Bebo

Billy Bragg raised some interesting questions recently as to whether artists should be entitled to some of the revenue raised from the sale of Bebo which was sold to AOL for $850 million. Media reports highlighted two opposing opinions; Bragg (and others) suggested that they should be entitled to a cut of the profits because a large part of the success of the site is due to the participation of musicians. On the other side, others argued that artists were free to chose whether or not to use the site, that if the site had made a loss they would not be offering to meet the debts, and that in having the opportunity to gain exposure and make contact with fans they have already benefited sufficiently. These are all compelling arguments. As well as highlighting the difference between contractual rights and what some might see as equitable rights, this issue also raises the need for musicians to collaborate together for their own benefit.

Contractual rights and equitable rights
Bragg’s argument is that the value added to the site was sourced from outside the software developers and operators. In essence he makes an equitable argument for a share of the sale funds. Equity is a strand of law developed by the courts over a very long period of time that does not rely on legislative enactment to gain its force. Examples of grounds for entitlement include the doctrine of unjust enrichment, constructive trusts and the like. Some remedies such as injunctions are also seen to be equitable in nature.

While it is difficult to frame Bragg’s argument within the confines of these doctrines, his suggestion nonetheless has an equitable flavour to it. He argues that artists, as the real creators of value to such sites, should be given or offered some reward for their contribution. He suggests that artists are like investors in the site and while I disagree with this characterisation overall, it is nonetheless possible to see his reasoning as to why they should be rewarded for their contribution. But of course this argument can also be extended beyond musicians. All of the 40 million members of Bebo at the time of its sale had in fact contributed some form of ‘expression’ so the value really stems from the community as a whole not merely the artists.

However, in real terms it is the contractual provisions which work against Bragg’s suggestion. Here artists have agreed to terms and conditions of use which displace any argument of an equitable entitlement. Without some other from of unconscionable behaviour which could be said to render their consent ineffective, at law, musicians on Bebo have no legal basis to make a claim.

Musicians Doing It For Themselves

There are three important points I think should be highlighted from this story:

1. It is the aggregate value of the artists rather than any one individual’s value that is important
2. Private ownership of the site has been a major disadvantage for artists
3. Artists need to recognise how emerging technologies such as blogging can create new financial opportunities for them
   

Whilst probably not possible at the time social networking sites were first launched, given their proven ability to assist in viral marketing and exposure, it may be time for artists to reconsider their position. With a relatively small amount of money it would be possible to start a social networking site owned by its members and run on a not for profit basis. While there are of course costs associated with starting a venture such as this, arguably there has been a reduction in the risk associated with these sites since their initial introduction. Furthermore, a critical mass of musicians on a member owned site would inevitably attract the wider public. Even if some privately owned social networks continued to operate, musicians would be in a better bargaining position.

If artists truly wish to realise their independence and embrace the potential that the internet offers they need to work together. Private companies are profit driven. Unless musicians are owners of those companies the decisions that are made will only ever be in their interests whilst their interests are clearly aligned with the pursuit of profit.

Articles

TechDirt, It's Not Exploitation If You Chose To Take Part (24 March 2008) <http://www.techdirt.com/articles/20080322/142342625.shtml> at 3 April 2008

New York Times, The Royalty Scam (22 March 2008) <http://www.nytimes.com/2008/03/22/opinion/22bragg.html?_r=2&oref=login&oref=slogin> at 3 April 2008

e-consultancy, These crazy bloggers still think they understand the music business (25 March 2008) <http://www.e-consultancy.com/news-blog/365309/these-crazy-bloggers-still-think-they-understand-the-music-business.html> at 3 April 2008