“So we had this idea about compensating artists, and then the big question was, ‘OK, I’m not using the distribution system and I’m not using the marketing. All I want to pay for is the artist and for production. How much of the $15 is that?’ We started looking on the internet [for the answer], and we couldn’t find anything. And then we started to realize there must be a problem here.” — Matt Goyer, Fairtunes
Hey, can you spare a dollar? What if I told you it was for Bono? Shellac?
The family down the street who plays together as a washboard band? The
Chicago Symphony Orchestra? No? Well, what if you’d been downloading washboard
MP3s over your phone line for the last 17 hours? What if I told you that
you could use your credit card online to transmit that dollar? And what
if I really laid down the guilt trip, and said that these musicians couldn’t
continue to create without your voluntary contribution? Then it might
start to make sense.
PD: Let me ask you a couple of questions about Fairtunes itself. First, why don’t you explain what it is and what it does?
MG: Fairtunes is a web site right now, essentially it’s a web service, that allows music fans to send voluntary contributions or gratuities or tips or however you want to label it to their favorite musicians, artists, and anyone else involved in the creation of intellectual property.
PD: So this must be a pretty exciting time. You guys started the company how long ago?
MG: (laughs) Umm…
PD: Like two months?
MG: Well, the website went up I don’t know, about a month ago, and we officially incorporated on June 30, 2000. So, I mean, it’s been two months now.
PD: Every day it seems like you’ve got a new story up on the site, or somewhere I hear that there’s some new partnership. You’ve got the lyrics archive thing going now, I noticed, which wasn’t there the first time I looked at the site two weeks ago.
MG: It changes daily.
PD: So, do you have any background in music?
PD: Any connection? Just a fan?
MG: Yeah, I listen to music…uh…that’s about it.
PD: So, no background in music, do you have any background in software, besides your stint at IBM doing web application development?
MG: No, I spent all my previous summers as a sailing instructor.
PD: So you’ve never released any kind of software, anything like that. Fairtunes is product offering number one.
MG: Yeah, I learned HTML in May, I think, and jumped right into server-side scripting and interfacing with databases. A quick, steep learning curve.
PD: How was Fairtunes hatched? How did you and John Cormie get things started?
MG: Well, we were driving down one of the main roads in Winnipeg in my friend’s car. We’re listening to the radio and they said the new Tragically Hip album is coming out on June 8 or something. And I joked to John, “Yeah, we’ll go buy that, right?” Because, you know, it’s been years since we bought a CD.
PD: Years. Really?
MG: Yeah. I can’t even remember the last CD I bought, that’s how long it was. So we were joking around, but the thing was, we love the Tragically Hip. And as we were driving, actually in the car, we were talking about how we could compensate the artist, because we’re not buying their CD anymore. And then, you know, we’re two internet junkies so we said, OK, what can we do? So we said, “OK, let’s send them money. Why can’t we just write them a check? Why can’t we have a website that accepts money and the website writes them a check for me, since I’m lazy and I don’t want to have to actually get an envelope out, get my checkbook out…”
PD: Actually look up their address…
MG: Fans don’t want to do that. They just want to click and it’s taken care of. And that’s what the internet’s about. So we said, OK, let’s build a website that does that. And then we got home, quickly whois-ed all the relevant names, and it took us a while to find a name that wasn’t taken, which was Fairtunes, so we snapped it up. It’s a shame that name is just Fairtunes.
PD: Why is that?
MG: Because it’s so much more than music.
PD: So in the future, you’d like it to compensate any creator of intellectual property that one can identify.
MG: Yeah, that’s what we want to work towards. Our focus has been music. But, you know, once we started thinking about music, why can’t this work, even that first night we bought FairAuthor or FairBooks or something like that — I own so many domain names I can’t even keep track. But we were thinking, “When are we going to have a Napster for electronic books? When are we going to have a Napster for essays, school essays? Why don’t we have all these other different Napsters but for other intellectual property mediums?”
PD: So that opens up a real can of worms.
