There's Plently of Value in Awareness
There was a lot of chatter over the weekend about folk punk rocker Billy Bragg's New York Times editorial where he argues that music artists who uploaded material to social network Bebo were entitled to a cut of the site's $850 million sale price. Because bebo owes much of its success to becoming an indy music hub, that seems reasonable, right? Bragg says this is a case of artists’ rights. Certainly, artists deserve to be compensated for their work, but if you willfully put it online for free, can you really lay claim to revenue later that was never part of the argreement?
Much of the response to Bragg's editorial has actually come in the form of a respone to a response. Specifically, Michael Arrington's Saturday afternoon post in which he argues that social networking sites like Bebo provide free marketing for artists. Most controversially, Arrington wrote that, "recorded music is nothing but marketing material to drive awareness of an artist."
That sentence in specific drew a vitriolic response from Nick Carr who called it "the saddest, stupidest sentence [he's] ever read." You can't make money from awareness, says Carr, so thinking that awareness is all musicians want is stupid. He's partially right. Recorded music, even though its reproduction cost is zero, is still a product that can and should be sold, and professional musicians want to, need to, and deserve to make money from their craft. But Arrington is also right: there is value in awareness and musicians aren't owed any money from social networks.
It's interesting to note that this argument has been made before about MTV and iTunes, which some musicians feel were unfairly built on the back of their creative material. From a November 2007 editorial by music producer Jermaine Dupri, "If anything, WE made iTunes. It's like how we spent $300,000 to $500,000 each on our videos and MTV and BET went ahead and built an entire video television industry off of our backs. We can't let that happen again. These businesses exist solely because of our music."
Social Marketing Machine
The wonderful thing about social networks like Bebo is that they provide a ton of viral marketing for musicians and other artists. The other wonderful thing is that they're completely voluntary -- you don't have to upload your work if you don't want to. However, because of the massive amount of free marketing that they provide, most artists would be silly not to take part in the love-in.
Bebo's terms of service specifically state that don't "claim any ownership rights in any Content" uploaded to the site, but that by uploading the content artists grant them "a worldwide, non-exclusive, royalty-free, transferable license to use, copy, modify, publicly perform, publicly display, reproduce, communicate to the public and distribute such Content in connection with the provision of the Service and the Bebo Site, including with regard to the promotion of the Service and the Bebo Site on any media whether now known or hereafter invented, whether or not within the contemplation of the parties."
That's a lot of text, but what it basically means is that you own your work, and if you put it on the Bebo site, they might use it to make money. In exchange, though, you get your work exposed to thousands or millions of users of the Bebo service. Or, in other words, you get awareness.
Knowing the terms by which you participate in the site -- and anyone who uploads anything to sites like Bebo should familiarize themselves with the TOS first -- means that you can't ask for compensation later when the site turns a buck. That'd be like going on the TV show "American Idol," then demanding compensation when you didn't win because your performance was part of the show's content for a few weeks.
It should also probably be noted that most social networks allow, and sometimes encourage, artists to install third party widgets allowing them to sell their work via their profile.
Value in Awareness
Most artists know that there is immense value in awareness. Two large music acts demonstrated that this week. First, REM, whose new album will be streamed for free on iLike starting today until April 1, prior to its official launch. Next, Pennywise, who announced that they will be putting their new album on MySpace free for two weeks starting tomorrow.
Why would REM and Pennywise, two acts who have each sold millions of records, give their music away for free before selling it to their fans? They answer is awareness. These marketing stunts will potentially boost concert ticket and merchandising sales, while probably not hurting album sales from die-hard fans (i.e., the fans who buy every album a band puts out). It will attract a "look-in" audience as well -- people who have never listened to REM or Pennywise in the past will give their music a listen because its being offered free. That added awareness and consumer mindshare might translate into a few more fans and in turn translate into dollars down the road.
The "pay-what-you-want" download schemes from Radiohead and Nine Inch Nails would not have worked as well as they did had those bands lacked awareness. If success for independent artists requires the cultivation of "true fans" then awareness is paramount. The service that social networks provide -- free awareness -- is a valuable one for artists. The relationship between artist and social site is symbiotic: artists upload music and gain a following, social networks distribute music and make money.
What do you think? Are artists owed something by social networks if they upload their music there, even after agreeing to a TOS that says they won't be compensated monetarily? Is "awareness" compensation enough or should artists fight for more from the sites hosting their music? Let us know in the comments below.
