From MTV to YouTube: When the Net Pays Everyone But the Musician

In 1996, taped to the wall of my now defunct record label spinART Records' 800 square-foot, four-Ikea-desk-loaded-with-unsold-CD-and-vinyl office was a $1 check from MTV. I fought hard for that stupid check. MTV wanted to use a song called "Supermerica" by a band called Poole that I released. Usually TV shows pay good money for the use of a song, but not MTV — they required labels to allow them to use the music for free in their TV shows when you submitted a music video to be considered for programming on their network. I still don't know why they even bothered saying they would pay a dollar. It really pissed me off. I had fronted money and worked my heart out along with the band to promote, market, manufacture and release their album and along comes a multi-national billion dollar media corporation and demands to be able to use the music for a stinking dollar. I refused to do it. The music had value to me, it was the thing we sold and the thing the band made the majority of their money off of. I could not just give it up for free. But, Harry (lead singer of Poole) convinced me to let MTV have it in anticipation of the promotional value they might get out of it. The show aired, the song appeared in the background for about 30 seconds, the show ended, MTV made money from the advertisers and the song was not mentioned anywhere. This was the way it worked. The labels fed MTV free music and videos and in return hoped to get their videos aired which in turn would drive huge music sales. And MTV made a fortune off the advertising.

And this is more or less why Warner Music recently demanded that all its videos and music be removed from YouTube. Warner previously granted YouTube the legal rights to use its content and YouTube generated a lot of money from it via advertising. Now Warner wants to be paid more by YouTube. If the Google-owned YouTube does not comply, it opens itself up to potentially tens of millions of dollars in copyright infringement fines. Universal did this same thing successfully some time ago.

When media giants fight over music, you know it has to be valuable. Looking, listening and occasionally buying a "good" song drives revenue, tremendous web traffic and generates big advertising dollars. I can kind of understand Warner's point, but as music sales drop and the multi-national, billion dollar media giants wrestle, lobby congress and sue each other for new income streams the musician seems to be getting lost in the shuffle, and that's a huge mistake. Creating a new revenue sharing model that focuses on allowing artists to generate enough money to continue creating music would be a win for everyone. After all, it is the music that is fueling the entire machine.

The union of music and advertising goes back decades, but it seemed to reach a new level with the launch of MTV. MTV broadcast free "TV shows" from the labels in the form of music videos. These videos brought viewers allowing MTV to charge money to advertise on its network. In return for the free videos, the labels and artists received promotion. Artists became more famous which in turn allowed labels to make more money from music sales (there were other income streams as well like money from gigs, but the labels only participated in revenue that came from the sale or license of the music). This symbiotic relationship worked very well as long as all involved made their fair share of money.

However, after over two decades of a steady annual increase in music sales generating enough revenue to feed the record industry, music sales plummeted. At about the same time, advertising revenue from music went through the roof. Internet companies made money off music via venture capital investments, going public and getting acquired for a billion dollars. And this is the crux of the problem, music is being used for profit but not everyone is getting a piece of the pie.

Music sales plummeted with broadband proliferation and the mass adoption of the Internet, MP3s, compression technology, peer to peer file sharing, instant messaging of files, email attachments, torrents and other on-line distribution vehicles. The labels found themselves wondering why they should continue to provide their music and videos for free if the channels/sites they gave them to were reaping a disproportionate financial benefit. Labels would not have given MTV free music videos in the 80's if MTV made money off the videos but the labels did not. (Imagine ABC getting the TV show "Lost" for free, then broadcasting it and keeping all the advertising revenue.)

Move ahead in time to the launch of the original peer-to-peer music file sharing software Napster allowing anyone to get any song at any time for free. Tens of millions of users provided Napster a huge "viewing audience" that it could reach via its "channel." Unlike MTV, most labels and artists did not give Napster permission to use their music. The one area where value could have been created - music sales from discovery - was made irrelevant by allowing users to get the songs for free. To add insult to injury, despite Napster raising almost 100 million dollars and then being bought for 8 million the artists and labels were not paid anything (some would even suggest they lost money due to pirating).

