Fidel.ru - everything
It's time to close the project. He worked for nearly 6 years. Six years is an incredible time for the digital distribution market, especially in Russia. During this time, a lot has been done. Except, perhaps, the main thing.
Fidel.ru was the first in the CIS to sign a contract with Universal Music, and later with all the other major players, and with a huge number of indie labels. The first one, among market participants, attracted large investments , the first one implemented all the available music distribution models, ranging from selling wma files with DRM (even scary to imagine now) to the Freemium model. We carried out various advertising campaigns and, as a result, probably tried everything that was possible, from banal banners to complex BTL constructions. Traffic, at times, reached 120 thousand unique visitors per day. But we could not earn. Not only that, we didn’t even come close to the payback of the project. Why? In this article we want to examine in detail the current market and understand: where could we have been mistaken.
Catalog
In fact, the main thing that the user needs is a directory. You can calm yourself somehow and think that there is already a lot of things in the catalog. Almost all. But “almost” in this case does not work. You need absolutely everything. This is natural and normal. People are accustomed to the fact that there is everything on the Internet, and it is quite natural that when they came to a specialized website, it means that everything is collected here. And people get upset when they don’t find something. And he does not find quite often. Why is it so and is it possible to make everything so? Working according to the classical model of getting a catalog from software, probably, all the same, no.
There are a huge number of rightholders and, even if you have a huge staff of managers in your company, you are unlikely to get the rights to everything. However, here it is necessary to recognize that the western market is moving towards content aggregation and, perhaps, after some years it will be possible, having signed one contract, to get, for example, access to the entire indie catalog. But there is a local directory. In Russia, collecting all Russian music is definitely unrealistic. Imagine that a company that owns 5 “necessary” tracks can easily exist, I emphasize: not albums, but tracks. And they have only related rights, and the copyrights to the same 5 tracks from 4 are completely different companies. So, to get these 5 tracks for service, you need to sign 5 or 6 contracts, get files on your hard drive and pour your hands on your platform. Then make all these companies reports, agree and sign their paper version. And I do not touch finance.
')
And there are majors. Everything is not easy there either. For example, you have a contract with Universal Music, on which Metallica has been released all its life, but this does not mean that Metallica will appear on your service. It's just that Lars Ulrich and James Hatfield do not want her (Metallica groups) creativity to be available for streaming. And there are a lot of such artists. Well, now imagine a music service without Metallica, AC / DC, Rammstein, and so on.
Well, there are still exclusives. That is, for example, the expected and loud release comes out (by the way, there are not so many of them per year) and it is sold as an exclusive service to some kind of service. All the others, before publishing this long-awaited release, are waiting for this exclusive to end, the next release is being sold to another service, etc. It is not clear what the user should do in such a situation. That is, the user is offered either to run on different services, register and pay a subscription in each of them, or not to listen to this release and wait for it to appear on the service it uses. And you can just score on all this nonsense and download the album from anywhere, which often happens.
Finance
Let's estimate the economy. Let's start again with the directory, as this is the basis of the service.
The right holder wants at least 50% of the service revenue for related rights plus another 10-12% of the service revenue for copyright. There are a lot of different conditions, but the bottom line is that the software wants about 65-70% of its revenue. There is still a billing - 3-5%. For the remaining ones, it is necessary to maintain employees, ensure technical serviceability of the service, create new functions, applications, and attract new users.
Also, the right holders have such a thing as Minimum Guarantee. This is what the right holder expects to get the minimum from the service. How this amount is calculated is unknown. It just is. So, the approximate amount of minimum guarantees for the rights to catalogs of 4 majors plus some number of indileables is $ 1 million per year.
The rest should be about the same. Think a lot? Perhaps, but less did not work. Staff + office rent + content storage and so on. In short, for the operating break-even, the service needs to earn at least $ 2.5-3 million per year (that is, 7.5 million rubles a month). If a subscription costs 250 rubles per month (minus 18% VAT = 202 rubles), then it turns out that (very roughly and without marketing) you need about 40 thousand paid users per month. We could not. And, most importantly, we do not know who could.
