Heads in the clouds

Sony’s jump into cloud-based music has created quite a lot of buzz in the past week. Its new Music Unlimited service has launched in the UK and a half-dozen other European countries; Sony plans to launch it in the U.S. in 2011.

It includes music from Sony/BMG and at least three other major record labels, which I believe makes it the largest service to challenge Apple’s iTunes. But the concept appears to be more similar to Pandora. It selects songs for an individual user based on feedback that user has given in the past, presumably in multiple channels created by that user.

What strikes me about iTunes and Music Unlimited is that our FargoTube service is like a blend of the two, albeit for now on a smaller scale, and with a couple of unique features of its own. (All three offer both music and videos).

The most basic difference between Sony’s and Apple’s services is that Music Unlimited streams its content, while iTunes’ content is available for download. Various tech bloggers have cast Sony’s challenge as a bet that the streaming format will eventually beat out the download format, in which listeners own the tracks they select.

FargoTube, in contrast to both of those services, lets independent artists offer their entertainment in either or both formats. In most cases, FargoTube users therefore can determine the format that best suits their viewing/listening preferences. All of this ensures that all artists’ presence on FargoTube will remain strong even if one format wanes in the film or music industry as a whole.

The early (and perhaps premature) verdict on Music Unlimited seems to be that it won’t displace iTunes. Readers at Engadget were particularly harsh on Sony.

The good news for FargoTube is that major players in the industry are not only beginning to accept that streaming and subscription services are viable, but they are now implementing solutions in the market. FargoTube is positioned to help independent artists jump on the bandwagon!

 

Progress for FargoTube business

F3′s sales team is back from a productive trip to Music City USA and preparing for yet another Nashville trip, its fourth in two months.

Wednesday, Thursday and Friday were busy for Paul Campbell, our chief operating officer; and Stephanie Miller, our SVP of business development. They met with a talent-management agency, a public-relations firm, a large music-licensing firm, and a couple of country musicians who have become television stars.

We expect some of these meetings to have indirect but very important results for our FargoTube entertainment service. The licensing agency, essentially a group of sleuths that track down unlicensed use of songs, could eventually give FargoTube enormous credibility as a force for the rights of musicians and other content owners, who are trying to break their addiction to free online distribution.

“A lot of things we’re doing are not just short-term,” Paul said. “They’re things we’re doing to ensure that the site has longevity. Everything we do as a company is about getting to the point where we have sustainability.”

With some of the other meetings, the goal is a partnership where the content owner makes FargoTube a key part of distribution strategy. After signing Strange Celebrity Entertainment, LLC, and its country musicians last month, we’re aiming for a second major content partner. We expect that to happen soon because we’ve drawn a lot of interest from a lot of different content owners, who range from Nashville musicians to producers of instructional videos.

The sales process is a bit like planting a tree and waiting for it to bear fruit, even for the discussions with content partners and potential content partners. For one thing, FargoTube is pioneering a new business model that content owners are only beginning to understand. Artists have been using their online presence mainly to promote their concert tours and sales of physical albums, and the costs of such promotion are often larger than the revenue they generate. And while free music videos have helped generate advertising revenue and have probably aided in the sales of digitial music files through third-party websites such as iTunes, those two sources have replaced only a fraction of the loss from declining CD sales. In short, online distribution hasn’t been a smashing success, so content owners are having to become more judicious in how they fit the internet into their business models. F3 Technologies is working with them to ensure that FargoTube is the online source of the future.

Pulling the plug on business as usual

This post from MoneyTalksNews made me think seriously about nixing my own cable television service, and wonder how long the cable industry will survive in its present form. The post included plenty of interesting insights about the industry, but it was basically a how-too guide for finding free video entertainment.

One key point: You no longer need cable access to get prime-time shows in high definition, thanks to rules that went into effect last summer. So viewers now have incentive to go back to advertising-supported television, except that off-the-shelf digital recorders can skip the ads for them. The post also gives pointers on the other hardware for catching and viewing HD signals.

