Planed Business Model clarified… and questions

Here it is put simply.

  1. You can stream all content, for free, in AAC or AC3. Just like Youtube. Listen to it as mush as you like.
  2. Subscribe for $5/month, and you can download everything, in any format.
  3. Purchase credits in $10 or $20 amounts, and you can ‘tip’ the contributors… as much as you like. The contributor gets 70% of the tip (same rate as iTunes).

Here are my qualms:

  • is $5/month too much? Should it be $3/month. If its $3/month, then it may not be enough to hit break even point (I’ll need heaps more subscribers.
  • I cant charge $5/month in monthly increments, because the credit card transaction fees would chew a large chunk out of it. So it will most likely be more like $30 for 6 months or $50 for 12 months.
  • What if someone wants to just download 1 piece and is happy to pay $10 for it? … they cant, they have to subscribe for a minimum of 6 months for $30. That’s not good, that will lose a lot of people. Maybe I should also allow a 1 month (not recurring) subscription for $5. No, that’s not good, people will be able to subscribe for 1 month, download everything, then wait an other 6 months to subscribe again. Hmmm.
  • Should the $5/month subscription also include $1/month free credit? That way, when you get a 6 month subscription, you also get $6 to spend on tips. That would encourage people to start tipping. I think this is good, but this means the business loses 70c in every monthly $5. This may well be worth it.
  • Wont people get confused between the monthly subscription cost … and tipping credits? Perhaps it needs to be simpler. Perhaps you can just buy tipping credits. Perhaps the only way to download for free is to buy tipping credits. Perhaps you have to buy a minimum of $30 tipping credits … you have to spend it in 6 months but then you can download everything for free for 6 months. Ambisonia’s income here would be less (I think I will project this model a bit further). But this would dramatically simplify the ‘business model’ from the consumer side. Perhaps I can recover the lost monthly reveny by increasing the commission from 30% to 40%. Maybe that is not fair.
  • How do I introduce this model? At some point I will have to say “no more free downloads” … now everyone has to pay. Do I do this overnight? What would be good sense here?
  • Should I advertise this post on the sursound list?
  • Should I wait for the new version of the site (slicker, faster, more professional) to come out _before_ I start enforcing the commercial model? (I think so… I need to convice people that I am serious).
  • Should those who upload content have free monthly membership? Maybe it should be 1 tune per month to get the free membership? Maybe that doesn’t make commercial sense… but it makes good ‘community sense’.
  • What if people dont want to have their uploads tipped? Well, I’ve already catered for that… the uploader will allow you to say “dont allow tips for this piece”.
  • How do I handle payment of the contributors? Monthly would be great. Is it done over paypal? Do I do some kind of background check to make sure that they do have legal entitlement to receive income from that piece? OK, I already have this covered in the legal documents I got my lawyer to draw up… but should I put some extra vigilance on top?
  • Concerning the tips, if someone purchases $20 credit (for $20) I’ll only have access to something like $18 (after the credit card transaction fees and commission)… so do they then only have $18 credit? … or do I wear the credit card transaction cost and still give them $20 to spend? I’ve got to research how itunes does this.
  • Do the credits have an expiration date? I suspect that I will have to do this, otherwise I become some kind of ‘bank’ holding people’s funds. Need to speak to accountants about this.

and can I change the whole business model 2 months down the track without alienating the site users?

lots of questions 🙂

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2 Responses to Planed Business Model clarified… and questions

  1. Martin says:

    The key is that nobody has heard of Ambisonics. This was illustrated recently when Codemasters incorporated Ambisonics into their game DIRT. They mentioned Ambisonics in a press release, and the Web was littered with people saying thay had no idea what it was.

    Because nobody has heard of Ambisonics, visitors to must be able to hear it easily and for free. (A better player would help here, but that is a digression.) Some of your business models take that away. Such a model, if deployed, will kill Ambisonia. Stone dead.

    I appreciate that without revenue Ambisonia is going to die anyway. But without visitors being able to hear Ambisonics easily and for free, there will never be any revenue.

    It is possible there may not be a solution to this. Given that Ambisonics is completely unknown, there may not be a way to generate appreciable revenue from it. Sorry.

  2. Hi Martin,

    I agree that most people have never heard of Ambisonics. The ‘core’ experience must remain free so that newcomers can have the experience.

    But this is exactly what I am proposing. Stream 4 channel decodes from the web browser for free. Just like You Tube.

    How many of these newcomers will want to take the extra step of finding a software ambisonic decoder, working out how to connect their 1 or 2 amplifiers to a semi-pro level sound card, and hooking up the extra speakers they have purchsed to get more than a 4 channel decode?

    I suspect it will be around 1-5%.

    So for the vast vast majority of people, the site will remain entirely free.

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