Posts Tagged ‘free’

We recently signed an agreement with SESAC (formerly the Society of European Stage Authors and Composers), pledging to pay appropriate royalties for all videos and other content we upload to FargoTube.

Most of FargoTube’s content falls under agreement with individual artists because that’s how it’s organized: Content owners create “tubes,” each of which is an online social network centered on content by a particular artist. Most of the revenue that artists receive from FargoTube is therefore direct. The royalties we pay them through SESAC are comparatively small.

But we’re going out of our way to ensure that artists are compensated fully for their work, and to make sure that artists see us as a committed partner, an important distinction for a website in an era when 95 percent of music tracks are downloaded without appropriate royalty payments, according to an estimate cited in an excellent New York Times Magazine article on Sunday. After all, that’s FargoTube’s very reason for being — artists are sick of posting their videos online without seeing any return or, worse, seeing their works pirated over the internet. We also believe that the agreement with SESAC gives us credibility and will help speed our adoption by musicians and other sorts of artists.

SESAC is the third-largest of the three major performance rights organizations — copyright enforcers — in the United States. My semi-educated guess is that it represents 100,000 to 200,000 artists, compared to about 400,000 each for the American Society of Composers, Authors and Publishers; and Broadcast Music, Inc. The royalties we pay to SESAC are based partly on the total content by SESAC’s artists that gets uploaded to FargoTube and take into account the fact that we pay most of the content owners directly.

I’m willing to bet that most radio stations make a point of keeping their agreements with SESAC, ASCAP and BMI current. Most restaurants and clubs that play music probably wait to get a visit like the one described in the NYT Magazine article.

I suspect the vast majority of internet-based music players are similar to the restaurants. They figure they can operate below the PROs’ radar for a couple of years — or maybe indefinitely — so they don’t make a point of paying for licenses right away.

FargoTube is different, and our decision to be so proactive with the PROs is designed to underscore this difference. SESAC isn’t necessarily going to endorse FargoTube or refer artists to us, but we believe that highlighting our shared goals will help bring in a lot of artists.

FargoTube’s very business model makes it different from other internet video and music sites: It puts artists in control of their own tubes, social networks centered around videos and other rich content. While some of the artists will choose to sit back and watch the money roll in, we suspect most of them will participate actively, either in person or through employees, because interaction differentiates FargoTube from simple commerce sites like iTunes and Amazon.

Its European roots notwithstanding, SESAC is based in Nashville, and seems to have more than its share of country-music artists. F3’s COO Paul Campbell and SVP of Business Development Stephanie Miller have met with SESAC reps on a couple of recent trips, between meetings with country musicians and record labels.

A press release we put out earlier today gives a bit more detail about our SESAC agreement.

The timing of our announcement coincides nicely with the NYT Magazine article. It followed a BMI representative as she traipsed from bar to bar in the Arizona desert, signing agreements worth a few hundred dollars each. That contradicted, in my mind, at least, the image of the recording industry as a bunch of fat cats who collect on artists’ creations from corner offices in New York and Los Angeles skyscrapers. I blogged about it here.

This blog post has been updated since its original posting so that it answers questions I received from an F3 investor.

I’m willing to bet that most radio stations make a point of signing agreements with SESAC, ASCAP and BMI that are at least conceptually similar to what we signed. Ssome restaurants and clubs that play mu