Moving The Goalposts

I love Billy Bragg, his attitude, his on the sleeves politics, his music, everything about him. So I read his op-ed in today’s Times with interest.

In it he argues that Bebo, which may or may not have built it’s audience on the backs of artists who uploaded their music for free consumption, should have shared some of their $850mm payday with those artists.

I think that specific suggestion is not workable for a host of reasons, but his basic point – that creative artists  (whether they be musicians, filmmakers, screenwriters, painters, poets, etc, etc) need a way to make money online and they don’t have one – is directionally correct.

Some of my favorite bloggers have already weighed in on the discussion. Arrington in his classic in your face fashion feels no sympathy and argues that online is the best promotion that an artist can find in today’s world. Mike is right, but the problem is "promoting what?" Merch and touring hardly cuts it and the loss of music sales hurts everyone, including the artist.

Nick Carr, predictably, takes the opposing view and says:

arguments to the contrary are ultimately specious and self-serving.
Exploitation is exploitation, no matter how lovingly it’s wrapped in
neo-hippie technobabble about virtual communities, social production,
and the gift economy.

I am tired of the arguments, no matter who is making them. It’s time to help these artists get paid. There is a royalty structure in place for streaming music. It’s a penny per listen for on demand and about a tenth of that for something less than "on demand".

These rates aren’t right and need some tweaking, but I am firmly in the camp that royalties can and should be paid to artists for the streaming of their music on the Internet. I’d pay them if it were easy to do so. I stream artist’s music all the time on this blog and my tumblog. But I don’t know how many streams are played, I don’t know how much I owe, there’s no easy way for me to pay it, there’s no easy way for me to share my ad revenue with them, etc, etc. As far as I know, if I wanted to pay $1000 right now to the artists, there isn’t even anyone to take my money and send it to the artists.

Who is going to build the infrastructure the artists and the web services need? Who is going to deploy it at the micro-scale that most mp3 blogging happens?

The music industry is all about demanding to get paid, but I don’t see them building the systems to make it happen easily and within the constraints of what an online business model can pay.

I know one thing for sure. Artists, particularly musicians, are entertaining people more and more every day because of the Internet. Entrepreneurs are building a host of great ways to discover and listen online. And if there were an easy and affordable way to cut the artists in for a piece of the action, most would do it in a heartbeat. It shouldn’t be necessary to wait for the $850mm payday to get paid.

#My Music#VC & Technology

Comments (Archived):

  1. vadadean

    Art needs its benefactors. It should be easy to be a benefactor. Unfortunately, we have business practices and laws “optimized” on a 50 year-old model. It’s ludicrous to shackle content value exchange to distribution hand-offs because when distribution costs approach zero it enables hand-offs to grow infinitely. We should re-engineer the media business around attention value. We simply need to make attention fungible, obey the letter-of-the-law, deploy scalable technology, and make it insanely great for users…maybe that’s not so simple.

  2. Farhan Lalji

    I always thought true artists never did it for the money. Plus according to Kevin Kelly (… an artists only needs 1000 true fans to make a decent living. I think the music should be free, the money for artists should come from appearances, concerts, merchandise and the like. By ensuring the playing of music stays free artists are more likely to make more money from the other value add sources.

  3. Timmmy

    is this why you give songs away for free?

    1. fredwilson

      I don’t ‘give them away’I stream them to showcase great artists and great musicBut even so, I’d be happy to pay streaming royalties out of my ad revenue (which I donate to charity)But there’s no way that I know of for me to do thatFred

      1. Steven Kane

        This really is not difficult. If web publishers want to support artists they can, easily. On that score Nick Carr is right.Any case, have you checked with ASCAP? I suspect they would be happy to take some contribution from you and figure out how to dole it out? That’s their entire raison d’aitre, after all. Maybe $X per month per unique visitor?If that’s too complicated, there’s always the ASCAP Foundation, their 501c3 dedicated “to nurturing the music talent of tomorrow, preserving the legacy of the past and sustaining the creative incentive for today’s creators through a variety of educational, professional, and humanitarian programs and activities which serve the entire music community”http://www.ascapfoundation….

