could help fund better music payouts if IGTV grows to become a compelling destination for musical content. For example, if Instagram's e-commerce efforts start to ramp, the profits there could help subsidize music payouts. If the payouts are relatively stronger than YouTube, artists and record labels may shift their attention to building their audiences there, giving IGTV even more credibility in the eyes and ears of music fans.

Artists could even set up shop on Instagram, selling merchandise and other products. Merchandise revenue represents a significant chunk of an artist's total income. You can't sell stuff on YouTube. Instagram has a lot to offer to the music industry, in ways that no one else does.