Hacked: Hacking Finance

ICO Analysis: Viberate.io

It’s dishonest not to begin this analysis with the author’s gut reaction upon being informed about Viberate: yet another great idea that probably won’t make enough money to succeed. In analyzing new financial instruments, especially volatile ones with no real history, there are a lot of pitfalls to avoid. Common wisdom would have cautioned against an investment into Google, which is why Yahoo! passed on their historical opportunity to purchase the giant in its infancy. Therefore avoiding the “small minded” fallacy is important, but also important is demanding that investments actually have a profit model. In Viberate, on the surface at least, we don’t find a lot of that. Instead, we find a lot of talk about building a community around live music and expanding a database of live acts.

The Viberate business model isn’t quite simple. It’s a 21st century middleman approach. By aggregating venues and acts to perform in them, they create a garden inside of which they can charge for activities.

Viberate is a platform that joins the entire live music ecosystem under one roof. Currently it acts as IMDB for live music, where profiles are ranked according to their online popularity. It is built and curated by the Viberate user community. Our end game is to disrupt the music industry as we know it – by becoming the biggest global talent marketplace.

They themselves speak to the problem this author is establishing, a couple pages later in their whitepaper []:

[…] We managed to build the database we have today with the help of over 50,000 contributors and we will always keep it open for anyone to take part in maintaining its relevance. […] Those 50,000 Viberate contributors didn’t get anything in return for their contributions. Now the blockchain technology allows us to reward them for their work with Vibes (VIB) from our bounty allocation.

For their part, Viberate wants to expand the usage of their token beyond just the Viberate platform. They aim for it to be “default token in the music industry” which would mean it could be used in digital music sales, ticket sales, busking, merchandise, and more. To this end, they have a number of potential and untested revenue models. Most interesting among these, and perhaps the emergent winner in terms of the firm’s actual focus, is their Decentralized Ticket Exchange service (DTX).

The DTX will allow people to buy and sell tickets to events via the Ethereum blockchain. Every ticket will be created as it its own ERC20 token that can communicate with the Vibe application itself, meaning that any Ethereum wallet could be taken to an event, or an Ethereum ATM could vend the tickets. This alone disrupts the model of Ticketmaster and several other ticket scalping professionals in a huge way and could represent large revenues if integrated into a few large arenas early on. For reference, Ticketmaster’s parent company is worth over $7 billion.

Another revenue model, that seems most obvious, is the booking commission model. Agents today earn up to 20% of an artist’s take from each event. Viberate can compete with these figures for obvious reasons, offering a better price and a far greater variety of potential venues.

Then there is advertising, which will be hit or miss. Viberate wants to develop partnerships with other sectors of the music industry and sell advertising to its member artists. It could sell it directly or through smart contracts built into the platform, between artists and ad markets. However, one can easily see this aspect being unprofitable or undesirable, since 21st century promotion is a totally different ballgame.

Another probably less valuable feature is paying for access to members of the act, such as the manager. One assumes they intend to expand this to a sort of backstage access situation, but ultimately this is, again, not the sort of thing that will have broad appeal.

Vibe Token Details

Viberate has always been a community project. The initial database of musician profiles was built with the help of over 50 thousand contributors, who got nothing in return for their work. Sometimes being a true music fan and feeling like a part of something big is enough. But we believe that community work should result in sharing the proceeds of its efforts. One of the main purposes of the Vibe is investing into the growth of the service. We will reward community efforts with Vibes from our bounty pool. The pool will be fuelled by the profits from excercising our business models. The below scheme illustrates Vibe’s circle of life.

Viberate tokens will, like many in their class, have real value only within the ecosystem itself. They can be used to buy tickets, book musicians, add musicians to the database, and more. A fixed supply of 200 million tokens will be generated on September 5th, with 60% of them being offered for sale. The initial price is tied to the US dollar, at 10 cents each, with daily tranched bonuses.

The value of the tokens can only increase if demand for access to the platform does, so in a sense, the commitment to the previous community and to running bounty programs is very forgivable. To this end, they are dedicating 5% of the 200 million at the outset to rewarding participating community members who continue to expand the platform. An additional 27% is withheld for awarding early investors, distributing to staff, and future partnerships that may require Vibe tokens.

Vibe tokens will be useful in either the Viberate app or in a standard ERC20-compatible wallet which can be used to transfer them in person, at events or otherwise.

Verdict

This may be the greatest idea ever to grace the music industry, but that does not mean that there will be financial rewards for investing in it. Disrupting an established industry which has a lot of internal competing interests is difficult and potentially dangerous. Stumbling blocks for Viberate will include simple “didn’t like the color” reactions from legacy parties they are trying to bring on board. The risk in this product is higher than many because it requires a lot of social capital to really get legs. As such, the following verdict can be considered positive in light of all the potential negative factors/headaches that a behemoth, consolidated, and opaque industry can give to a would-be cure-all like Viberate.

Worth a look, and at ten cents a pop, maybe a swing, but probably mediocre in terms of ICO returns unless your motive is pure speculation. In that case, a sell-off point of 30 cents per token seems an easy gain.

Risk

Growth Potential

Disposition

We land on a 4.9 with Viberate, having exhausted its positives and negatives.

Investment Details

On September 5th, Viberate.io will have all the details for investment available. They already have user-friendly guides available, and a mailing list for reminders.