        1. fredwilson

          I’ve triedNobody even returns my callsWhat’s needed is a comprehensive web service that I can pull the music Iwant to stream from, play it in their player (like the tumblr player or theyahoo player or the delicious player), have it record the number of playsfor me, and then send me a bill.What would be even better is if I could direct a portion of my adsense or FMad revenue to go directly to the streaming music billFred

          1. Eric

            I would use a scrobbler => micropayment for artists – as a listener. in lieu/in addition to charging the SERVER. maybe an (optional) listener charge is relevant.I already subscribe to emusic, but honestly I would prefer not too, and simply direct that money to the artists I listen to. Most of what I download from emusic I never listen to again. (My point is – I voluntarily spend $300+ annually for digital music. And I am comfortable spending it. AND it would go a loooong way to support the artists I ACTUALLY listen to and enjoy. But currently NONE of that money makes it to them, or at least very little.)Additionally from a server perspective, I would also be interested in implementing something. But since I don’t make any money from my blog/hosting, the money I would pay to host would come from my pocket… maybe this makes me irresponsible? Since my focus isn’t on monetizing my sight for the benefit of the artists I present…I’ll be honest. and I know there are many people that have been saying the same thing for a long time, but the industry really does need a makeover. I think we need to forget about ALL of the old rules, and think about what’s happening naturally, and enhance it, and find a way to have artists make a living producing music.I think there is really a rich opportunity for artists. and we should really share our music aggressively.

  4. Erik Peterson

    I’m going to speak a bit from experience here. I used to work for a small indie record label (as treasurer and “web guy”, but I still sat in enough of the conversation to understand it pretty well).Merch and touring are the exact opposite of “hardly cuts it.” They are the bread and butter of the performing artist. Our artists would make much more from a new round of shirts or a big show than they would from a new album. Most albums are sold for $10, cost about $3 to make, and even the best record labels will take half of that gross profit. That leaves $3.50 to be distributed amongst 4 or 5 members, which isn’t exactly a ton. Merch, on the other hand, is a gold mine. Put on a good show, and you’ll have dozens of people lining up to not only buy the album, but shirts, buttons, stickers, trucker hats, etc. So with a good fan you get $5 for the door, $10 for a shirt (gross), $5 for a hat, $1 for a button and $3.50 for the album. The band as a whole gets almost $25 from one fan, and 15% of that comes from the album.This effect was so pronounced that the label actually folded because one of our flagship artists (who was in 3 of our other bands) decided he was going to give away all of his music in the hopes that he could attract more fans. He did- he now makes a living playing small venues and selling the merch, while giving away the music online.This dynamic probably won’t be as true for larger groups (>100k album sales), but for anybody smaller, it is definitely true. These smaller artists are the ones that *actually* need the money, so in my view, they’re the ones we should be concentrating on paying. The way we pay them is not by giving them a cut whenever their music is played- it is by playing their music as much as possible and getting them as many good fans as possible.

  5. charlie crystle

    Artists need to get paid for their creative works, period. There’s an existing system that works–ASCAP should force collections from the sites just like they do bars, restaurants. Stealing music through crappy mp3s is nevrer justified. Giving it away is justified, but the question is how do you make a living as a songwriter who doesn’t tour? It has to be through some sort of royalty. The non-touring musician’s music is just as valid as the touring musician’s. I scraped by as a musician, playing bar and club circuits, cutting records, etc. The best monetization came from royalties, hands down. I understand the value of free as a marketing tool, but it should be my choice, not the fans’.

    1. ryancoleman

      “but the question is how do you make a living as a songwriter who doesn’t tour? … it should be my choice, not the fans/”You have the choice of how you try to make money but ultimately the fans/customers have the choice about whether or not they choose to give you money.Tour/Merch has long been recognized as a place where musicians have the opportunity to make a lot of money – If you choose to ignore/avoid that model then I think you need to decide whether you’re doing this for the money or as a hobby – Consumers have no obligation to provide a business model for you.

      1. charlie crystle

        Yes, they have no obligation to provide a business model, but they do have an obligation to pay for material they use that has not been explicitly been made free. If I sell nothing because people either expect it free or don’t like it, that’s my problem.That said, why not create a pre-roll ad system for all mp3s?