MG: Then our space goes from music to basically anything that you can create in a digital form on the internet. We’ve even had people come to us and say, “This voluntary contribution system exists in the real world. Why can’t you guys put it on the internet?” And we say, “Wow. That’s an amazing idea. Let’s do that.”
PD: I’d like you to talk about your idea of embedding Fairtunes in the media players, if you can work out partnerships there. How do you think you can accomplish this? What’s the game plan?
MG: We’ve just worked out a deal with Winamp to integrate what we’re doing into their music player. If you go to http://www.fairtunes.com/download.jsp you can download the Fairtunes Winamp Plugin, which allows you to right-click in the playlist to send money to the artist who is currently playing, view your top X artists, and view your top X songs.
PD: So your long-term focus is to write some kind of freely distributed software.
MG: I see this as the next logical step for Fairtunes. Because I don’t want to have to — I have 800 MP3s. How am I supposed to keep track of my favorite artists? That’s a lot of work. If I write software that can keep track of all my favorite artists for me, and then remind me, all in a way that — it’s not like nagware — you could have it specified to pop up every week. Tell me my favorite artists for that week. And then I can go send them a tip right through the player, so that you don’t have to go to the website. It’s so cumbersome to go to the website and add five artists. Why can’t I just double-click them all on my WinAmp and it’s all done automatically — automagically?
PD: Which kinds of traditional voluntary contribution systems do you think about for comparison?
MG: I’m thinking of symphonies in Canada. I don’t know if it’s the same in the US but it’s all voluntary contributions that drive them. Your ticket price doesn’t actually cover the cost of seeing the symphony perform. There’s a lot of money behind the scenes. And if we could facilitate that over the internet, that’s cool. A lot of people pigeonhole us into “music tips” which is fine for now. We will focus on music and get that working before we try to bite off something bigger. But, yeah, I see the space as huge. I think voluntary contributions are great. I love them.
PD: That actually leads pretty nicely into some questions about general ideology. Why do you think it is that musicians are the first case? Is it just because of Napster? Is it just happenstance that musicians are the first that seem to need this voluntary contribution system?
MG: I think it’s directly tied to Napster. OK, I guess software piracy was the first big thing on the internet. But the beauty of music is there’s one identifiable person — or 4 or 5 band members — there’s an obvious front person to the gig. Whereas if you start looking into software, it’s not obvious. There’s a huge company behind it. So I think it’s the whole Napster issue combined with how easy it is to identify who is the public front of the work.
PD: And therefore whose intellectual property is being used without compensation.
MG: Of course people will argue — and that’s come up — “What about the songwriters?” And I’m totally of the opinion that we’ve got to support them. That wasn’t what we were thinking [about] two months ago. But now that everyone’s brought it up, I see that it is an issue. I appreciate that not everyone writes their own music. Now, the majority of the music I personally listen to, the writer and the performer are the same person. But I promised one guy that in a week we’ll have that [capability] up. And in a week we will. But I don’t know how we’re going to do it yet.
PD: Well, it’s a problem, because what might work for U2 might not work for the songwriter. My dad is a huge music fan, well-versed in jazz and standards, and a huge fan of Frank Sinatra. But even he couldn’t tell me who wrote “That’s Life” when I asked him the other day. So that’s a problem. Because my dad isn’t going to search on Fairtunes to find that songwriter’s name.
MG: So we have to find a way so that if you listen to U2, you can find out who wrote all of U2’s songs. Or at least find some basic tool so that you can do that in another mechanism until we can get an ideal solution in place. Organizations like ASCAP already have that [information]. So we just have to find a nice way of integrating and linking.
PD: Getting back to the ideology of how it started and why it started with musicians — in your opinion, do you think musicians are currently under-compensated? Even before Napster? Or is it just that musicians would be under-compensated if X, Y, and Z happened?
