F3 executive discusses Interactive Defense in interview

In an interview with Tony Golden of the Shareholder Development Group today, Chief Operating Officer Paul Campbell gave an overview of the Interactive Defense System, its business plan,  its market opportunities and its revenue streams.

He went into more detail on IDS’s sales strategies, including geographical synergies, how we focus on regional clusters of police departments and our plans to expand our sales staff.

Paul discussed F3’s Interaction Community Systems HOA-management platform with Tony earlier this month. Paul and Senior VP of Business Development Stephanie Miller have each talked with Tony about F3’s FargoTube entertainment platform.

On the road again

Back from Austin, three days in the office to review and follow up on South by Southwest, and then back on the road again, this time to Nashville. Chief Operating Officer Paul Campbell and Senior VP for Business Development Stephanie Miller drove up to Music City, USA, for two days of meetings with strategic partners and potential partners for FargoTube.

They moved forward on a nice promotion with Ditto Music, one of our top partners. Ditto just expanded from Europe to the U.S. with a new office in Nashville, and its marketing push includes a “Battle of the Bands.” Stephanie, Paul and Ditto co-founder Lee Parsons hammered out details of FargoTube’s participation. For starters, the top three bands will win their own customized tubes — fan sites — on FargoTube. FargoTube partner GigLaunch, a booking agency and clearinghouse, is also contributing prizes, as is Music2Q, a FargoTube partner that helps musicians in licensing their works to films and television programs.

On Wednesday evening, Paul and Stephanie took in a performance by — and met with — the Swon Brothers, new FargoTube users from Oklahoma who were touring last week. More news on Zach and Colton Swon as they continue to tour and record — and to post their tracks and videos on FargoTube.

F3 also met with others, including a publicist who is both using and promoting FargoTube in her own business.

All in all, the sales team had a short and sweet trip, and is following up with some breath-catching before hitting the road again in the near future.

South, southwest, and several other directions

F3’s trip to Austin for the South by Southwest festivals was quite productive and successful.

Our goals in attending were to make contacts in the film and music industries in our ongoing push for new strategic partnerships for FargoTube, to create interest among bands, labels, artist managers and filmmakers who will use the platform, and to learn more about their needs. We exceeded our goals, and we expect several of the relationships to bear fruit over the coming months as FargoTube gains partnerships, entertainment content and subscribers.

Perhaps the most interesting aspect of the festivals was the film component. As you probably realize, the bulk of FargoTube’s artists and users are in the music space, and the SXSW Film Festival, in the early part of last week, was our first major opportunity to introduce FargoTube to filmmakers and get their feedback. We talked with several dozen filmmakers in documentary, short-form and serials, including many whose emphasis on social-media marketing makes FargoTube an ideal platform. In the course of our conversations with filmmakers, we discovered that a couple of FargoTube’s capabilities are even more important than we had realized, and we intend to focus more of our marketing efforts on these features.

We met with quite a few entertainment-industry companies that are potential partners in fields ranging from music distribution and management to order fulfillment to manufacturers of branded merchandise. Conversations with many of these are continuing this week and beyond.

Lastly, we continued to learn more about the music industry, both in individual conversations with industry people and in the 10 or so discussion panels we attended. One of the most interesting for me was a panel on pricing strategies, which covered loss leaders and cash cows, single-track versus EPs versus full-length albums, and discussion of how ticket sales and music sales can drive one another. Another panel focused on the changing role of managers in a world where artists are expected to handle their own online social networking.

All in all, it was a very successful week, and we’ll look forward to telling you about the relationships that grow out of it as they come to fruition.

Newly automated sign-up process for ICS

Homeowner associations, property managers and churches can now create online communities in Interaction Community Systems with just a few clicks, thanks to a major update to ICS that live earlier this week.

We expect the automation to encourage more groups to create communities and begin using ICS. Moreover, this frees up time for F3 Technologies staff to focus on expanding the reach of all of our platforms, for example FargoTube and its potential to help musicians and other artists to develop their careers.

We included a few more details in the press release we put out this morning.