The money that labels did make came from suing Napster and getting paid settlements for copyright infringement; the artists got nothing.

Over time social networking sites began to pop up and MTV moved on to showing its own TV shows (why not, they now had their own built in audience). Bands began to use these sites to get heard, discovered and to collect fans. Music lovers flocked to the sites, web traffic went up and the social networking sites began to charge advertisers for banner ads based on the "eyeballs" they were getting (for a website, any friend of the band is a friend of theirs). Once again it was the bands' and labels' content driving the audience, and once again someone else was making money off the music without an equitable inclusion of the labels and bands in the equation.

Which brings us back to Warner demanding that YouTube take down its content until it receives what it perceives to be its fair share of revenue. Following Google's one billion dollar acquisition, YouTube is not yet profitable and suggests it cannot give up even more of its advertising revenue. Labels contend that this is really not their problem and need to be paid more for the use of their "products." Unfortunately, advertisers are not paying the same sort of rates for online exposure as for TV and radio airtime, and there is not enough money to go around. And the artists, the ones who create and make the music that fuels it all, have yet to be directly included in the conversation.

As the "golden era" of MTV morphs into the world of MySpace and YouTube, a new model of advertising around music - ads appearing on artist's WebPages or popping up on a streaming internet radio player- is not creating enough money to share. And no one is seriously discussing sharing it with the artists anyway. How then in this shifting landscape can they survive?

One possible piece of the puzzle may be the democratization of corporate sponsorship; instead of companies deciding which bands they choose to endorse or random ads appearing when music is played, let bands decide which corporations they want to work with. Bands can then tells their fans to click a link to land at a sponsor's webpage where the fan gets a "free" song. The advertiser gets the web traffic and the artist gets their proportionate share of the advertising money for each free download. Going a step further, the artist has the ability to collect information about the fan (i.e. email address, age, zip code) thereby providing the opportunity for a targeted ad buy , i.e. 18 - 25 year old woman in the 02134 zip code. Or, taken another step further, as opposed to a random ad appearing on a streaming Internet radio player as a Pixies' song is played, assume an ad appears for a product that the Pixies selected, i.e. The Pixies use Gibson Guitars or they love the movie Fight Club. Targeted demographic marketing allows advertising fees to go way up.

TuneCore is launching this model in January 2009 (full disclosure, I am CEO). This connection allowing artists and corporations to work with one another directly may prove to be one of the better ways to generate revenue in the new model. New companies such as TuneCore can then become facilitators providing the tools and information to the artists to collect fans, create music and provide access to opportunities such as corporate sponsorships. I by no means believe this is the magic bullet to the problem, but I do think it has the potential to be part of the solution. In 1981, video killed the radio star, here's to hoping the Internet does not inadvertently kill the musician.

Comments

[AmeriGus]

This advertising-revenue-share plan sounds fine as another angle on having third party sponsors for art, but being ad-driven, it still relies on "brain pollution" -- the vast majority want the song but not the advertised product. The "free" song is therefore paid for by those who buy an unrelated product. We know everyone who clicks through wants the song, but we don't know how badly. Considering cost and convenience, if we can make song purchases quick and cheap, we can improve probability of direct-to-artist sales and reduce ad clutter simultaneously.

A sensible vehicle for music buying is the micropayment, where users can own a song for a tiny fee, perhaps even a negligible amount. If there was a meaningful collection system in place for these micropayments to be accumulated and disseminated, it would reward the creator directly, making costs to purchaser lower, with the payment processor taking a slice. This would benefit not only musicians, but authors, video creators, bloggers or even charities.

Paypal is slowly recognizing the micropayment, lowering it's minimum payment amount in 2005 from 30 cents to a nickel. But it's got to be even more convenient - Paypal requires you to enter their site, log in, and go through several screens even for the smallest amount. Newer Web 2.0 tools enable pop-up password prompts without needing to leave a web page, or, with web-to-phone tools, we can even make payment today through our phone biller quickly and easily.