Enjoy it while it lasts, folks. Studios won’t keep producing indefinitely for no payback — not on television and not on the Web. They’ll eventually restrict their programs to paying subscribers. Some are already doing so: Witness the advent of Hulu Plus, a $10/month version of the Hulu free television site, earlier this month. Expressing disappointment with Hulu’s ad sales, the media conglomerates that co-own it have been pushing it for a subscription version for a year or more. This looks like a validation of FargoTube and any other subscription-based models.

In contrast, television producers and cable networks that keep offering free online content will almost certainly find that the decision comes back to haunt them.

Need nobody to tell me now that we’re in Tennessee

F3’s sales team is back in Nashville for the third time in six weeks. I could’ve guessed that after a glance at their list of appointments: an agency that manages country musicians, a public-relations firm, a couple of country musicians who have a reality television show, and two meetings with a large music-licensing firm.

The reality-show stars may be the biggest coup for our FargoTube entertainment service if they come through because they’re a household name among country-music fans. It’s a logical fit: FargoTube would let them sell music videos and other video content that isn’t already claimed by the network that airs their reality show.

Moreover, FargoTube would do that in a social setting that the network can’t match. FargoTube is fundamentally a social networking platform, with each network — or “tube” — centered on a content owner and his/hers/their/its videos. Viewers can e-mail each other and post comments while watching. They can create personalized networks of online friends with similar entertainment interests. They can subscribe to one or more tubes or pay a one-time fee for a single video, depending on how tube owners want to integrate FargoTube with the rest of their online presence. The direct contact with fans allows tube owners to better understand fans’ buying habits.

For me, the most interesting part of our team’s trip has been hearing about their meetings with the licensing agency, one of the three largest music-licensing agencies in the United States. Licensing agencies are basically sleuths that track down unlicensed use of songs and then politely ask the radio station or website to pay and play … or cease and desist. Radio stations are relatively easy: The licensing agency just records what’s on 1,600 radio stations, runs it through a software program similar to Shazam, and checks the resulting list against its own list of which stations have bought which rights. (“Wait,” you’re probably saying, “you call that ‘easy’?!?!?”)

Well, from what I understand, there’s no way to automate that kind of search when it comes to internet-based music outlets, and there are theoretically an infinite number of those outlets. So licensing agencies have to rely on those outlets’ cooperation. We’re eager to cooperate because FargoTube’s entire mission is to help musicans and other artists to regain control of their work and the profit it brings. And we believe that a partnership with this licensing agency will give us enormous credibility with musicians and record labels.

Speaking of street cred, a reliable source tells me that American Idol is kicking off its next round of auditions in Nashville Saturday morning. I think our COO and business-development manager, Paul and Stephanie, have already established their credibility, but I’m going to watch the first few episodes of Season 10 in the fall to see if they stayed in town with their guitars for an extra day.

You don’t like me? So will you give me money?

I was checking out comedy skits on FargoTube’s competition — YouTube — yesterday, when I noticed something surprising: A Republican National Congressional Committee ad popped up on a video spoofing Sarah Palin. The RNCC was asking for donations with the tag line “Don’t let Obama and The Left win.”

People who crack up after watching “Sarah Palin” wondering aloud who the first president of the U.S. was — do they really want to see RNCC ads on their screens? And what about people willing to fork over $25 to $30,000? How many of them are happy to see a sliver of their donation going to a website that hosts anti-Palin videos?

The dilemma crops up a lot less often for viewers on FargoTube. Owners can monetize their video content entirely via subscriptions, or choose to allow ads when they believe viewers will tolerate or enjoy them.

As with YouTube, Hulu.com’s primary revenue stream is advertising, albeit video advertising similar to what’s on traditional television. While some financial analysts cheered the launch of a subscription version of Hulu earlier this week, others predicted that the continued ads would repel would-be subscribers.

And of course you may have heard about iOmega’s “Burn, Baby, Burn” ad, which someone appears to have screen-captured alongside an article about a toddler dying in a house fire. I don’t know if it ever happened to appear that way, or if someone got a little crazy with PhotoShop. Either way, it was a public-relations disaster for both iOmega and for the news organization.