And what are the actual proposals?
There is a feeling that you need to offer a slightly different approach. The main idea of ​​our proposal is that each market participant must perform its function.
The task of the music service is to provide the user with the ability to conveniently consume any music that is online, in any convenient way, from any devices, anywhere, anytime. In return, get traffic and learn how to monetize it as much as possible, that is, to adequately estimate the cost of this service. At the same time, the task of the copyright holder is to realize his intellectual property (in our case, a catalog of music content) with the greatest benefit.
Now it is very strange, exactly the opposite. That is, the software does not want to realize its asset in any way, putting protective conditions for those who want to help them with this. These conditions could be considered as the most advantageous if the right holder knew how to properly protect his property. And since software cannot do this (and most likely, it is simply impossible), it turns out that this property has no value at all. Therefore, in our opinion, the only way out of this situation is, first of all, to provide the most simple and convenient access to your catalog for everyone. Thus, simply replace all files with legal ones. For a start, this will provide an opportunity to represent the real volume of consumption of your asset in order to adequately assess its value. To do this technically is not at all difficult. It is enough to offer XML of your catalog to everyone who uses music in their services, in return to receive reports. There is no need to transfer files, because they are all already in the network and get there much faster than if you do it through existing import systems. Well, there are a lot of such things that all market participants duplicate, and everyone wants to put the cost of this work on the consumer. Well, this is a topic for another post.
We will try to implement these and our other ideas with the help of the new project www.tracksflow.com . From a technical point of view, there is no breakthrough in this project, they have already written about it here . However, we believe that this model is the most correct foundation for building new relationships with both rightholders and users.
The project is at the stage of alpha testing. Habr, as always, everything tries one of the first. Visit us at www.tracksflow.com , leave your postal addresses and we will send invites, today is especially active. Well, follow our project on Facebook , Twitter , and VK .
Fidel.ru was the first in the CIS to sign a contract with Universal Music, and later with all the other major players, and with a huge number of indie labels. The first one, among market participants, attracted large investments , the first one implemented all the available music distribution models, ranging from selling wma files with DRM (even scary to imagine now) to the Freemium model. We carried out various advertising campaigns and, as a result, probably tried everything that was possible, from banal banners to complex BTL constructions. Traffic, at times, reached 120 thousand unique visitors per day. But we could not earn. Not only that, we didn’t even come close to the payback of the project. Why? In this article we want to examine in detail the current market and understand: where could we have been mistaken.
Catalog
In fact, the main thing that the user needs is a directory. You can calm yourself somehow and think that there is already a lot of things in the catalog. Almost all. But “almost” in this case does not work. You need absolutely everything. This is natural and normal. People are accustomed to the fact that there is everything on the Internet, and it is quite natural that when they came to a specialized website, it means that everything is collected here. And people get upset when they don’t find something. And he does not find quite often. Why is it so and is it possible to make everything so? Working according to the classical model of getting a catalog from software, probably, all the same, no.
There are a huge number of rightholders and, even if you have a huge staff of managers in your company, you are unlikely to get the rights to everything. However, here it is necessary to recognize that the western market is moving towards content aggregation and, perhaps, after some years it will be possible, having signed one contract, to get, for example, access to the entire indie catalog. But there is a local directory. In Russia, collecting all Russian music is definitely unrealistic. Imagine that a company that owns 5 “necessary” tracks can easily exist, I emphasize: not albums, but tracks. And they have only related rights, and the copyrights to the same 5 tracks from 4 are completely different companies. So, to get these 5 tracks for service, you need to sign 5 or 6 contracts, get files on your hard drive and pour your hands on your platform. Then make all these companies reports, agree and sign their paper version. And I do not touch finance.
