It's Not Exploitation If You Chose To Take Part

from the repeat-after-me dept

Well, the buzz of the weekend seems to be around a New York Times op-ed by musician Billy Bragg upset about the sale of Bebo to AOL earlier this month. Bragg's complaint is an old one that we've heard before: Because musicians chose to put their music on Bebo and that helped attract users, don't they deserve some of the $850 million that Bebo got from AOL. Not surprisingly, Nick Carr, who has been pushing this obviously false notion that "user-generated content" is exploitation, comes to Bragg's defense with his usual technique: sound smart, make some interesting points, and then wrap it up with a conclusion that is in absolutely no way supported by the facts.

Let's break this down. The first complaint is that somehow Bebo was "using" this music for "free." This is false. There was a fair trade in an open marketplace that made this happen. Bebo offered musicians a chance to promote themselves (for free) to its community. Musicians accepted this offer, and in exchange, provided their music for free. No one was forced into it. No one was compelled to do it. If either party felt the other was unfair they could choose not to engage in the trade -- and they could also vocally complain. In fact, Bragg did just that when he felt MySpace's terms were unfair, and they changed them. So by choosing to accept Bebo's terms, clearly they were perfectly acceptable. It was a fair trade.

Bragg goes on to assert: "The musicians who posted their work on are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend." Actually, they're very different from investors. Investors made a very different trade. They traded money for equity. Again, it was the fair and open market that allowed that. If Bragg had wanted to trade music for equity, he should have discussed it before... not after. You can be sure that any investors in Bebo didn't ask to change the terms of the deal after the buyout went through.

Complaining after the fact about what happened is like selling a bunch of wood to a builder for a few thousand dollars, and then complaining when he turns that into a million dollar house. Was the wood seller exploited? No. He made the fair trade, and the builder was then free to do what he wanted.

Nick Carr's response to all of this is especially wrong. He writes: "When challenged in this way, the plantation owners counter that they are doing musicians a favor by providing them with a place to promote their work." That is incorrect in so many ways it would take another whole post to get through them all. But let's take the simple point: no one is saying they are doing musicians "a favor." They are saying that there's a fair trade. You give music, we give promotion. No favors at all.

Carr and Bragg go on to use radio as an example, noting that it pays royalties, so why shouldn't social networking sites. This is incorrect for a variety of reasons. First, in the US at least, radios do not pay musicians royalties. This was a decision made by the government that since musicians benefit from airplay, no royalties are needed for the musicians (other royalties are paid for composers and publishers). However, much more to the point was that for most of the history of popular music, those royalties have been meaningless -- as record labels went through all sorts of contortions to have the money go in the other direction. What's sometimes called "payola" has gone on for years, with the record labels effectively bribing radio stations to get music on the air -- recognizing that the promotional value greatly outweighed the royalties coming in.

In other words, a free market will let the benefits to both sides balance out. If payment needs to even up one side, then the market will determine that. But, many musicians made a fair trade decision to take up the offer that Bebo made. It's their own fault if they feel they got the short end of the stick, but they clearly were happy to go along with the deal originally. Buyer's remorse and sour grapes are no excuse. If anything, this sounds quite similar to Doug Morris' ridiculous belief that no one else can make money.

To understand this most simply, it goes back to the psychological explanation we discussed earlier this year, where relevancies matter. People dislike seeing someone else made much better off, even if they are better off themselves. These musicians felt they were better off by using Bebo, but they're now upset that Bebo's founders are relatively better off than they are at the end of the deal. It's a weird world when someone would prefer to be worse off, rather than seeing someone else be even better off. In the meantime, if you'd like to read an ongoing debate between Billy Bragg, myself, Tim Lee and Joe Weisenthal, check out the post on Joe's blog where we all discuss this in the comments.

Filed Under: billy bragg, copyright, music, nicholas carr, royalties, social networks
Companies: bebo

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  1. icon
    Mike (profile), 24 Mar 2008 @ 5:02pm

    Re: Re: Re: It's Not Exploitation If You Chose To

    I think you've fallen into the one of the major traps of neo-classical economic thinking, namely the assumption of perfect information.

    Not at all. I'm actually one of those who argues (rather vehemently) against the idea that anyone has perfect information in these decisions. But I do think that when people enter into transactions that both sides believe are fair, it's bad to go back and try and reneg on the deal later.

    The musicians who distributed their music on Bebo may have thought they were making a good deal at the time, but in hindsight wish they had different terms. Clearly that is the case with Bragg. One would assume (hope?) that when Hi5 comes calling he will be a bit wiser. That said, I don't see the logic in assuming since musicians made a deal in the past that it was a good deal at the time, or will be going forward.

    Well, Bragg claims he never even did anything with Bebo in the first place, so I *really* don't see what he has to complain about.

    But, I agree, on the next deal they can change the terms if they want. I just don't think that Bragg is realizing how much of a fair trade musicians got. They got plenty of promotion up front for free. They didn't have to pay for hosting. They didn't have to build a community. They got all that for free.

    And what did Bebo get? Well, they took a big risk. The whole thing was costly to host, and it was a highly competitive market. It worked out for them in the end, and with risk comes reward. But the musicians got a very fair trade when they did it.

    I generally agree that giving away music is probably a good way to cross-subsidize concert tickets, merchandise, and god knows what else, and I think your past articulations of that idea are sound. However at this point we have no idea if that is a sustainable model. Other than a few examples here and there of short term trials (Radiohead, Prince, NIN, BNL, etc.) no one can say for sure if there is enough money there to survive. If Bragg and anyone else wants to try to open up another revenue channel from the likes of social networks I say God's speed and more power to them. Is it sustainable? Beats the heck out of me, but its probably worth a try. Now the idea that musicians are owed something out of a sense of fairness is a totally different issue . . .

    As I've pointed to elsewhere, it's absolutely sustainable, and for that you just need to look at the history of economic growth. Economic growth is driven by the introduction of infinite goods, so the more there are, the more growth there is -- and that will grow every other aspect of the market. We're already seeing this. Every single scarcity that touches on "music" has grown larger and larger. This isn't a theory where I'm just guessing. It's based on a ton of economic research. I've been trying (and failing, it appears...) to figure out a way to explain all of it without forcing everyone to dig through the same set of economic research.

    Unrelated, but I just finally moved out to SF. We should grab a drink and argue music sometime soon. Maybe we could call it the "Techdirt Music Industry Conference" invite the rest of the readers and get some sponsorship!

    Heh, meant to ask if you had made it out here. Would be great to get together, with or without sponsorship.

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