For newbies, don't be led to believe that selling music, movies and books is what F3 is about. For the short term, IMO, their revenues will come from Music Distribution. The retail products are just a way to drive traffic to the site. The post below is kind of long but it has a good ending:
F3 has 2 distinct media related products: FargoTube and FargoTunes. FargoTube was originally developed as a social media platform to allow artists to easily communicate with their fans and sell their media. Artists have the tools to easily create websites called Tubes and assign a revenue generating method such as purchase or rental to their tubes for consuming their products. Serving artists remains the main focus of FargoTube and the CEO recently replied to me in an email that they will be concentrating on removing tubes w/o media and try to give each a unique look. He wants people asking each other "what is your tube" .
To drive traffic to the FargoTube site, F3 has added a consumer component that retails music, books, and movies. Soon a sports component will be added to the site. Also there are plans for streaming of concerts and apps that integrate with Facebook. When traffic volume approaches critical mass, they hope to sell advertising. This is a facebook type model.
Within FargoTube, there is a music distibution component called FargoTunes. Artists use FargoTunes to upload music to the various online stores. F3 has also created FargoTunes as a stand alone website independent of FargoTube. F3 has a partneship with a large Digital Music Distribution company in Europe called Ditto Music who represents artists like Lil Wayne and Samantha Fox. Ditto's artist use FargoTunes to distribute their music and they have the option to load that content to FargoTube. F3 and Ditto share these revenues: See below:
Question to F3 IR on FargoTubes and Ditto and their reply:
There is confusion on investors part on how FargoTunes differs from Ditto's distribution site. It seems that they are the same. We know that Fargo and Ditto have a close relationship and Ditto users get the option to upload to FargoTube. But is FargoTune separate from the Ditto platform and is there revenue sharing involved?
Answer from Frank:
Hi J***,
FargoTunes resides within the FargoTube platform and utilizes the Ditto platform to perform the actual release. Meaning it goes through FargoTunes, then to Ditto, and then out to the worldwide stores. We created a standalone site for FargoTunes distribution because we felt it was worth the investment to showcase it as a standalone service. Right now the process tells users, hey come to FargoTube (which is all about premium content and content monetization) and upload your music and then oh by the way if you want to pay a fee you can also send it on to these other worldwide stores you can. This is fine, but we thought a second method of communicating directly to people about a new service that gets their content EVERYWHERE and is focused on that one core function would be a better approach. The first one still exists, but the second (we feel) will make more money.
On average we'll get anywhere from $9 - $35 per release plus an $8/year subscription fee per track. There are also several add-on services that the artist can purchase that range from $25 - $1,000. We split all revenues with Ditto evenly. The strategy here is to rack up as many tracks as possible to get not only the distribution fee but also the annual subscription fee per track.
As it's shaping up, FargoTunes will be a great money maker for us and will continue to feed the FargoTube content platform, as will Ditto. FargoTube will be a great place for users to come to get all of their favorite music, movies, and other content at an industry leading price and in an environment that is fun and socially collaborative. Lots more to announce soon. Back to the grind for the Thursday launch. Wish us luck.
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