')
And there are majors. Everything is not easy there either. For example, you have a contract with Universal Music, on which Metallica has been released all its life, but this does not mean that Metallica will appear on your service. It's just that Lars Ulrich and James Hatfield do not want her (Metallica groups) creativity to be available for streaming. And there are a lot of such artists. Well, now imagine a music service without Metallica, AC / DC, Rammstein, and so on.
Well, there are still exclusives. That is, for example, the expected and loud release comes out (by the way, there are not so many of them per year) and it is sold as an exclusive service to some kind of service. All the others, before publishing this long-awaited release, are waiting for this exclusive to end, the next release is being sold to another service, etc. It is not clear what the user should do in such a situation. That is, the user is offered either to run on different services, register and pay a subscription in each of them, or not to listen to this release and wait for it to appear on the service it uses. And you can just score on all this nonsense and download the album from anywhere, which often happens.
Finance
Let's estimate the economy. Let's start again with the directory, as this is the basis of the service.
The right holder wants at least 50% of the service revenue for related rights plus another 10-12% of the service revenue for copyright. There are a lot of different conditions, but the bottom line is that the software wants about 65-70% of its revenue. There is still a billing - 3-5%. For the remaining ones, it is necessary to maintain employees, ensure technical serviceability of the service, create new functions, applications, and attract new users.
Also, the right holders have such a thing as Minimum Guarantee. This is what the right holder expects to get the minimum from the service. How this amount is calculated is unknown. It just is. So, the approximate amount of minimum guarantees for the rights to catalogs of 4 majors plus some number of indileables is $ 1 million per year.
The rest should be about the same. Think a lot? Perhaps, but less did not work. Staff + office rent + content storage and so on. In short, for the operating break-even, the service needs to earn at least $ 2.5-3 million per year (that is, 7.5 million rubles a month). If a subscription costs 250 rubles per month (minus 18% VAT = 202 rubles), then it turns out that (very roughly and without marketing) you need about 40 thousand paid users per month. We could not. And, most importantly, we do not know who could.
And what are the actual proposals?
There is a feeling that you need to offer a slightly different approach. The main idea of ​​our proposal is that each market participant must perform its function.
The task of the music service is to provide the user with the ability to conveniently consume any music that is online, in any convenient way, from any devices, anywhere, anytime. In return, get traffic and learn how to monetize it as much as possible, that is, to adequately estimate the cost of this service. At the same time, the task of the copyright holder is to realize his intellectual property (in our case, a catalog of music content) with the greatest benefit.
Now it is very strange, exactly the opposite. That is, the software does not want to realize its asset in any way, putting protective conditions for those who want to help them with this. These conditions could be considered as the most advantageous if the right holder knew how to properly protect his property. And since software cannot do this (and most likely, it is simply impossible), it turns out that this property has no value at all. Therefore, in our opinion, the only way out of this situation is, first of all, to provide the most simple and convenient access to your catalog for everyone. Thus, simply replace all files with legal ones. For a start, this will provide an opportunity to represent the real volume of consumption of your asset in order to adequately assess its value. To do this technically is not at all difficult. It is enough to offer XML of your catalog to everyone who uses music in their services, in return to receive reports. There is no need to transfer files, because they are all already in the network and get there much faster than if you do it through existing import systems. Well, there are a lot of such things that all market participants duplicate, and everyone wants to put the cost of this work on the consumer. Well, this is a topic for another post.
We will try to implement these and our other ideas with the help of the new project www.tracksflow.com . From a technical point of view, there is no breakthrough in this project, they have already written about it here . However, we believe that this model is the most correct foundation for building new relationships with both rightholders and users.
The project is at the stage of alpha testing. Habr, as always, everything tries one of the first. Visit us at www.tracksflow.com , leave your postal addresses and we will send invites, today is especially active. Well, follow our project on Facebook , Twitter , and VK .
Source: https://habr.com/ru/post/144709/
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