The update has been in development for several months and in intensive testing for a couple of weeks. We’ve added several new features along the way. All of this amounts big benefits — for ICS users, potential users, and for F3 Technologies.

Answers to several questions about ICS

F3 investors and readers have this blog have posed several good questions about Interaction Community Systems this week, so I’ll take a crack at answering them here.

We’ve continued to add new communities to ICS at a pace comparable to the modest pace we saw through 2009 and early 2010. Our current sales pipeline leads us to believe that this pace will continue for the next couple of months.

We believe the pace will pick up substantially this year after we introduce automation that makes registration easier and faster for individual communities and even property management companies with multiple communities. We’re on track to complete the automation and have it active by early February.

When the automation is active, we plan to beef up marketing for ICS, with a particular focus on direct marketing to property managers. One aspect of the update will let ICS users select communications and accounting modules. This will mean additional flexibility for our clients, more clients, and more revenue for F3 Technologies.

Focusing on F3’s three platforms

A regular reader asked us yesterday about F3’s three main platforms — Interaction Community Systems, FargoTube and the Interactive Defense System — and how we’re dividing our resources among them. It was a good question, so I’m posting the answer here.

While we continue to update and refine all three periodically, we have been putting somewhat more time into FargoTube and IDS than into ICS because the first two are new platforms and we’ve made a point of getting them up to speed. Furthermore, we believe these two are cutting-edge platforms. The markets for them are brand-new, with significant upsides, so it has been important to move quickly.

In contrast, Interaction Community Systems is one of several online management platforms for homeowners associations and other membership groups, and the relatively saturated state of that market may moderate ICS’s potential for growth.

Nonetheless, we believe ICS has significant advantages over its competitors, including the integrated nature of its accounting, paymenting, communications and management functions; and lower price points. These strengths make ICS an especially useful platform for property managers who want to manage and interact with their various communities efficiently. For this reason and because property managers have lower acquisition costs per dollar of revenue, we have been focusing more heavily on selling to property managers than to individual communities.

Additionally, we believe ICS is benefiting indirectly from our new focus on the IDS platform. IDS’s adoption by a city or law-enforcement agency acclimates residents of that city to an interface that is very similar to that of ICS. The two platforms can be linked quite easily in areas where community associations and public-safety agencies are using them.

Levels of service for FargoTube

As new artists continue to join our FargoTube video/entertainment service, F3 Technologies is developing a range of service offerings and a pricing structure that we believe will maximize FargoTube’s value for the artists, for the end users and for F3’s bottom line. We believe it’s especially important to standardize these levels of service in light of the growing influx of users we expect from a range of sources including the content-sharing agreement we recently signed with Ditto Music.

We realize that artists’ needs from FargoTube vary quite a bit, so we’re making the service flexible and accommodating for them. For now, four levels of service are shaping up:

1) As we’ve discussed all along, a content owner is able to upload one or more individual videos or music tracks, which users find through browsing, keyword searches, or suggestions from the system. The content owner pays nothing and receives 70 percent of the revenue generated through downloads and streaming.

2) Tools on the system have allowed and will continue to allow content owners to create their own “tubes” — fan sites — branded with personalized graphics and photos, and including biographical and contact information and social-networking features. These content owners also pay nothing and receive 70 percent of the revenue generated through downloads and streaming and 90 percent of the revenue from sales of any physical goods, such as DVDs or t-shirts, that the tube owner sells (owners themselves are responsible for fulfilling orders).

3) For an additional monthly fee, F3 creates and manages a branded, semi-custom tube for the content owner on the FargoTube platform. Singer-songwriter Anthony Snape’s tube is a good example of this.

The content owner receives 70 percent of the revenue generated through downloads and streaming and 90 percent of the revenue from sale of physical goods. F3 expects to charge $25 a month over the first year for this level of customization.

4) F3 also custom-designs websites for content owners who desire them, leveraging its design and development capabilities in combination with the FargoTube platform. You may have noticed the clean, colorful and dynamic sites that we designed for singer-songwriter Coles Whalen and author/television personality C.J. Miller and the site we’re developing for the Severe Records label and its 30 acts. They’re powered by F3’s Ascend Global Business System of content management, which allows content owners to add, alter and manage the videos and music on their own tubes and websites easily. It may not be immediately apparent that one of these sites runs on FargoTube; the two do, however, run on the same “back end” programming, and they can be hyperlinked so that a user on one of the sites can easily click to and from FargoTube’s “general tube,” its aggregated pool of content.