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No, not at all. It wouldn't matter if there was ZERO value to awareness, this is simply a question of the up-front agreements between the artists and the site. I'm pretty sure they did not upload in exchange for stock or stock options.
That being said, the same goes for morons that think that since there is a low marginal cost of music that it's OK to copy it. It wouldn't matter if it was absolute zero, they are bound by the same agreements, that is not copying and distributing copyrighted music.
Bragg should go pound sand on his imagined earnings, and pirates should be prosecuted vigorously, enthusiastically, and to the full extent of the law.
Posted by: Morgan | March 24, 2008 1:29 PM
Pretty much an obvious thing. While some artists will remain pathetic and procrastinate, others will calmly use it.
It's still possible to make money over 'the internets', but the approach needs to be different. In any case, becoming more popular is and will be a goal # 1 for all new artists. So why sell something that hasn't been advertised yet?
Posted by: Alex Yarmula | March 24, 2008 1:29 PM
I'm guessing that a similiar debate took place in 1914, when ASCAP was formed and began demanding compensation for the broadcast and live performance of their member's music. In the end, ASCAP won the day. Which was a good thing for me, since I spent a few years as a working musician and songwriter and those checks from ASCAP helped pay the rent from time to time!
The difference, of course, is that the broadcasters are actively using music as a vital part of their business model. They actively select the music to be played, and actively incorporate the music into their broadcast. For many broadcasters, especially FM radio stations, no music means no profits. So I think that the songwriters deserve to be fairly compensated in this regard.
But on a social networking site like Bebo, the music is incidental (or at least that's the legal argument that Bebo might use). It's not Bebo employees who decide what music gets added to their "library", and it's not Bebo employees who decide what gets played. Their role is much more passive, so the songwriters and musicians will have a much more difficult time arguing that they should be compensated.
Billy Bragg probably sees the situation much more pragmatically: music seems more pervasive than ever, yet it appears that musicians a being deprived of sources of income. Musicians once were able to pay the bills with income from concerts, record sales, and performing rights royalties. The last two sources of income are disappearing rapidly. Musicians are now being encouraged to become "brands" and supplement their income with merchandising, but it's not clear that merchandising will compensate for the lost sales and royalties.
Additionally, the more time and energy that a musician spends on non-musical sources of income, the more the quality of the music is likely to suffer. Trust me, I know!
I think it's a lost cause, but I can't blame Billy Bragg for giving it his best shot. The rest of us can do is wait for the fallout...
Posted by: Marcello | March 24, 2008 1:45 PM
Why not let the market decide?
This is a period of great (and much-needed) innovation in models of compensation, publicity and distribution for musicians and other media producers, and it's an open question which model is the best at maximizing the quality of artistic output, promoting the discovery of new artists and taking advantage myriad other opportunities opened up by this paradigm shift.
I deeply respect Billy Bragg's work, but I'm not sure this is something that needs to be decided by policy of legislation just yet. If offering musicians compensation for the work they make available to online communities promotes more or higher quality creative output, if social networks provide the perfect platform for monetizing the sort of distributed cultural economy which the net is capable of fostering then lets do it! But if that would only serve to undermine the net's egalitarianism and reinforce the top-down, big-players-take-90%-of-the-market-share scheme that's been dominant since recorded music really came into its own, then I'd personally have to take the position we should keep it free and open.
Posted by: Ethan Winn | March 24, 2008 2:09 PM
We're getting pretty deep into the metaphysics of the information economy here.
Value comes from there being demand from something that is scarce. Aka supply and demand. Economics 101.
Today's there is no scarcity in media. It is spread too easily. The scarcity is on the consumer side of the equation in the form of "attention".
With this in mind, it is the artist who is getting the bargain with sites like bebo & myspace. They are getting more exposure than they ever could have gotten within the old-school music industry. So to make a living off it? With the thing that is the most scarce: memorable experiences. This means touring and putting on a great live show that engage the audience, and treating merchandise as souvenirs instead of a commodity.
BTW, all new media artists should be sure to check out the 1,000 true fans posting:
http://www.kk.org/thetechnium/archives/2008/03/1000_true_fans.php
Posted by: Tony | March 24, 2008 2:26 PM
Musicians, Bands and artists in general really need to look at widgets, RSS and podcasts. The social networks are simply platforms that can help catapult the careers of aspiring artists who use the new web 2.0 tools to their advantage.