        1. Eric

          because it sucks.

      2. Sam

        As an aspiring songwriter/performer that doesn’t tour, this has the painful ring of an uncomfortable truth to me.There’s a huge opportunity here, of course, and maybe it starts with Hype Machine or CD Baby – the companies that today have the pipeline of content to do something with. Once Hype Machine establishes itself more directly as the new college radio (i.e. the place to go to hear buzzing new bands) they could figure out a way to get bloggers enrolled in some kind of ad network that has as its component a royalty distribution mechanism for artists. Maybe both bloggers and artists sign up to their platform and bloggers have a clearinghouse for all music they want to post or license on their site. That feels too cumbersome actually. Just thinking out loud.

  6. Jim in Colorado

    As I see it, the mainstream, including myself, almost never purchase or even listen to music from anyone other then a well known popular recording artists. Those popular recording artists flash around a tremendous amount of wealth so its really hard to feel sorry for them “losing revenue”.The “indie” bands seemly need to give away music because otherwise it would be impossible to get noticed beyond their Die Hard fans.

  7. curmudgeonly troll

    Music industry before and after Internet.compulsory license… very tricky to design… let the artists determine their own terms, some will be free and the rest probably at non-market-clearing price.

    1. curmudgeonly troll

      oops… after

    2. fredwilson

      I think you are right that artists should determine their own roayalty rates. We need a web service to deal with all of this in real timeFred

    3. jeremystein

      sounds like a similar infrastructure to the distributed zipcar competitor. i tried to find a post on this subject but couldnt. basically the architecture would allow anyone who has a car to rent it out in a similar manner. in this case, the software could be used to manage distribution and payments for artists– to an extent i think theyll need the labels for promotions, tours, etc.

  8. Druce

    <li>musician determines license terms <li>embeds in media (with digital signature) <li>aboveboard sites don’t accept unsigned media, or not licensed for that use<li>government enforces – to sign you need a license, if you sign stuff that’s not yours your license is revoked.Won’t do much about piracy. But for legitimate public distribution, workable business models will emerge for artists, distribution platforms.

    1. fredwilson

      This should all happen via streaming. Files will be useless in five years, maybe tenFred

  9. Marc Rigaux

    During the first bubble, a friend of mine had a site in 2000 called, which was a “tipping service”. If you wanted the labels out of the way in order to pay the artist directly for their work, you could send money to Fairtunes and they would remit cheques to the managers of whatever artist you chose. In the beginning they were sending $2.00 cheques to people like David Bowie, but it was early, and it was more of a signal of what was possible than anything else.Their model relied on the honor system, in that of course not everyone was going to voluntarily pay artists for songs they download for free, but some would, and the theory was that this would approximately equal what the artist would get from higher volume sales – LESS the labels’ cut. Great idea, and they got national attention due to the Napster craze, but to Fred’s point, there was too much friction in the process of getting money to them that most didn’t adopt it and it fizzled out.For me personally, the most frictionless way to get this done would be if a service pennies just got added to my monthly internet or cell phone bill, and I got to make one payment a month for all my music. My part of the process would be complete and it would be out of my hands, and the service would just remit transaction fees back to the carriers, artists, managers, labels, etc.Would love to see a Fairtunes model re-emerge, but to make it frictionless, the payments have to be digital, added on to existing things I’m locked into paying for regularly, and divisible fairly amongst the stakeholders that created the content and enabled that frictionless payment.

  10. Gerd Leonhard

    Fred, Indeed I think it’s the INDUSTRY that screws this up. Licenses for this don’t exist but they SHOULD. Here is my response:… Billy: you are right of course; music should be paid for and the creators should always receive a piece of the take in all of these deals. But here is the real question: how come your representatives (i.e. the labels, publishers, rights organizations etc) have not yet offered a simple and realistic blanket license for the use of your music in these 1000s of social networks? A license like Radio has?IF they had done this a few years ago, you WOULD HAVE receive a piece of this cash and you WOULD be participating in all these deals. The fault is not with Bebo but with the music industry, for not making those licenses available – at least not until there is huge pockets to go after (such as myspace > News Corp, Youtube > Google, > CBS). Is it laziness, cluelessness, ignorance, incompetence… or lack of leadership? You tell me. So far, the industry has waited until some startup gets big enough only to then, retroactively, take them serious and negotiate appropriate license fees. It is the fault of your representatives, Billy, that you have not received your share, not Bebo’s or Myspace’s – tell these guys to get off their behinds and start blanket licensing NOW. Don’t complain about Bebo – the liability is with the music industry. In-action is what is hurting the creators.

