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 @ 6:26pm

    Re: Re: Re: Re: Re: It's Not Exploitation If You C

    Excellent point, though at the end of the day we'd have to run the actual numbers to figure out if this was a profitable deal. For Ghostface Killah it clearly was not: (WARNING: coarse language and hilarious).

    Hilarious, yes, but he didn't embrace what we're talking about. He's complaining about people downloading instead of buying the music. That's the whole point, though. Of course people are going to download. That's why you give them something else of value to buy. The problem is that he didn't do that. The downloads increased his market, but he didn't position himself to collect on it.

    Infinite goods and the idea of technological innovation pushing the boundaries of economic growth is sound (the article in today's WSJ about Malthus and the world's carrying capacity skirted that issue leaving me very frustrated) but to assume that music works in the same way may be a mistake.

    Heh. Well I've wasted all day discussing this stuff, and so I haven't had any time at all to write up the post I've been intending on that very WSJ piece (or to get my REAL work done). Hopefully will have something tonight or tomorrow on it.

    But I don't think it's a mistake to assume that's the way music works as well. Paul Romer's research showed this pretty clearly (though I think he eventually pulled the wrong conclusion out of it at the end). It's all infinite goods. You don't assume infinite goods work differently if they're an idea or a song.

    Unless you've seen some fantastic studies I have not, these two externalities are not yet quantified. It seems very possible to me that these market quirks, and especially the latter, may be too much for musicians overcome with the scarce products they still have to sell while continuing to make a living

    Well... I'm going to be a little coy, but I will say yes, I've seen some fantastic studies (and there are a few more that will be out soon). I just can't say anything about them yet.

    My guess is that they are not, but frankly I don't know, and I don't fault any musician who is not willing to risk his or her livelihood to find out.

    It doesn't seem like a risk to me. It seems like a bigger risk not to...

    What the music industry needs more than anything else is some creative thinking around business models, value creation, and monetization. While I generally agree with your stance I think we should encourage as much experimentation as possible, even trying to capture value from sites like Bebo (going forward anyway).

    Sure, I'm all for experimentation -- and discuss all sorts of different experiments around here. But, there's no reason not to explain the basic economic framework of market growth, so that musicians can capture that growth. Suggesting models that are based on artificially limiting a resource limits growth. It just doesn't seem reasonable to me.

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