MG: I was probably pretty ignorant until May. I had no idea how much an artist got when I went and bought a CD from a CD store. So we had this idea about compensating artists, and then the big question was, “OK, I’m not using the distribution system and I’m not using the marketing. All I want to pay for is the artist and for production. How much of the $15 is that?” We started looking on the internet [for the answer], and we couldn’t find anything. And then we started to realize there must be a problem here. Then, the Courtney Love article — the first day it came out, John called me at some ridiculous hour of the morning. And we were like, “Wow.” And then reporters started to report on it, and I’ve learned a lot over the past couple of months about artist compensation. I think there’s a huge problem there. I’m an outsider, I’ve only been in the music industry for a month or two, but…
PD: It sounds like a buck or two out of $15 isn’t fair.
MG: Right. Someone recommended to me that I buy this book, The Business of Music, so I read that and it’s 50 cents. That’s what the artist gets. You know? It’s a buck-fifty gross and fifty cents net. And I don’t think that’s fair.
PD: And I assume you’ve read
PD: I have friends whose story fits his description perfectly. That’s just the way music has worked this decade. Now, when you think about why that happened, why musicians are under-compensated, or why it ends up being 50 cents out of $15, what are the top three causes you’d name?
MG: I think it’s the pure power of monopoly, and the greed of American society, and the whole celebrity cause. I can see if I was a band or an artist and the record label came up to me and said, “We’re going to make you famous,” I would totally agree, regardless if I was getting screwed. You know, because you’re going to be on MTV, on the cover of all the magazines, blah, blah, blah. So of course I would agree. But that’s wrong. And artists are driven to keep on doing that because they see everyone else doing it, they see how they’re [other musicians are] all driving in Mercedes and they’re all rich. And they just sign on the dotted line. I don’t know if I’m wrong or right, but I don’t think anyone really knows what they’re getting into. It’s the record industry’s fault, because the top 5 record labels basically own the record industry, and no one’s going to step in and redo their business model. They’ll just put them out of business or sue them to death.
PD: Do you think that these technology developments are going to leave the artists in a better situation at the other end of all these changes, or do you think they’re going end up worse?
MG: I would hope it would be better. But I wouldn’t be surprised if things remained the same even as things change. Maybe the new system we get will still be unfair, but it will be unfair in different ways. Now you’re being exposed to more people, but maybe you’re not making as much. Maybe you’re making less. I think it’ll probably be some kind of tradeoff. I don’t know — I hope that people would use the voluntary contribution system, or pay per download, or subscription. But I think there’s going to be a fundamental shift in the music industry in the next year or two. It’s going to be interesting to see how it all settles down into this new internet world where everyone has a computer and an MP3 player in their cars.
PD: Do you think that musicians should be self-sufficient, and paying attention to all this stuff? Or do you think that they should sort of be protected from the business and have people — you know, like you guys, the artist doesn’t have to do anything to use Fairtunes, necessarily. They don’t have to educate themselves about the changes coming on. They can just say, “All right, we’re switching revenue sources,” but do you think it’s important for the musicians to be educated about this stuff, and to know what’s going on, and to know what choices they’re making?
MG: Two different issues, or things I have to say. I don’t, as a businessperson, worry about all of the legal issues of what I’m doing, because I pay my lawyer to do that for me. So I would hope that the artist doesn’t feel they have to keep up to date on all this, because they can pay an expert to worry about that for them, and to advise them. But at the same time, I can’t be ignorant about all the legal issues going on. I have to keep up to date myself, so I can keep my lawyer in check, and when he says something I’m not completely lost. So I think the artist can’t be completely ignorant of what’s going on, because it’s going to affect the way they do business. I know art should be this ideal thing, but we live in America, and it’s not; it’s a business. If you’re going to be an artist, and you’re going to do this as a living, you’re going to have to pay some attention to the business side of it. Or at least pay someone to pay attention for you.
PD: And know enough to evaluate that person.
MG: Or else you’re going to get eaten alive.
PD: Implicit in all of what you say, and correct me if I’m wrong, but it sounds like there’s a belief that musicians deserve to get paid, that making music is labor that deserves to be compensated, it’s worth something, it’s valuable to society. Would you agree with that?
MG: Yeah, I would completely agree with that. When I’m listening to someone else’s work, it’s only right that I show appreciation for that work. We can do that a bunch of different ways. In the internet world, and in our standard world, I don’t know how we do that, other than through money. So I really think at the end of the day, artists should be paid, and they should be paid reasonably.