  11. patwoodward

    Artists (musicians, visual artists, writers) make money when they create things that fans want to pay for. Using the web as a medium to create art in a way that will deeply intrigue fans is a wide open opportunity.When artists use the web as a medium to create something that can’t be found anywhere else because “that” artist made it, something special is created.Fans pay for special.

  12. Tom Stitt

    A guy (he’s actually an attorney) named Don Passman wrote a good book called All You Need to Know about the Music Business (… The last update was in 2006, first edition was in 1991. Everyone that wants to offer an informed opinion about artist music royalties needs to read this book first – a lesson I’ve learned many times. As technologists and consumers, we tend to look at music royalties as a technical problem that could be addressed effectively with web technology. Royalties for performing musicians are just one piece of the puzzle. And Fred, you have bad information about performance and merch revenue. These are currently the top net revenue opptys for performing musicians – most of whom have figured out how to keep major labels out of these revenue streams.

  13. bill

    the problem is very elemental – the inconsistency and greed of the industry creates a barrier between the artist and the fan, and from a “music purchase” standpoint, facilitates a disconnect with their customer, the music listener.Examples? If I scratch a Windows XP CD, I can get a replacement for a nominal charge. If I scratch my Bob Mould CD, I have to pay full price for a replacement, despite in both cases having already bought the rights to the Intellectual Property. How about a nominal discount to a concert to the fans who buy the album, vs. the fan who just goes to the show without buying the music. Or vice-versa? Be innovative! This is the music BUSINESS! Look at the excessive surcharges from Ticketmaster, even the bands themselves are irate over it.In basic economics terms, we have not hit the intersection between demand and price yet, where the price is higher than people want to pay, and now they have, unfortunately easy (albeit often illegal) workarounds for that problem.In no way am I advocating theft, and I am happy to pay a “fair” price for a song/album/concert, and clearly artists are responding to that – Bob Mould asked the question himself on, and we all know Radiohead is experimenting with it.The music industry (the companies themselves) is becoming less and less relevant. If the industry sticks to its old-ways of working, they will be out of business, because their supply – the musicians, will migrate to other channels of distribution, going direct to their customers. There is less and less value add to the music companies.Perhaps only the airline industry treats its customers worse?

  14. bill

    one addendum – I too am a huge Billy Bragg fan, DESPITE his politics.I find the NYT article an interesting spin coming from a socialist…

    1. charlie crystle

      I don’t see how you can be a fan of billy bragg and his music but not his poltiics, which is all over his music.

      1. fredwilson

        I am a fan of both. Call me the venture socialist!

  15. vruz

    Amazon is going to do it. You can bet on it.

  16. Terence

    Maybe it should be simpler. I mean, I always thought that if there’s a business where an ad-based model could work, this business is music. Regarding the specific situation here (Bebo – or social networks), we should make sure that the more I stream, the more people come to my music, the more I get. There could even be some interesting profiling based on the genre and such. I mean, the structure is already in place. All you need is to treat the artists as a source of revenue (since they are a source of traffic) instead of just another profile.

  17. McLarty

    Maybe is sitting on the very infrastructure to give artists money, and they don’t even know it. Imagine if you had the choice to tip an artist, if you wanted to, whenever you heard a song you liked. You can see implemented in Mathew Ingram’s site. You have to click on a single post and scroll down a bit…it’s on the right hand side.

