Pew Research Center confirms validity of FargoTube business model

Posted: January 3, 2011 by chrisbagley in F3 Technologies, FargoTube, Uncategorized
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A survey published last week by the Pew Internet & American Life Project found that 65 percent of internet users in the U.S. have paid for news, entertainment and/or other digital media.

That’s crucial for FargoTube because it strongly reinforces our belief that musicians, filmmakers and other content owners deserve to be compensated for their creations that are distributed online just as they’re compensated for tangible products such as CDs and DVDs. More importantly, this is evidence that content owners can profit from their works, which is the central premise of the FargoTube business model. Artists don’t have to post their videos and music for free consumption, merely as an attempt to steer fans to their discs and live performances, and they don’t have to rely on ad-funded sites like YouTube, which share a far smaller portion of their revenue than the 70 percent that FargoTube shares.

The Pew report has drawn extensive news coverage in the last few days, both on tech blogs and in the mainstream media.

This was the first time that Pew surveyed Americans’ spending on online media, but I think it’s safe to assume that 65 percent is a big jump from a couple of years ago. (Taking into account that a quarter of the people in the survey don’t use the internet, only 49 percent of Americans buy online content. That percentage has also surely grown quickly and will continue to do so.)

I think people are becoming more willing to pay for digital content for two main reasons. First, they’re spending more of their time online. It’s worth the investment to them because they know they’ll either be at their computer or have an appropriately equipped mobile device on hand at the moment they want to listen to the music, watch the video or play the game that they download.

The second big reason is that individual online content providers and distributors are differentiating themselves from one another, thanks partly to faster internet connection speeds. They offer a wide range of interactive features, including many that were impossible in the days of dial-up and even DSL. Internet users can no longer drift away to a different site that has exactly the same content and presentation.

I think FargoTube is a great example of this differentiation, especially in terms of presentation. FargoTube’s social-networking format is unique among online video platforms. Subscribers to a FargoTube fan site can interact with each other and with the bands, authors and filmmakers whose works they buy. Subscribers can share their own videos of concert footage with one another and even sell that footage, subject to the approval of the content owner behind the fan site.

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