Billy Bragg Says Don't Blame Spotify; Blame The Record Labels

from the there-we-go dept

There's been so much misguided hatred towards successful internet music services lately, with the main targets being the most successful: Spotify and Pandora. Could those services be doing better? Yes, absolutely, but so much of the the hatred seems incredibly misplaced. Here are services that are actually paying artists, and that have built platforms that millions upon millions of people love. Many of the complaints about the "low payout" numbers involve people totally misunderstanding the data as well. But there's also been one elephant in the room which hasn't received as much attention: Spotify and Pandora pay the record labels, since they hold the copyright. Often, a big part of the problem is that the labels then do everything to avoid paying the artists.

In the past, I've disagreed with singer Billy Bragg's view of internet services, but this time around, he's right: in many cases, the real problem (yet again) are the labels and not these services. He's written a detailed Facebook post explaining this position, noting that complaining about Spotify is like "campaigning against the Sony Walkman" when it was first introduced. Going against what music fans want is never a good strategy.

From there, he gets to the real issue: how the labels account for streaming revenue:

The problem with the business model for streaming is that most artists still have contracts from the analog age, when record companies did all the heavy lifting of physical production and distribution, so only paid artists 8%-15% royalties on average.

Those rates, carried over to the digital age, explain why artists are getting such paltry sums from Spotify. If the rates were really so bad, the rights holders - the major record companies - would be complaining. The fact that they're continuing to sign up means they must be making good money.

Here in Sweden - where I'm doing a show tonight in Malmo - artists have identified that the problem lies with the major record labels rather the streaming service and are taking action to get royalty rates that better reflect the costs involved in digital production and distribution. UK artists would be smart to follow suit.

Of course, there have already been lawsuits about similar issues, related to legacy contracts. You hopefully remember Eminem's big lawsuit over whether or not digital sales count as licenses or sales, since "licenses" involve a 50% cut, while "sales" are more like 10 to 15%. As the Guardian article notes, there are some labels that do in fact pay a greater percentage on streaming deals, as they should, but many legacy artists are locked into bad contracts. And, of course, there's always the issue of how well the labels actually handle their accounting, and the way they play games to make sure artists never "recoup," making it difficult to get any royalties.

The internet services definitely can do more to help artists, but much of the blame often seems misplaced, so it's great to see someone like Bragg recognizing that.

Filed Under: billy bragg, contracts, labels, luddites, streaming
Companies: pandora, spotify

Billy Bragg's Backwards Approach To Helping Artists

from the blame-others dept

While I may be a fan of Billy Bragg's music, I have a lot of trouble getting behind his take on the music industry. Last year, we had a bit of a back-and-forth with Bragg when he suddenly wanted to demand a cut of Bebo's sale price to AOL, claiming that it was unfair since he had put his music on the site for free. When asked whether or not Bebo would have the right to demand some of Bragg's money if the company had flopped, Bragg didn't seem to have any answer at all.

That episode is a precursor to what appears to be Bragg's current position on the industry, which has a mix of good and bad. As with Bebo, he supports using new online services, and not being anti-consumers (good!). But, as with Bebo, he seems to want to demand entitlement to any revenue that anyone makes (bad!). It's entitlement society again. Rather than recognizing that the responsibility is on him -- and on other artists -- to come up with business models that work, he demands that others (and the gov't) create those business models and just hand him a check. It puts the responsibility off of him and onto everyone else, as if they owe him a business model.

On the one hand, he talks up how useful new technologies are for distribution and promotion, but then he immediately talks about "the damaging aspects of illegal downloading on the livelihoods of the creative community." It's only damaging for those who don't put in place a smart business model. As we've seen time and time and time again, put in place a smart business model that embraces file sharing, combined with good music and a strong connection with fans, and piracy isn't a problem. It's free marketing and distribution.

Bragg talks up the need to compete with sites like The Pirate Bay, but why isn't he looking at actually using The Pirate Bay to his advantage? Plenty of others are. Why does Bragg need to demand help from legislators?

Filed Under: billy bragg, business models, entitlement, file sharing

Fight Over YouTube Videos Heats Up In The UK; Musician Propaganda Begins

from the you're-about-to-learn-what-leverage-is dept

The decision earlier this week by Google to block music videos in the UK has certainly kicked off quite the firestorm of discussions within the music industry -- and an awful lot of whining about how it's "just not fair." Not surprisingly, the PRS folks have dragged out some musicians to kick and scream about how Google makes sooooooo much money, so why aren't they sharing? It's the same economically clueless argument that the newspapers have been using against Google. However, as Google pointed out, they are looking to share. The offer they made to PRS was to give them a significant portion of whatever ad revenue can be generated on those videos. PRS wants more than that, such that every music play would cost Google significantly more than it made.

It is, perhaps, no surprise at all, that one of the major complainers on the musician side is Billy Bragg -- who's been quick to make these sorts of ridiculous arguments in the past as well, and whose manager, Peter Jenner, is equally unable to understand basic economics. The problem is that they think that the world owes them money after the fact. They both refuse to come up with decent business models, and then complain when others do -- and demand that those other innovators simply have to pay up.

It's the same story we hear over and over again. Folks in the entertainment industry insist that 100% (or perhaps 99%) of the value comes from the content itself -- and refuse to recognize that any of the value comes from the technology, the service or the community of folks using those services. However, their own actions show how wrong that is. If it's true that Google is "underpaying" the artists, shouldn't the artists be HAPPY that Google took down their content? After all, according to what some of these artists and record labels insist, wasn't Google "stealing" from them? So, now that Google has stopped, doesn't that mean they're better off?

No?

The very fact that the musicians are so up in arms shows how much more leverage Google has. It shows that a significant part of the value is in YouTube. YouTube can survive just fine without the music videos. The musicians, on the other hand, are suffering. That's why it's the musicians complaining. But that shows the very point Google is trying to make: Google has the leverage here, not the musicians. And, yet, the musicians still want to pretend it's the other way around.

Filed Under: billy bragg, music, music videos, uk
Companies: google, prs, youtube

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 Bebo.com 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