As with other levels of service, we will share 70 percent of revenue with content owners and 90 percent of the revenue from sale of physical goods. F3 expects to charge $250 to $400 a month over the first year for this super-premium level of customization and service, a total price of $3,000 to $4,800 that is highly competitive in the web-design market and spread over a full year to accomodate the independent artists who constitute a key market for FargoTube.

This post has been updated to include information on physical goods sold via FargoTube and the relationship between FargoTube and the web sites of top-level clients.

Momentum for IDS

Clarkston Police Department’s move to begin using the Interactive Defense System, which we announced earlier this week, was important for IDS because it represents momentum for the platform; now we’re even more optimistic that more cities will sign on in the next few months.

That’s because the platform grows ever more powerful with each new police department that signs on. Member police departments can share warnings, “wanted” notices and other public safety notices not just with their own citizens, but also with citizens in other cities that are using IDS. In other words, the pool of information grows with each new city that signs on, and that’s particularly important for cities like Dunwoody and Clarkston, two northeast Atlanta suburbs that are only about 12 miles apart from one another.

Putting the “Next” in “Next Big Nashville”

COO Paul Campbell and SVP of Business Development Stephanie Miller are in Nashville from Tuesday evening through Saturday, rubbing elbows at the Next Big Nashville summit and signing up new musicians and record labels for our FargoTube video and entertainment service. They’ve had meetings nearly back to back from breakfast into the evening.

“Obviously, we’ve had a lot of chances to meet with a lot of people,” Paul said.

F3’s co-sponsorship of lunch on opening day is helping those efforts.

The summit has focused heavily on technology, and particularly distribution and sales technology in the same spirit as FargoTube. Labels are seeking to replace — and to exceed, in some cases — revenue from dwindling CD sales.

“It was a validation of a lot of what we do,” Paul said. “A lot of labels and musicians who are here are building individual solutions, but not a comprehensive solution like FargoTube.”

In that context, it looks like Paul and Stephanie have been able to make an impact. One musician and one music-promotion organization created FargoTube presences for themselves while still at the conference. I’m still trying to get those details. We expect many more to set up on FargoTube over the next couple of weeks, with the service beginning to generate appreciable revenue in the quarter that started today.

On the same note, I just noticed that Kelly Peters, a dance instructor with followers across the nation and particularly in the northeast, has begun to upload videos to his fan site on FargoTube.

Updates on updates to FargoTube and Interaction Community Systems

An F3 investor asked me whether we’ve finished streamlining the processes of creating a community on Interaction Community Systems and uploading content to FargoTube.  The answer is “no,” but we’re getting close, and we expect both updates to go live in mid-October.

The gist of the Interaction update is that homeowners associations, property managers, churches and other membership-based groups can set up their online communities without having to call us. A community representative enters its information — including members’ names, addresses, and e-mail addresses — and can start using Interaction almost immediately. The representative also provides credit-card information, though we don’t charge during an initial 30-day trial period.

The new process will save us staff time, and we believe most clients will find it much more convenient, though they’re still welcome to call us if and when they need assistance.

The FargoTube update goes beyond the streamlining of content acquisition, but I’ll discuss only that one aspect here and now:

The new interface will walk the content owner through the process step by step. It will focus on the content, rather than the social network built around that content. Content owners will still have the option to create social networks — known as “fan sites” — around their content, either immediately or later, and we strongly encourage that because it helps to make FargoTube a unique experience for fans. But we also want to keep the content owner from feeling overwhelmed at the beginning.

The site’s new organization will also encourage users to check out videos that they might not have discovered otherwise, for example by displaying links to the fan sites of artists in the same genre as what the user has been viewing.

In the meantime, a new module to go live within a few days will allow content owners to set up online stores to sell t-shirts, coffee mugs and other paraphernalia.