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Tagged: bebo

Music royalties are not the answer in the digital age

((If you’re tagged in this note on Facebook, it’s because I value your opinion and am interested to hear what you have to say. Or because I’m pretending to value your opinion and would be interested in proving you wrong. 😉 Either way, you may want to read the first post to get up to speed, if the topic interests you.))

I recently wrote about Billy Bragg’s op-ed piece in the NYT, claiming that musicians deserve a cut of the profits from Bebo’s sale to AOL. I lamented the sense of entitlement his position displayed.

I take that back. I don’t think it’s really entitlement. I think it’s habit, well-intentioned but misguided old patterns of thinking.

In the comments of the ongoing debate that’s sprung to life on Joe Weisenthal’s blog post, Billy writes:

And for the record Blaise, I also view the technology as a blessing rather than a curse – it has the potential to allow more artists to make a living than before.

I’m just concerned that there are enough safeguards in place to ensure that we are able to earn a living – that we don’t go from the old feudal arrangements with the record companies to a new shiny kind of feudalism on the internet.

I responded thusly:

I’m glad to hear you view the technology as a positive opportunity. I think where we differ is in our expectations. I’ve become more and more involved in the free / open source software community where users of the software have the freedom to redistribute software as they please, for a fee or not, and software is often available at no cost. Programmers still make money through the economics of abundance that Mike talks about, through monetizing the scarce goods (i.e. their time for custom software development, support services, brand name reliability like Red Hat GNU/Linux, etc).

It seems to me as if you are arguing that these royalties should exist because that’s what you’re familiar with. That’s how musicians have monetized their music over the last few decades. It seems as if you’ve worked backwards from a conclusion that royalties are the answer.

How are musicians to make money in a digital environment? Well, how did we do it with another huge technology challenge – radio… With royalties! Therefore, digital music needs fair royalties. And thus, the bebo’s were ripped off because they didn’t get their royalties.

That thinking has blinded you to the fact that they made a fair deal (they traded royalties for hosting and exposure) of which the terms haven’t changed, and I think it’s also why you refuse to turn the tables and allow your logic to work in reverse (in terms of musicians compensating Bebo for any of their success).

I reject the idea that royalties are the answer to digital technology. With traditional radio, being a broadcaster is analogous to owning a printing press. Owners of printing presses and radio stations were a small minority of the population, and distribution is on a large scale.

On the Internet, anyone can be a broadcaster or a distributor. And it can happen on a large (e.g. Bebo) or small (e.g. blog) scale. To take the thinking about royalties and copyrights that was developed to manage a few large publishers and mass distributors, and now attempt to regulate everyone in the same way just won’t work. Now, everyone can be a distributor. Enforcing regulation on digital technology is impossible and, more importantly, the benefits aren’t worth the drawbacks.

I’m young and inexperienced, so maybe I’m wrong. But I think the challenge to people who’ve been in the industry for a while is to understand that embracing this new technology can’t simply be a matter of adapting old concepts, like royalties, to the digital world. Digital technology is different in a fundamental way. So, too, does our approach as musicians need to be fundamentally different.

Billy is still dead wrong in too many ways to count on the initial issue he rose. In the case of Bebo, the rights holders made a deal of which none of terms changed with the sale, in the same way that the deal wouldn’t change if an artist got a record deal. Applying royalties retroactively, against the terms of an initial agreement, is flat out stupid and unethical. And denying rights holders the ability to make such an agreement, and therefore sites like MySpace and Bebo to exist (where you don’t need to be selected to be heard), would be unwise.

I think Billy is well-intentioned, but too used to old ways of doing business. What needs to be “safeguarded”? It seems that he fears exploitation in a digital world. If you embrace the economics of abundance, the distribution of your digital goods isn’t exploitation. It’s promotion, advertising for your scarce goods. If you don’t embrace that thinking, how can you even survive in a digital world? 98% percent of music acquired online is through file sharing networks. (Update: If… you believe the CRIA)

Embracing the economics of abundance means recognizing your abundant goods and leveraging them to add value to your scarce goods, rather than attempting to limit the abundant goods with artificial scarcity. The refrain is as follows: There is an inverse relationship between price and supply; as supply increases, price decreases, therefore as supply approaches infinity, price approaches zero. Digital goods are infinitely abundant insofar as they’re digital. But price and value are two separate things; price is a subset of value (monetary value). Since digital goods are abundant, they can be spread easily to add value to scarce goods (which can command a higher price). WIth respect to music, digital audio files are the abundant goods which can be used to add value to scarce goods such as embodied recordings (e.g. CDs), concert tickets, t-shirts, or a musician’s time (e.g. session work). (Credit: Techdirt)

I believe royalty-based systems are ill suited for the digital age. Royalties weren’t meant to be applied to everybody, yet anyone can be a distributor or a broadcaster in the digital world. The answer to monetising music in the face of digital technology lies in embracing the new digital nature of music through the economics of abundance, rather than attemping to create artificial scarcity.

What do you think?

