1999-2009
Many thanks to everybody who has supported us through the years.
Hopefully we'll meet again one day.
THE REASONS WHY WE STOPPED
March 13th, 2009
Dear Fabfriends,

The decision to kill our darling has been the hardest we ever had to make. And I totally understand all of your questions about a possible future, the archive and ways of generating revenue with Fabchannel. During the last nine years we did everything within our powers to create an artistically and commercially sound live music platform. In this blogpost I am going to try to explain a little about the road we travelled. Hopefully this will make things more clear.

Fabchannel and the record Labels
No money means no content. That is the way the labels (major and independent) look at potential partnerships with internet companies. Even when it is obvious a service provides added value in promotion and sales, the mantra stays the same: no money, no content. Even when a service invests substantial amounts of money in creating high quality concert footage and an award winning platform to show it to the world, the mantra stays the same: no money, no content.

When you look at it from a label point of view it might even look logical. Their businessmodels have been hammered the last ten years by decreasing CD sales. Their radio, TV and newspaper partners are not doing their promotional job as they used to. And last but not least: the majority of consumers are now downloading tracks for free. All bad things for companies that invest in recordings of artists.

So the most important feature that new partners have to have is: MONEY. Money to counter the decrease in CD sales. Promotion has turned into a dirty word. MTV for example got big and wealthy by showing videoclips paid for by the labels. So now these labels think: We will not let that happen again. From now on everybody who wants to become a mediapartner online is going to have to pay upfront to even start!

Take note of the word online after mediapartner. It is very curious to see that for radio and TV stations, the rules are a bit different. Labels pay so called ‘pluggers' to persuade DJ's to play their new artists. And the radiostations do not pay for the recordings, just like MTV. Some radiostations even insist of getting a percentage of the record sales before they decide to plug a new artist.

You see the difference in perception? Internet = source of income, Radio/Television = partner in generating income.

The beginning
We started Fabchannel in 2000 to create a promotional platform for the artists that play the Paradiso in Amsterdam. Already in 2000 it was obvious that media attention for upcoming bands was decreasing on radio, TV and in newspapers. That was a bad thing for the fans, artists, the venue and the labels. Back in those days bands played live to promote their new album and even got tour support from their record label. But when no media talk about your wonderful gig, only the fans in the venue can tell the rest of the world what a great album you have released. I always thought that was a very poor return on investment for the bands and labels. By webcasting the show live and putting it in an on-demand archive afterwards, thousands of fans can enjoy the show for years. In the meantime we promote the latest album release so that the band sell more CD's . Everybody happy, we thought...

But the majority of labels (major and independent) wasn't so enthousiastic about the internet. They saw it as a big threat. So you can imagine the look on their faces when we asked them to invest in high quality video recordings from the Paradiso and put these in a video on demand archive that could be seen by fans all over the world. Okay, I must admit it was a radical idea then, as broadband internet and online video were still promises of the future. But still, I would have thought they would start experimenting with this. They did not. They even played hardball when we proposed to pay for everything ourselves. Only one month online, no live webcast, and all the exploitation rights for the label. Something deep inside us told us that was a poor deal. To build an interesting online archive you need to keep concerts online for as long as possible. And you need to be able to make some money with it (in the end) to cover the cost of rights clearance, recording, editing, site development, data traffic and promotion.

We did not let it get us down and with financial support from the department of Culture of the Dutch government we started to record artists in Paradiso that did allow us to record their show. Beautiful concerts from exciting artists that needed the promotion. We have done so ever since.
Growing up
Around 2007 it became obvious that we would have to start making some serious money on our own in order to survive. Subsidies were not going to be there forever and labels, collective rights agencies and publishers started seeing the commercial potential of the internet. That meant that for only showing the concerts we would have to pay a minimum amount per click to collective rights agencies and labels. So we had to come up with a plan to cover all of our cost without the help of subsidies.

First we looked at selling the concerts. A lot of our viewers mail us that they love our videos and want to have them as download or DVD. We pitched that idea to the labels, but not one of them saw it as an interesting businessmodel. And we do not have the rights to sell them ourselves. We need their approval.

We also did a lot of research on subscription models. The most important result from our research was that we did not have enough and appealing content to justify a subscription model that would cover our costs. If you have to pay 10 Euros per month to watch a concert archive and live webcasts you would want to see the big names too, right? Also we would have to lock up our archive which would seriously hinder the promotion of our upcoming bands. In the early days when we asked visitors to sign up to see our streams, 80% of them did not. We did not want to lose the thing we had going for us, promoting the bands that needed it.

In advertising and sponsoring we found a revenue source that fitted our service. Before every concert a short video commercial and co-branding of concerts and genres with sponsors. It was obvious that we needed a lot of pageviews and unique visitors from viewers worldwide to make this model happen. But it was the only model that allowed us to show the archive for free and hey, it works! The only thing we needed was more concerts to attract more viewers.

A lot of the companies the labels work with these days are companies that need music to promote another product. Fabchannel does not. We don't use music as a marketingtool to sell phones, jeans or sodapop. And we do not have the budgets to buy the content. For us the product is the music. We record it, show it online and promote it. That means we had to convince the labels that they should see us differently than a short-term cashcow. At the end we came up with a simple, but powerful model. Revenue-sharing. We record the concerts, put them online, promote them and generate revenue through advertising. From the money we earn we share a substantial part with the labels and the collective rights agencies. The labels only have to say yes and give us the rights to record and broadcast. No investment of them is needed. In 2007 we managed to attract investors that believed in our businessmodel. In 2008 we landed a worldwide recording and distribution contract with Universal Music Group. It showed that the model worked. It would not be long before all the other labels would see the light and start a similar partnership with us, we thought...

But they did not. Although a lot of labels are facing serious problems these days, they seem to be incapable of starting meaningful partnerships with more than a few worldwide players. You would think that when the end nears they would come out of their shells and start creating new formats and platforms themselves and with others. But the opposite seems to be true. Their focus is getting even shorter and cash is the only king. That really did it for me. After 9 years of trying we still do not have the fuel to keep our service alive: rights to record the majority of concerts in our venues.

As we do not bring in enough money to keep our service going we had to make very hard decisions. Of course we wanted to keep the archive online for you, but the cost of running the service is just too high and our money runs out. Even without us around, the money we have to pay collective rights agencies for showing the archive is way too much. And we will get sued immediately when we let you download the concerts from our archives for free.

We still believe in the concept we created. It worked as a promotional platform in the days CD's were sold and it works today as a powerful promotion/sales platform. All of your warm replies made that even more obvious. But we also believe the next few years will be getting even more difficult as companies are forced to decrease their spendings on advertising and sponsoring. When on top of that the most important players in the music industry still don't see what we bring to the table, nothing we can think up will help. We are fully dependent of them for recording artists.

I hope this clarifies things a little.

Thanks again for all your warm replies and keep on watching live music. There is nothing better.

Cheers,
Justin Kniest
CEO, Fabchannel.com