  18. Maggy Young

    Previously read TechCrunch article beginning ‘ Why do the Brits have all the crazy stupid ideas ?’ Gee thenks Mike.& maybe we are getting confused between Billy Bragg & what he is saying. First I would say that Billy is & has always been a very minor & little known artist over here. I had a copy of ‘ Talking to the Taxman about Poetry’ ‘ ages ago ‘cos I heard a track I liked somewhere & no-one I lent it to liked it, barring 2 tracks. Same here. That was the only reason I’d ever heard of Billy, by a one off pure chance, & barring the usual few thousand diehards, the name would mean nothing to most music fans. Not exactly what you’d call mainstream. Read in a linked article, think it was Wiki, that Billy’s earlier lack of record sales forced a small company which had the faith to sponsor him out of busoiness, or just about. Fact is, he’s never had a big deal career, & I suspect that is why he’s claiming he should share proceeds from the sale of Bebo. I agree with Mike A. here – fact is over here, Bebo’s huge & hardly anyone’s heard of Billy. So maybe Billy should be paying Bebo for exposure & not the other way round.But the issue isn’t Billy, it’s that the fans are getting a product for free while the artist gets no return. This can be fine for aspiring & little known artists who need the exposure, but not for big sellers who don’t need the exposure, but do want the return on recordings. For them, it’s a terrible business model. And most of those who listen to their music won’t go to their shows, so they are not paying for the music in another way. So I think we do need something like the radio system to give artists a return on what is, after all, their product. The problem is correctly identified as being the record companies, who have been clinging to a dying sales model, instead of trying to arrange this. Yeah right, Billy is griping & blaming the wrong people.

  19. Bruce Warila

    Count up the number of social networking sites and digital music businesses that have been built upon or around artists, music and music fans. Bebo isn’t all about music, but music helped build Bebo.Collectively, artists and their fans have the power to rapidly build billion dollar businesses.My prediction: some social networking / music site is going to step up to the plate and make a blanket deal with artists that pulls artists in and pays them real money for every bit of upside they create. The deal will be hot enough to convince artists to motivate their fans to buy into the proposition, and at the expense of other alternatives in the marketplace.Music is a powerful force. Paying to gather that force and to keep it from competitors is on the horizon.

  20. Luke Archer

    Over the last 8 years I have made independent artists my life. I started the Indie channel on MSN video…great exposure but no real revenues for the artists. I search and searched….the one model that I like and that does work is by a company called IODA Alliance ( . They have got it right. Real time reporting and payment. Ingest one and distribute to the masses. Opt-in program participation. They don’t however, let artists set their own royalty rates. (AND I DON”T WORK FOR THEM). So in spite of all this, I propose a solution 50-50 partnerships with artists. This is how myy company works. We film artists at no cost to them, but they give us the rights to sell and license the footage with the rights cleared. We then share 50% of the profits back with the artist. This model works and is fair.

  21. monsur

    “Who is going to deploy it at the micro-scale that most mp3 blogging happens?”This reminds me of Amazon S3. They charge a small fee for storage and bandwidth. I routinely put files on S3 to share with friends, and I’m charged accordingly (usually less than 10 cents a month). I can see a similar model working for artist royalties.However, Amazon has the benefit of being a centralized gatekeeper; how do you monitor the traffic on a decentralized system?

    1. Eric

      optin and ignore? adding value?I would seriously consider a website that organized the catalog of music, funded artists fairly (the ones I want to support), and let me download all music files available. The universal catalog is useful – I guess these days, that will be yahoo.I am willing -today- to scrobble my listens and pledge my affinity to artists. And would subscribe to premium feeds for specific artists. I want an unlimited download catalog, that is easy to use.I want to share my passion for music with reckless abandon.I am willing to pay a reasonable monthly subscription as a voluntary consumer.I am willing to pay a monthly hosting fee for hosting and streaming media to my friends. ala S3. is there room within S3 to simply be an aggregator?

  22. Antman

    It seems to me there are two sides of this argument. Can’t ya consider savin’ money, makin’ money? The net provides access. Access that once cost vasts amounts of money. Access to huge markets and the ability to build a following through sweat equity seems like pretty good consideration for ya puttin up ya music. Master P drove around from city to city, selling his CD’s out of the trunk of his car, to make it. When ya consider time, gas, food, hotels, CD costs, car maintenance etc, ya get my point, he is in for some coin. He needed cash to make cash.The net provides a capital free place to get exposure. It’s about access, once the following is created it proabably makes sense to use the net to turn the sweat equity into coin. But wouldn’t that be the tiniest percent of musicians?My feelin’, the value of the web isn’t cash it’s ACCESS!