PD: A “living wage,” so to speak?
MG: Exactly. I feel that way about all segments of society. Artists aren’t the only ones who are being treated unfairly in our world.
PD: Name some other examples; I’d love to hear what comes to your mind.
MG: The first thing that comes to mind — up in Canada, we have universal health insurance, all provided for by the government. And our nurses, and everyone who works in the hospitals, except for the doctors, are generally overworked and underpaid. But then you look at our computer technicians. You know, as a summer student at IBM, I was making about the same amount that my mom makes, and she’s a physiotherapist with years of experience. And she’s helping sick people, and I’m [doing] what? Doing stupid business application. So I think there’s a lot of inequities in the world, and…I don’t know.
PD: It seems sometimes that salaries are pretty arbitrary, aren’t they? The pretense that salaries are connected to some inherent value is really open for question when you think about it.
MG: I know the whole demand and supply issue. There’s high demand for computer technicians. But still…
PD: In the end, it has something to do with the fact that markets are imperfect. In fact, really imperfect.
MG: Yeah. Well, that was the interesting thing about the whole CD market. The record companies kept saying “Buy these CDs for $16,” so that’s what the market bears. But then you see a lawsuit that 28 states bring against the record labels for price-fixing.
PD: Sure, and then this whole underground market for free downloadable music opened up. Perhaps if the labels had been charging a reasonable price, the impetus for a black market wouldn’t have been there. So you’ve got to look at the whole picture.
MG: They’ve abused their monopolistic power.
PD: I want to finish up with some “rebuttals” to the online tip jar proposition. (We’ve already talked about the issue with compensating songwriters in addition to performers.) I want you to respond to each of them — they’re each in the form of a quote. Think of it like “The Rebuttal Game.” Fair enough?
PD: So the first one is, “The contributions they’ve collected are a pittance. It’s just not enough money to matter.” What do you say to that?
MG: What I say to that is, “Wait. Give us time.” We’ve been online a month, and once we have steady volume, I’m sure they won’t be a pittance for much longer.
PD: You already have statistics about who the artists are on the site. U2’s still in the lead — eighty bucks. Pretty solid. I hope you guys get a thank-you note from Bono and Edge.
MG: They’ve received a lot of money, more than anyone else.
PD: Yeah, sure. The two of them can go out to dinner on that. It’s something.
MG: Well, think about it in terms of “a buck a CD.” It’s eighty CDs from what? Five fans. It’s phenomenal. Can’t do that in the current model.
PD: OK, number two. The model you guys have chosen is based on people’s altruism. Or, to be more specific, it’s based on people’s enlightened self-interest, people realizing that they want to support the artist so that the artist will keep making music for them. What would you say to someone who said, “You can’t rely on altruism in a market capitalist society and economy.”
MG: I would ask that person to explain to me why we still have churches, theaters, symphonies, all the non-profit organizations that are run solely on volunteer effort and volunteer money. Explain that to me.
PD: What if someone said that those organizations, especially in America, are chronically under-funded?
MG: That doesn’t surprise me.
PD: At least you’re honest. This is a big issue that’s even been brought up in the presidential race. George W. Bush has said that we should count on private organizations to do more [ i.e. social services work like that of local health care organizations, low income aid, and churches]. But the problem is that they just don’t have any money.
MG: I think it’s a matter of time and enlightenment. I think there’s always going to be people who pirate, and people who don’t respect intellectual property. I also think that as more people learn about intellectual property, and our society gets more educated about these issues, more people are going to care about it. Then more people take part in stuff like what we’re doing at Fairtunes, and voluntary contributions. I think if we can demonstrate that this is going to work, and it’s going to work on a large scale, then more people are going to come on board. I think it’s a matter of time and more people waking up and saying, “We can be responsible. We can do this.”
PD: OK, number three. “This is insulting. It puts musicians on the level of coffee shop clerks.” The cultural devaluation argument.