A good widget can provide updated touring info via RSS. It can also include video and audio interview podcasts, backstage footage and contests for freebies like cd's t-shirts and other schwag.
Posted by: Jughead | March 24, 2008 3:00 PM
Josh,
Good post and a balanced summary.
One thing that should be clarified perhaps in the discussion is the difference between revenue and ownership. You seem to conflate the two ("Certainly, artists deserve to be compensated for their work, but if you willfully put it online for free, can you really lay claim to revenue later that was never part of the argreement?"). Billy Bragg seemed to be placing a clear stake on ownership, not revenue.
The overall principle (should artists get money from sites that provide awareness platforms?) may be the same regardless of whether you're talking about revenue or ownership - but in practice - especially in regards to websites with valuations that greatly exceed their revenue - the distinction is crucial. Fotolog sold for ~$90 million but was just barely cash flow positive. Would you have rather had a cut of ownership or revenue?
----
Also, I think Morgan makes a brilliant point. It's quite inconsistent to get legalistic over the TOS and then abandon the juridical stance when it comes to file sharing and other unlawful methods.
Overall, I don't think there's any argument that there's value provided by awareness. However, conceding that point does not mean artists aren't entitled to additional compensation. Artists are constantly lectured by webheads to get creative regarding monetization. Why can't entrepreneurs get more creative regarding compensation? Who's the lazy party?
Posted by: Gabe | March 24, 2008 3:54 PM
Viral marketing is a great way to build traffic to website. A well thought out campaign will not only get people talking, it will get them motivated to visit your site and buy your product.
Posted by: vviralmarketing | March 24, 2008 5:09 PM
I think that Tony makes a very good point about Scarcity in an earlier comment above. You want people to love you not like you. The Nine Inch Nails catered to the fans that “love” them by offering them something scarce. They gave their fans their music for free and then they sold 2,500 copies of the Ultimate Deluxe Limited Edition for $300 a piece. That’s a $750,000 paycheck that they didn’t have to split with anyone else. And people paid them for it. (Thank you ReadWriteWeb http://www.readwriteweb.com/archives/nine_inch_nails_releases_album_on_bittorrent.php).
Seth Godin calls this the Seinfeild curve. “If you like Jerry Seinfeld you can watch him on television, for free, in
any city in the world two or three times a day. Or, you
could pay $200 to go see him in Vegas. But there is no
$4 option for Jerry Seinfeld. " This is death. You can’t
make any money in here. Because if you’re not scarce
I’m not going to pay for it because I can get if for free.
Braggs people don’t want to buy your songs because they are paying you something that is more valuable to them than money. What on earth could be more valuable then money? Their attention. I can’t get that 5 minutes back that I listened to your song, and I certainly can’t get those 5 minutes back after listening to N’Sync, argh. But I can always make and spend more money. Braggs, you should be thanking sites like Bebo. In fact you should be using sites like Bebo to connect with you fans. You are selling yourself as much as you are selling music and in order to do that you need people to connect with you, to “love” you. There is a lot of music out there that people like, not a lot of music people “love”. The music industry is changing with or without you Braggs, don’t waist time trying to sue people for the $4 option. Connect with your fans and create something that people want to “pay” you for.
Posted by: Ryan Hyde | March 24, 2008 6:23 PM
I just got off the phone with a former bandmate who's still in the business... he summed it up nicely...
"We made music for the record labels, and they didn't pay us. Now we're supposed to bypass the record labels and sell directly to the public... and *they* don't pay us."
Plus ça change...
Posted by: Marcello | March 24, 2008 8:43 PM
It not just the Artist that are being robbed; its also anyone that ads content and friends to any social network without asking to be compensated for time and for their content.
You can buy or download for free a Social Network application.
Does this mean that a Social Network as an application is worthless ? If we look at true cost of the software, I think we can clearly see that Artist and Members content bring the true value to Social Networks.
When we say that Social Networks are giving us access to the platforms for free we are framing the argument as if the value of the Social Network is greater that than the value of Artist and Members that contribute content.
Bebo was not Acquired because of the value of the Software. Bebo was Acquired because of the Value of it's community.
The Artist and Members that contributed to the success of Bebo and any other social network should be fairly compensated for the Value that that add to the service. Since the amount of the purchase and the membership and traffic of Bebo seem to be know we could probably come up with a Matrix to figure out what the value of the community is versus the value of the "Free" platform that we are allowed to use.
Posted by: william | March 24, 2008 11:46 PM