The internet was supposed to level the playing field between signed and unsigned artists, giving each a way to reach fans without middlemen or kingmakers.
And we might get there still. But judging from the major labels' equity stakes in MySpace Music (not to mention imeem and LaLa among others), music's future as a free economy could actually turn out more restrictive than its past, until these sites figure out how to compensate artists of every stripe fairly.
The core of the problem, say MySpace Music's detractors, is that major labels stand to gain from lucrative advertising contracts and the potential sale of the site, while the indie labels and unsigned bands who arguably created the community from which others now profit will not receive similar benefits. Even now, indies cannot upload their music into MySpace's hot new playlist engine the way the big boys can.
To get their fair share from the music services of tomorrow, artists may have to sign with major labels – the opposite of the scenario many had hoped for – because the majors own part of MySpace Music and other free music sites.
This phenomenon of labels acquiring stakes in music sites after dropping lawsuits against them is so prevalent that two experts proposed an equity-based music license for startups. But so far only the major labels are getting equity deals, which has some indie labels hopping mad at the prospect of being locked out of the free music economy.
The American Association of Independent Music (A2IM), which represents labels from ATO Records to ZOHO Music, issued a statement Thursday demanding equity in MySpace Music in return for music from its members, and chided MySpace for turning its back on the indie community.
"A2IM is disappointed that MySpace Music, previously a champion of independent music, has not included independent music labels as equity participants as they have done with the major labels, thus not giving independently owned music labels parity," stated A2IM president Rich Bengloff.
He added, "without an equity component ... independent labels face a situation whereby their major competitors will profit from the use of their repertoire without an appropriate upside opportunity."
Bengloff has a point: If free, ad-supported music is the future of the industry, then indie labels and artists have been largely left out of it. Given MySpace's size and status, these negotiations could determine the blueprint for how the free music economy will operate, similarly to the way Apple's iTunes set the standard price of an individual song download.
But all is not be gloom and doom, according to Greg Scholl, president and CEO of The Orchard. His company has already inked a short-term deal with MySpace to have its 1.3 million songs added to MySpace Music in the coming weeks or months that includes an "aggressive" revenue-sharing clause that's more important to The Orchard than equity, which Scholl said could end up diluted and has other drawbacks for minority stakeholders (full interview).
Scholl admitted that The Orchard is still pursuing an equity deal, just that it's not the end-all-be-all, and other indie label aggregators could follow his lead. For example, IODA Music head Kevin Arnold explained to Digital Music News, "Equity is not out of the question for us, but there are other things like real potential for short-term revenue that are more attractive." (Imeem [through SnoCap] and Last.fm both allow bands to register to receive a share of the advertising revenue generated by their music.)
Indeed, MySpace's intentions towards indies appear to be good even if equity turns out not to be part of those deals. MySpace COO Amit Kapur assured Wired.com that when MySpace Music adds unsigned bands during "phase two" of the service, those artists will share in the site's various business models. A fair system exists for compensating both major labels and unsigned artists in the free music economy – it's just a matter of finding it.
The potential upside, if MySpace can cut the right deals with all these big fish, schools of fish and solo fish, is that MySpace Music could become the first music destination to appropriately compensate copyright holders large and small while letting fans listen to, collate and share music for free – a rosy scenario certain circles have been clamoring for ever since the labels chose to sue, rather than invest in the original free-music juggernaut, Napster.
See Also:
- The Orchard CEO Provides Perspective on MySpace Deal
- MySpace Takes on iTunes With DRM-Free, Amazon-Backed Site
- MySpace Music Won't Give Equity to Indie Bands
- MySpace Music Adds User Playlists, Amazon Links
- MySpace Music Looks Good, But It's No iTunes Killer
- Is MySpace Music Deliberately Blocking Indies?
- Universal Music Group Sues Myspace