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Billy Bragg: when songwriters develop a sense of entitlement

In a Saturday op-ed in the NY Times (via Techdirt), Billy Bragg argues that musicians deserve royalties for the use of their music on the web. Bebo, a social networking site which rivals Facebook and MySpace in popularity in the UK, was recently sold to AOL for $850 million. Bragg thinks musicians deserve a cut.

Problem is, that doesn’t make any sense. At all.

The main and obvious problem is that, with websites like Bebo and MySpace and Facebook, artists upload their own music to the website. If they don’t like the terms, they don’t need to participate.

These websites don’t pay musicians, but they offer them a platform. Bebo offers its services at no cost and, in exchange, musicians allow their music to be used at no cost. Obviously, many musicians are grateful for the free promotion these websites offer (e.g. no hosting or bandwidth costs). But, there are alternatives. Last.fm, for example, is now paying royalties to artists, though they function more like a radio station than a MySpace.

What bugs me about Bragg’s comments though is his sense of entitlement. It comes through in the article, and it comes through in the discussion about it.

The claim that sites such as MySpace and Bebo are doing us a favor by promoting our work is disingenuous. Radio stations also promote our work, but they pay us a royalty that recognizes our contribution to their business. Why should that not apply to the Internet, too?

For one, no artist needs to upload their songs to such a website if they don’t like the terms and conditions. Second, while I don’t have a problem with a website paying royalties to artists (e.g. Last.fm), why is it necessary? Artists have a choice to use these sites or not. MySpace would not exist if it had to pay royalties to anyone who uploaded their music; it would be a fundamentally different thing, more like a radio station than a platform for artists. Bebo and MySpace provide a different service that radio stations do because you don’t need to be selected to be heard. I mean, they’re functioning more like a web hosting service than a radio station. But the point is, artists have the option of seeking royalties through services like Last.fm or seeking exposure through Bebo (or both), why force one of these options out of existence? Clearly, artists and fans alike have found such services to be useful.

More importantly, I think it would be entirely impractical to try and apply the royalty systems that worked for radio to the Internet. The fundamental difference is that it’s pretty easy to identify radio broadcasters, but the distributed nature of the Internet would make it impossible to police such a thing. Plus, there are so many different ways in which content could be distributed. If every webcast were subject to the same type of terms and conditions that large commercial radio stations are, Internet radio would be stiffled. What about blogs? What about derivative uses of a song? Even if there were technical measures to attempt to police the Internet, I would argue that enforcing that sort of thing would do more harm than good. The Internet is fundamentally different because anyone can be a broadcaster, whereas broadcasting terrestrial radio is more analogous to owning a printing press.

Billy Bragg seems to embody a sense of entitlement in the music business that just gets on my nerves. We would never apply his thinking to other businesses.

If I am guilty of thinking in an old way, then its because I believe that businesses which use my music to generate revenue for themselves should pay me a royalty for doing so. [from a comment on Joseph Weisenthal’s blog post]

This sounds like my discussion with John about whether or not artists deserve money from the sale of digital audio players. It’s really easy to come up with examples why this idea is wrong.

Does Rogers’ owe Google money because Google’s services make Rogers’ ISP offering more valuable? Does Google owe Rogers money because it generates ad revenue from users that connect through Rogers? Do home decor businesses owe construction companies for building the houses they decorate? Does Slash owe Gibson for making money by playing a Les Paul guitar? Do I owe Lenovo when I make money developing websites using my Thinkpad? Do students owe their teachers when they put into practice ideas they learned in school to make a living?

It’s easy to see how this gets ridiculous very quickly. Why do we tolerate such thinking for music?

Furthermore, Billy Bragg himself admits in the comments what the real value of radio airplay was for him, even though he doesn’t seem to realize it.

Sure I started out doing shows and then made a record. But until that record was on the radio, I couldn’t get gigs outside of my area. The record legitimised me in a way that passing out cassette tapes never did. Promoters and media around the UK started taking me seriously and, more importantly, people in the US heard me and invited me over to tour.

The promotional value is the real value in such broadcasting. That’s what Bebo is offering artists in exchange for uploading their music.

Is the contradiction glaringly obvious enough yet? Businesses that make money from Billy’s music owe him money, yet when Billy makes money from other people’s businesses (such as the radio stations that promote him), they… also owe him money. When asked this question directly, he confirms his contradictory thinking.

Should I pay Bebo for the privilege of being on their site? I don’t think so. I never had to pay record shops – remember them? – for the privilege of being in their racks. They stocked my record so people would come into their shop. Same reason why Bebo hosts music.

One second Bebo is like a radio station, now they’re like a record shop? Do record shops pay royalties to artists? Why is it that Bebo apparently owes musicians when it profits from their music, but musicians apparently don’t owe Bebo when they profit from the site?

It’s child’s play to point out the holes in his article and his comments. I commend him for starting the debate and discussion, and for participating in it, but his ideas seem to me representative the industry’s denial over the death of their traditional business models.

Personally, I’ve decided to forgo the royalty thing entirely for my music. The sooner this sense of entitlement dies out, the better…

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