[knerd]

Making music. Making money.
Discuss.

[MikeAlike]

MTV is a false title (Music Television)- in its inception the revolutionary station was non-discriminatory towards the extreme- excpet for rap and darker skinned people. Its obvious MTV is under corporate control and getting music on "music television" is difficult- then again major labels need to control their numbers and place product-why would MTV allow an influx of new music take over their channel and wash out business for corporate controlled media moguls-entertainers (Madonna-Disney kids)??? An influx of out control independent artists would ruin the major control factor. Madonna who is by trade not an artist - by definition Madonna is an artisan- she use people their work and so forth to sell herself as a commerical product in new packages. MTV thinks she some creative genius- infact she's a art leech- so to say MTV is a mere channel in a remote world of devoided youth and blood sucking designers. MTV is more reality Tv channel with video blips as ads for a few corporate stars. MTV is about as revolutionary as the Chevrolution and Madonna's Couture Gap ads. MTV isn't a music tv station and Madonna isn't a mother the mother christ or holy- end story.

[ianbruce4swim]

smart musicians would be wise to see what the singing cowboy gene autry did to get out of a bad movie deal and into becoming a multi-millionaire. he built his own "network" of movie theaters.

person to person networking worked for autry.

[AmeriGus]

The music industry now bears no resemblance to yesteryear. The number of bands and musicians far outnumbers the number of fans and "paying" music aficionados. Labels do not offer contracts like they used to, recruiting and cultivating talent over time to build followings (Led Zeppelin and Pink Floyd never charted until their 3rd albums). Today, they must be overnight sensations, producing SoundScan revenue within one business quarter or they are dropped. The majors continue to profit off the same old contracts for 30 years - Hendrix, Zeppelin, Beatles, Stones, Sabbath continue to sell reliably to new generations.

After the digital revolution handed the industry it's deathblow, we see an enormous offering of free music available from millions of artists looking for notice. Anyone that builds a following can sell their own music through iTunes and graduate to a major once they've outgrown an indie. There is a lot of great music available today, new and old, in hundreds of niche genres in songs, podcasts, or round the clock streams. People everywhere are walking around with their favorite 1000 or so songs playing in their ears. It's a great time for music and artists have unprecedented access to vast audiences, provided they can justify their existence.

[davidray]

Musicians are not in the music business.
Only the music business is in the music business.
We are in the Applause business and therein lies the difference.

[JeffCore]

In many ways you are dead right! The problem is, to be in the applause and fame business you need the resources to gig or create the art in the first place. With my label spinART, the biggest challenge for a band was getting time off from the day job and still have the money to be able to pursue their dream.

[davidray]

Jeff
I don't mean to be glib but if life were fair coconuts would grow at eye level. Of course it's ridiculous that musicians who create the content get ripped off by the usual parasites.
But if life were fair wouldn't the victims of every tragedy be paid for being in the car crash or war that leads off every news broadcast and is freely used by the same media conglomerates to generate those huge profits. They steal it because they can.
In twenty years digitized nanobots will be patrolling our artenies and interfacing with human genomes and who know we may be able to illegally download a heart transplant. Do you think for one second the AMA would stand for that? ISP's would be shut down in a New York minute.
You have to organize and get a lot bigger. It's human nature.
ray in toronto

[JeffCore]

HI davidray

i do so agree with you. I suppose my point is that music is valuable - very valuable - to people and corporations (albeit for different reasons). We can not change human nature, so it is best to create a new model that harnesses the power of human nature and the environment within which it exists and allows those that create the thing we all love to continue to do so, in some cases professionally.

Jeff

[research]

Staving Musicians isn't new.

Perhaps Now the Internet can eliminate all the middle folks and allow musicians to directly reach their audience.

Put up your own web site, sell music, sell advertising.

That's what I'm doing.

