Question of the Day: Bebo & Profit Sharing

Question of the Day: Do social networks exploit their user-content generators?

I don’t know if you saw Billy Bragg’s Op-Ed yesterday, The Royalty Scam, but it’s worth reading as a criticism of social media business models that leverage the intellectual and artistic capital of users to build a traffic base that can be monetized — and then don’t share the wealth.

Specifically, singer/songwriter Bragg is griping about Bebo, which he argues built its 40 million-strong user base in just 2 years, in part, because indie artists allowed Bebo to showcase their music for free and that this helped Bebo snag its $850 million sale price from AOL last week.

Bragg writes:
“The musicians who posted their work on are no different from investors in a start-up enterprise. Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend…
The claim that sites such as MySpace and Bebo are doing us a favor by promoting our work is disingenuous. Radio stations also promote our work, but they pay us a royalty that recognizes our contribution to their business. Why should that not apply to the Internet, too?”

In Bragg’s camp, Nick Carr calls this exploitation. Mike Arrington thinks the musicians should be so lucky to have their art exposed on such a large platform. But then there is a chicken & egg dilemma here: did the draw of free music help build the Bebo community/platform the musicians now benefit from, and do the musicians deserve credit for this?

So the debate forms our Question of the Day:

Is it time for social network business models to evolve?</strong
* Is user generated content equivalent to work product?
* Are users’ contributions in building a community site equal to sweat equity?
* Should social networks compensate user-generators for either?
* Should this come in the form of sharing advertising revenue with user-generators?
* Or, should Bebo’s founders and VCs distribute some of their $850 million equity windfall with Bebo’s content-generators?