  23. jackson

    Who’s gonna build the new playground, eh? I’d certainly like to know. I’d like to help.

  24. Ethan Bauley

    figured i’d wait a few days to put in my .02the musicians are the ones who have to actually make any of this happen. THAT is “the market” imosee: tunecore, sonicbids(ask andrew p, he checked it ;-)similarly…fred, you are so brain-crushingly right on this:”Who is going to build the infrastructure the artists and the web services need? Who is going to deploy it at the micro-scale that most mp3 blogging happens? [build] the systems to make it happen easily and within the constraints of what an online business model can pay.”wilson/obama in ’08

    1. fredwilson

      Politics is the last thing I want to be doing professionally

  25. Cynthia Typaldos

    Fred — Our startup, called “Kachingle”, is developing a service that does something similar this in a general way for all types of online content and services. Would you like to see our demo?

    1. fredwilson

      It depends on whether it is real working system or notFred

  26. AP

    Tax the iPod at purchase and forget about Micropayments. A one time charge which can be shared by the labels on each device with dedicated music player.My vote would be to pay a fee for each gigabyte of storage. Prices would drop with gigabyte volume (4gig taxed at x…40 gig taxed at x*.75)- ensuring the incentive of all stakeholders.Then make music free. People will need new players to keep up.

  27. davduf

    Eric, i’ve been thinking A LOT about the scrobbler => micropayment idea and would love to find people to make it happen… contact me through my blog if you want to talk about this further…

  28. IGTB

    I have a web site that is absolutely set up to pay artist a percentage of all revenues from my site. My site is a new site and is just building up so far I have about 12 consistent users who are premium members which are the ones I will share revenue with, and I am currently getting around 800 + unique visitors per month and growing. The problem I have is getting the word out in such a way that artist will believe in it and then pay the measly $9.00 per year membership that will actually get them revenue sharing agreement. I currently am unable to get any paid advertisers on my site. It’s a catch 22 scenario. Need members to attract adverts and artists are reluctant to pay for a membership because all of the false hoper sites out there with free memberships. My site will Guarantee 25% advert revenue sharing which is divided amongst all premium users as well as individual payouts when an advert posts ads on their song on the sites player. Also I am going to create a collective group CD for production and generate revenue sharing off of that venture as well. I think you are right it is a difficult proposition to pay all of these artist in your given scenario. I do not intend to have every artist in the world join my site like some site would like to have. My site is geared to have only more serious minded types join the site as opposed to audio trolls etc. I am very anti RIAA and other agencies who want to have such an insulting level of payout structure for artists. Only when these organizations reduce the overall consumer costs of such CD’s DVD’s to a reasonable amount that will still take care of all of their overhead such as $4.00-$6.00 and give the artists a fair share of that revenue will I support these type of organizations. Any other business that has sales percentage payouts to the sales people and those doing most of the real effort towards the end results of such sales usually receive a 25% commission on such. Until then they will get no support from me and many other Artists. For those artists out there that are just free for everyone and don’t care to make one cent. There is always the Creative Commons Route if thats the case then go that route and say so on your work. If you are interested in copyrighting your work then you are probably not concerned with the do it for free and at least want some form of protection and reward or payout for your work. These people that choose this route have every right to earn at least a 25% payout structure from any organizations effort in propagating and profiting from said artists.Groove On!!!IGTB

  29. Eric

    but what is piracy? sharing music that was ultimately created to be shared? circumventing greed soaked financial systems? who are the real pirates?Certainly possessing a digital music file does NOT adequately measure my affinity for the artist that created it. Nor my intention to support the artist financially.The challenge is how to adequately reward the artists that I want to create music, so they can continue to create music.Commericial/Streaming is interesting to think about. But in the world of P2P sharing and http streaming how can it be controlled and monetized?

  30. davduf

    Eric, i’ve been thinking A LOT about the scrobbler => micropayment idea and would love to find people to make it happen… contact me through my blog if you want to talk about this further…