[RobinSeattle]

First, stop with the "video killed the radio star" meme because it's nonsense. Video CREATED radio stars. The U.S. heavy metal boom in the 1980's most AOR stations initially wanted no part of but they were forced to add Iron Maiden, Twisted Sister and Def Leppard after MTV rotated the bejesus out of them.

And so that you know, I hate MTV. I am not an apologist for them.

Secondly, mp3's are still better than the crap tape stock and dubious cartridge manufacturing you saw with cassettes (which have shallower headroom and distorts quicker than mp3). For those listening to music actively, mp3s are not as good as CD. But most people just want their recorded products to sound as good as their FM radio (which only has a dynamic range of between 40-50db, about half of CD).

Thirdly, not giving MTV that song for free was shooting yourself in the foot. Sometimes you have to give a little to rake a monster benefit. So Warner Bros. move to pull its videos off of You Tube is equally shortsighted and is little more than a snit engendered by a sense of corporate manhood.

Yeah, the record industry still hasn't figured out the internet. Like that is a surprise from a technophobic industry whose executives are spending most of their day hoping their coke dealer shows up. They weren't paying artists back in my youth, so that they aren't now hardly astonishes me.

[rwheeler]

You are right. Sometimes it just makes for good business give a way some of our stuff. But I hate to give it away when I know that they have already taken it for their purposes.
Good marketing requires that we put the news out about our talent but there comes a time when it must be purchased. It is our talent and our money.
The labels don't know about the internet, or much else for that matter. They are a marketing machine waiting to cash in on someone's stuff....that's ok but it seems to be about them only.
Releasing on the internet is the deal and the labels will just have to get used to that.

[dblrainbowmusic]

I have to admit... I was taken by the possibility of good "promo" by contracting to allow a major broadcast to use my music for free.
"Nashville Star" had approached my "label/management" (which, by the way, is all only my "dba") about using a particular song of mine for background and entry in to the contest library selection. I was interested in what was in it for me, and was told that my submission was to be at no fee, but that the exposure to millions of viewers would be more than worth the free submission in promotional value. This was very believable, and I agreed.
What I got out of this submission was a considerable rise in "hits" on some online radio airplay, and on some of my online sites.
What I didn't get was any increased demand for bookings or any increased "professional" interest in use and marketing of my music. I got a very nominal increase in the online sales of my music, songs and CDs.
But, I guess that it makes a good additional medal on my chest.
It is a sad state of affairs that big profit companies do not treat independent artists as business associates who deserve to recieve some value in what they create (manufacture). So many of them are actually extorting our material from us, for their own profits, under the guise that they are doing us some great favor.

[rjmiller]

So far this sounds decent, I'll probably check this out when its running for my band's music.

And to all of the people complaining about mp3 quality, its your own fault for downloading/encoding poor quality mp3s. If you encode in a good enough bitrate (240kbps VBR for example) the sound quality is pretty good. That's not to mention FLAC encoding or other lossless formats.

[wagadog]

Enjoying music should be about appreciating real music, live and in person...and learning to play music yourself, and learning to play with other people.

The questionable performer/audience model of what music is about is heightened by the media, and "how do we make money out of this" is the wrong question.

Our society never questions the value of money, yet always questions the value of the artist.

We've got it backwards.

The only way to reverse this back-to-front thinking is one person at a time, one performance at a time, one musician at a time, one band at a time.

Go to those live gigs and stuff the five dollars you would have spent on half a dozen disjointed tunes you might never listen to again -- into the musicians' tip jars. Even buskers deserve more support than your typical A&R guy and the corporate conglomerates he represents.

When you get the CD the musician made at home at the gig signed, if they've done a good job on stage -- tell them. "Good Job." Because it IS a lot of work, and those words of encouragement make a huge difference to them.

Glad to hear of a musician exploring ways of supporting musicians through new communications technologies. Rather than fighting the media conglomerates, lets make them increasingly irrelevant by promoting better music, better musicians, better ways of getting out and seeing them, better ways of interacting as a musician yourself, with other musicians.