MG: Getting five dollars from Fairtunes doesn’t pay any of your bills, by any stretch of the imagination. But if we sent you five times five thousand, that would be. It’s merely a matter of volume. I think if [a given artist] was receiving a lot of voluntary contributions, even if they were 25 cents each, but he was getting a check for $5000 every month, he wouldn’t say that this is a pittance and this is insulting. He’d say “Wow, there’s a lot of generous people out there.”
PD: So it’s partly the phraseology, right, because you don’t call them tips? You call them “voluntary contributions.” I admire your resilience in sticking to that. It is just a perception thing to a certain extent.
MG: It’s completely people’s perceptions. Some people perceive it to be demeaning, some people perceive it as necessary, it’s something you do. I don’t question tipping my waiter or waitress. I don’t think of my leaving a tip as demeaning, I think of it as, “They gave me good service, I’m going to do something in return, because I know the restaurant’s only paying them six dollars an hour.” That’s just the way it works.
It’s order of magnitude. We’ve only been up a month. When MP3.com first came out, yeah, it was a pittance. One of the guys who’s been with us, Dave from the Noisies — he received $9 from MP3.com. Being with us for a month, we’ve written him a check for $60 or something. And that’s amazing. I think the artists should be thrilled that one fan would go out their way — well, it’s not that much out of their way because we’re a website — to send someone a $5 contribution completely voluntarily. I think that speaks volumes about the artist’s work. Even a dollar contribution matters. We got five dollars for Fairtunes itself anonymously. And that’s cool. I’m not insulted by that. One dollar — our server costs us $75 a day. It doesn’t even come close to covering our server cost for an hour. But it’s the gesture. I think the gesture speaks volumes.
PD: Number four — someone threw this at you already — “It’s not even legal to send these artists the check, or, rather, it’s not legal for them to keep it all.” Because the labels and/or the IRS could take a cut.
MG: Tax issue first. I don’t care what the artist does. I know that Fairtunes is going to respect all the tax laws out there. I know that the artist does probably have a legal obligation to report that to the IRS or to Revenue Canada. I’m not going to argue with that. The response to the label taking a cut — if any label says that an artist cannot receive a voluntary contribution, I’m going to get my lawyer on them so quickly, and I’ll pay for it out of my own pocket.
PD: Because you just don’t feel there’s any way for the label to prove what the contribution was for.
MG: Exactly. They don’t know if it was for dinner last week or for an MP3 I stole yesterday. There’s no way for them to prove any sort of link there. None. Absolutely none.
PD: There’s nothing on your site that would cause a court to believe that there’s some indication that you’re compensating the artist for something you stole.
MG: Yeah, I think so. We link to Napster and people have told us to take that off. I’m not going to take it off, though. I can get legal MP3s on Napster. It’s ridiculous. Even if I cite — we have a personal message box where you can type in a message to the artist — this for that song which is on this album which this label produced. The label still doesn’t know that I didn’t actually go out and buy that CDÆ’and they can’t prove I didn’t buy that CD. So there’s no way they’re going to be able to prove it’s because of an MP3 download. I am young and broke, and I’d fight very hard against the labels for that because it’s ridiculous. Does the restaurant take a part of the waiter’s tip?
MG: Yeah, sometimes. But the majority of cases they don’t.
PD: One last thing — a lot of people talk about this voluntary contribution system, or online tip jar, as one part of an array of solutions to get musicians compensated. How do you think this fits in with other revenue models for musicians? A lot of people refer to the revenue from it as “extra.” How do you feel about that?
MG: Right now, it is just a little bit extra so you can buy another beer tonight. But some people have referred to it as one leg of a multi-legged stool. I think Jacob said that. I like that. Right now, Fairtunes isn’t a key part of anyone’s revenue stream, except for Dave from the Noisies. He makes no money off CD sales. But for other artists, it’s just a fringe thing. But if we can generate the volume, I think we can make it a larger part of their revenue. I don’t know if we can be their sole source of revenue, but in an ideal world it would be. I don’t know if we’ll ever get to that point. But I definitely see it as being part, and I’d like to see it as a significant part, not one that’s ignored.