Fabchannel

FAB CHANNEL CASE:

Question 1:

 ‘’A good understanding of the business environment is crucial in order to properly analyze an organization. Show via diagram or any illustration and explain where FABChannel fits in within the music industry.’’

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Created in 1999, FABChannel was a Dutch online media partner, more specifically a web broadcaster (or webcaster). Just like TV and Radio, their service proposes an added-value in sales & promotion of musical content. The website streamed free, live, and on-demand concert footage recorded from the Paradiso and other venues.

Record companies (labels) own the content and decided if FABChannel could or couldn’t record their artists. They were FABChannel’s suppliers: if a label accepted, FABChannel could access the artist and they would be in charge of recording the concert, webcasting, archiving and promoting. This situation made FABChannel hyper-dependent on labels (see diagram).

No agreement meant no content, which meant no attractivity.

The consumer could access this content for free. Because of that, FABChannel didn’t have direct competitors. Of course, the consumer could access the chosen content/artist through other channels like online and physical retail shops or TV. He/she could also choose a different format, such as print media or radio. The point is that these channels/formats didn’t  have a direct impact on FABChannel’s “attractiveness”. Moreover, the webcaster didn’t make any profit out of the consumer visualization and for this reason it didn’t have to pay any commission to copyright companies like: Performing Right Society in UK (PRS), American Society of Composers, and Authors and Publishers (ASCAP). This made them slightly different than a traditional broadcaster as is visible in the diagram.

When it started, FABChannel was considered a non conventional broadcaster and labels were facing decreasing CD sales through illegal downloads. Record companies were also cold to the idea of using a webcaster that wasn’t a direct source of revenues beside its promotional and indirect sales value. FABChannel’s revenues were coming from subsidies from the Department of culture of the Dutch government.

Eight years after its beginning -and 2 years before its close down- FABChannel was seeing the end of subsidies coming, and they had to review their business model. They would still record, webcast and promote the content but also advertise a 3rd party: the consumer would have to watch a short ad before accessing the content. By sharing their revenues with the record companies, their service would become more attractive. They managed to close a deal with Universal Music Group and could record and webcast UMG’s worldwide artists.