[mheister]

I've essentially given up on FM radio as a source for new music. I like chill music now - downtempo electronica - so I listen to a podcast called The Chillcast with Anji Bee. I also like to explore what artists have posted at eMusic - I have an account there.

I also buy the music of musicians I particularly want to support - The Dawnbreakers Collective (all of the children in my life LOVE "Army of Light"), Solomon Coal, Laura Harley, Ferraby Lionheart. I buy the CD from the artist, either at a show, through the artist's own website, or through CD Baby (a very artist-friendly online outlet).

A friend of mine produced a movie based on his late father's script, "The Man from Earth". They were alerted that their DVD - which hadn't been released yet - had climbed to the fourth most-searched item on imdb. They learned that someone had circulated the film as a torrent. Rather than fighting, they posted a note on their website explaining they weren't the latest big-budget big-studio spectacle; rather, it was a tiny film made on a shoestring budget with sacrifice all around. And they put a Paypal donate button on their site. More than a few consumers who appreciated the effort kicked them a couple of bucks. In effect, those who donated became patrons of these artists.

In short, IMHO we can complain about how the landscape is changing, or we can adapt to it - as artists as well

[Tiny Omar]

I am an engineer/producer as well as an independent artist. In the 90's I purchased records from indies such as SpinArt, Simple Machines etc... We are all being destroyed. I can no longer make a living selling my services because: 1. The standards of quality are so highly diminished by the advent of the Mp3 (like going backwards to cassette in terms of quality... worse even) that no one considers it important to have a good quality product anymore. 2. Bands would rather record for free using home based products like GarageBand rather than go into an "expensive" $35 per hour studio. 3. Bands no longer make money by touring because everyone else is in a band now. If you demand a guarantee for your performance clubs will pass you over for the bands that will play for free. Again, the quality is so diminished that no one notices that your band actually sucks. The only bands who currently "make it" are the ones whose trust funds are big enough to hire promoters who can push a crap product on an unsuspecting and ignorant audience. Promoters might be getting rich, but they are the only ones. It all started with the Strokes people and it ends with everyone pretending that Dead Confederate is actually a good band.

[AmeriGus]

I think the author is a bit idealistic here - musicians have been exploited by businessmen since the first lute was strung. The advent of the millionaire "rock star" has only been since Elvis (Caruso, actually)and was a one-in-a-million proposition then. Even before this, labels were only usually only willing to take chances on musicians if their outlay was minimal and had a promising upside potential. I have a garage full of LPs of artists no one's ever heard of and labels took a bath on. Many a fine label died out with horrible losses in the pursuit of patronage of fine music too. The remaining labels all consolidated as did all other forms of media. MTV was simply the new technology of the time, marrying music to visuals with ubiquitous distribution via television, but it too started off on a shoestring until it eventually became part of the Viacom monster.

I had an animated series that MTV offered me a development deal on, provided I signed over all my rights to everything ahead of time. Not saying yes on the spot was a big mistake. By the time I got back to them to say yes, the guy that made the offer was replaced - I only wish I could have been fighting Viacom today over money like the creators of Ren & Stimpy or Beavis & Butthead who also signed away their rights.

[carrieanna]

From what I have read in interviews most bands make the biggest money from their tours...since they can sell all the expensive merchandise in addition to the ticket fees. I have no issue with some bands who prefer to go with a major label. Provided that the major label has up-to-date marketing skills and can get their artists advertised in a variety of media, it seems like a good business marriage.

I still see an opportunity for the engineers and other technical guys to turn a profit...if they work with bands to provide a high quality recording vs the lower-quality bootlegs and copies that end up on the net. I also see a big potential in higher value CDs/Vinyl. I imagine most people think $12 - 15 is too much for a little mirror disk with flimsy paper booklet. That's why pirating feels less guilty than it would if CDs were only $5. But record companies have a myriad of opportunities in creating better packaging and enhancing the recorded music experience.