Looks like Billy Bragg has
pointed out the lack of clothes in the Social Net value game- he has written a fairly well argued article in the NYT on who gave Bebo its value vs who actually got the money - the crux is this:
Social-networking sites like Bebo argue that they have no money to distribute — their value is their membership. Well, last week Michael Birch realized the value of his membership. I’m sure he’ll be rewarding those technicians and accountants who helped him achieve this success. Perhaps he should also consider the contribution of his artists.
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.
Not a particularly new thought in the game, we heard similar after YouTube was bought - so why is there an unseemly rush to shout him down by the Web 2.0 A-List organs?
TechCrunch and
Mashable and
Matthew Ingram all weigh in:
TechCrunch
Why is it the Brits have all the crazy-stupid ideas about how to screw up the music industry even more than it is already?
British musician Billy Bragg argues in the New York Times today that some portion of Bebo’s $850 million sale price should go to the musicians who uploaded their music to the site.
Note that Bragg neatly sidesteps the fact that music was uploaded to the site by artists (or their labels) themselves, with full knowledge that they would not receive payments of any kind (except free marketing, of course, and access to Bebo’s tens of millions of music loving users).
Mashable:
I’m not going to knock Billy Bragg here. “Mr Love & Justice” is really as cool as they come. He’s got quite a far-reaching audience. He’s amassed much cred in his pockets over the years. No doubt about that.
But reading his opinion piece published in today’s New York Times concerning what he calls “the royalty scam” conducted by Internet music portals like MySpace and Bebo, I can’t help but say: wrong. Wrong, wrong, wrong.
Ingram:
He may be a great musician, but Billy Bragg’s logical faculties are somewhat lacking — that is, if his op-ed piece on the music industry in the New York Times is anything to go by. Billy writes about the sale of Bebo, and how the musicians and artists who have profiles on the site deserve to have a share of that $850-million or so. Why? Because Bebo has been “using their music to draw members — and advertising.”
All this just for suggesting that some of the lolly Bebo made may just have been due to the creative content on its site, and maybe the creators should get some of the loot!
A good rule of thumb with the mass Tech Media is that when such howls of outrage are heard, the howlee is generally onto something. And what Bragg is articulating in essence is this simple thought - the only real difference between the New Music Aggregators and the (automatically despised) Olde Aggregators is that the Olde Industry actually paid the artists something.
The basic argument of the Web 2.0 apologentsia is typically articulated by TechCrunch:
Social networks have absolutely nothing to do with the decline in music sales. The fact that recorded music can be reproduced at a zero marginal cost is why music sales are declining. You can hate that or love that, but it’s simple economics that drives it.
And in fact the argument that social networks actually provide free marketing to artists is not disingenuous. In fact, it’s quite correct. Bragg notes that radio stations pay royalties for playing songs, even though they also obviously provide free marketing for artists.
The first argument is true, but has nothing to do with Social Networks either - its a distribution issue, and would exist (and did exist) independently of them.
The second argument is more the case - it essentially implies that a Social Network is a one-sided market - ie it collates eyeballs (sorry - this is Web 2.0, we don't say eyeballs - it allows people to connect to their friends, en masse) and this drives its value in its entirety - in other words the value of the network exists independently of the content, its all in the connections and their conversations. By valuing music at zero, it is essentially assuming that the value of the distribution is always a wash with the value of the input content.
Now, Nick Carr argues the obvious riposte to the above assumption, when he calls for the
digital sharecroppers of the world to unite...
“exploitation is exploitation, no matter how lovingly it’s wrapped in neo-hippie technobabble about virtual communities, social production, and the gift economy.”
(To be more precise, I'd say its economic arbitrage - ie the present monetisation structure of a Social Net is at odds with where the value is created - even more so than with the Old Evil MusiCorps)
TechCrunch's view of artistic content's value is simplilfied to:
Recorded music is nothing but marketing material to drive awareness of an artist. Websites that bring that music to listeners are doing artists a favor.
And this is really where the difference lies - do you see value in art over and above social connection, or not?
Or, to take it to its obvious conclusion - if artists were not going to be paid in future, and thus stopped therefore creating music etc and instead went and became life insurance salesmen and wittered on in Twitter and Facebook and Bebo, do you believe that either (a) Arrington is right and that the original art was essentially value free, or that (b) the world has lost something of value?
Or more practically, if no musicians were to allow their content onto Social Networks, would the buyers of Bebo et al still find their valuations quite so sky-high?
I suspect that everybody, TechCrunch included, knows what the real answer to this is. And they also realise that Mr Bragg is probably one of the few people who can, with a high level of gravitas, point this out. He is exactly the sort of Don Quixote who can upset the social network value arbitrage applecart, because by tilting at these windmills he draws attention to their existence.
(The unmentionable truth is that the value of conversational social content in a social network is very low - hence the lousy CPMs. They need that talent to fund the big dollar exits.)
Hence the wails of opprobrium, because if Mr Bragg (who has been a pretty effective campaigner for social justice throughout his lfe, so is by no means a perceived tool of the music industry) can in any way create a movement around talented people
not giving Social Nets access to good content, without some stake in its euventual financial success (or paying them a usage fee), then they are left with a combination of the babble of the crowds plus piracy - and the piracy can be rapidly fixed via lawsuits.
And as we showed in
an earlier piece, the babble of the crowds alone nearly inevitably leads to declining usage and implosion. And at that point the wheels come off the whole consumer social network bus, and all who ride on it, and all who collect the fares.
Update -
interesting angle from doctoe, arguing that:
The reason why is because these platforms, services and “communities” are not all about the professional artist. Yes, music and other parts of popular culture give people social objects to talk around and to build conversations and groups upon. But it is a complex ecosystem. Without the people themselves making the ties, the conversations, the fan art or wom tributes around these artifacts, there would be very little value.
So where do you draw the line? I am reminded of Cory Doctorow’s proclamation that content isn’t king - conversation is. Content just gives people something to talk about.
I don't think Doctorow is right by the way, as my reductio ad absurdum argument above shows - if you removed all music, art, talent etc would the conversation still be quite as valuable with a far lower grade set of social objects to bat around?
However it is very true re drawing lines - there is a clear utility for aspiring artists on Social Networks, as it is a low cost access medium (cf blogging for writers). In fact, as doctoe also notes...
We hear again and again that service a, application b would be nothing without the cast of community characters who make it so and give it its flavour. Well then, isn’t it about time we/they were recompensed too?
For people who generate UGC, absolutely - it will come, its just that there is no payment or rights management mechanism right now. (For users, the traditional deal was advertising will subsidise your access to valuable content, but as noted above the fact that CPM's are so piss-poor on social nets implies that the value of "the conversation" is pretty minimal sans talent.)
But right now, all the value in the game accretes to a tiny band of founders and funders of the utility at its point of sale, and I would hypothesize that Bragg is right, and that this is essentially due to (short term) structural arbitrage rather than the true division of value creation in the supply chain.
