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Transcript of Mbm
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Music Business Models
Patrik Wikström
Jönköping International Business School
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After the lecture, you will: Know some basic business model
concepts and terms. Be familiar with a number of real-life
Internet-centric music business models.
Be able to analyze a music firm’s business model.
Be able to design your own music business model (sort of).
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What is a business model?
“A business model is a framework for making money.”
“A business model is a story that explains how enterprises work.”
“A business model is a conceptual tool containing a set of objects, concepts and their relationships with the objective to express the business logic of a specific firm.”
Magretta 2002; Osterwalder 2004
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Is it a fad?
E.g. Osterwalder 2004
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A framework for making money
Types of business models
A business model of a specific firm
E.g. Osterwalder 2004
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Business model building blocks
Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
How do we get and keep our
customers?
Who are our main partners,
suppliers, alliances?
What are our key
capabilities and
resources
What do we offer?
Who are our
customers?
How do we reach our customers
?
A visual description of
how we operate,
collaborate and create
value.
E.g. Osterwalder 2004
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Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Value configuration (chain)
Production value chain Distribution value chain
Content selection & processing
Transformation of content into distributable form
DistributionMarketing & promotion
Content acquisition & creation
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Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Value configuration (network)
audience approval
risk willingnes
s
+
DELAYDELAY
oblivion
-
intellectual property
development
novelties?
DELAYDELAY
DELAY
DELAY
+
attractiveness of IP portfolio
+
+
marketing effort
licensing effort
+
+
DELAYDELAY
DELAYDELAY
profit
profit gap
pressure
required profit
+/-+/-
+/-
+
+
+-
DELAY
DELAY
DELAY
DELAY
DELA
YDELA
YDELAYDELAY
+
royalties
+
+
+
+
+
+
media presence
DELAY DELAY
DELAY
DELAY
+
+
technology &
regulation
audience fragmentation
marketing efficiency
-
+
content demand
+
media outlets
audiencevolatility
media riskwillingness
playlist entry barriers
+
+
+
-
+
-
+
DELAY
DELAY
DELAYDELAY
DELAY
DELAY
revenues
audience reach
marketing
licensing
audience action
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Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Value configuration (what to include?) Users & non-users
Members, users of different status and with different behaviour
Partners Suppliers, alliances, etc
Flows Information, goods, money, attention, …
Resources Stocks, IPs, staff, equity, etc, …
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Business model building blocks
Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Cost Structure
Revenue Streams
What are our
costs?
What are our
revenues? Our
pricing?
Is this a viablebusiness?
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In practical terms– what does “the thing” look like The nine building blocks
Value propositions Customers, channels, customer relationships Partnerships, capabilities, value configuration
A financial model (Excel) A visual representation of the value
configuration
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Business models vs. Strategy
Business models ignorecompetition & implementation
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Business models vs.Business process models (1)
economiclogic
vs.implemented
activities
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Business models vs.Business process models (2)
“businessmodeling” ≠
designingbusinessmodel
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Target Customer
•People who listen to music in the background while they do other work.•Fans of music that gets little radio airplay or major record distribution.
Target Customer
•People who listen to music in the background while they do other work.•Fans of music that gets little radio airplay or major record distribution.
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Customer Relationships
•One-off purchases•No subscription, no customer database•Word-of-mouth•”We are not evil”
Target Customer
•People who listen to music in the background while they do other work.•Fans of music that gets little radio airplay or major record distribution.
Target Customer
•People who listen to music in the background while they do other work.•Fans of music that gets little radio airplay or major record distribution.
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
Value ConfigurationValue Configurationaudience approval
risk willingne
ss
+DELAYDELAY
oblivion
-
intellectual property
development
novelties?
DELAYDELAY
DELAY
DELAY
+
attractiveness of IP
portfolio
+
+
marketing effort licensing
effort
+
+DELAYDELAY
DELAYDELAY
profit
profit gap
pressure
required profit
+/-+/-+/-
+
+
+-
DELAY
DELAY
DELAY
DELAY
DELAYDELAY
DELAY
DELAY
+
royalties
+
+
+
++
+
media presence
DELAY DELAY
DELAY
DELAY
++
technology &
regulation
audience fragmentation
marketing efficiency
-
+
content demand
+
media outlets
audiencevolatility
media riskwillingness
playlist entry
barriers
+
+
+
-
+
-
+DELAY
DELAY
DELAYDELAY
DELA
YDELA
Y
revenues
audience reach
marketing
licensing
audience action
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Partner Network
•Creatives• Non-exclusive• Creative Commons• 50/50 revenue split
•Technology providers
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Core Capabilities
•Relationship Mgmt•Public Relations•Supply Chain Mgmt•Roster development•People•Web Usability + Tech•…
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Channels (Comm & Distr)
•Streaming, downloads, CDs•Mainstream media•Web site•E-mail
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Revenue Streams
•Royalty fees, donations, merchandise
•Download pricing: Flexible $5 - ?•License pricing: Depends (low)•CD pricing: $16.98
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Value Proposition
•”We are not evil”•Flexible licenses (Creative Commons)•”High” sound quality•User friendly interface
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Cost Structure
•Royalties, based on sales revenues (50/50 split) •Technology•Marketing•Admin + Salaries
Value Proposition
Partner Network
Value Configuration
Core Capabilities
Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams
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<3>
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Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
Partner Network
Value Configurati
on
Core Capabilitie
sChannels
Customer Relationshi
ps
Target Customer
Cost Structure
Revenue Streams
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Value Proposition
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I. Music-to-Users vs.Users-to-Advertisers
iTunes; last.fm
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User control: Playlists (formatted or personalized); On-demand
BBC; last.fm; YouTube
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On-Service vs.Off-Service
YouTube; iTunes
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Digital Rights Management:Locked or Unlocked
iTunes; eMusic
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Sound:Quality; codec; compression
iTunes: AAC 128kbps/Lossless; Amazon: MP3
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License:Temporary; permanent; creative
commons
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Bundling:None, pure, mixed...
Most Mobile Operators, e.g. Vodafone, Three, Telenor
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Value Proposition (summary)
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Customer Relationships
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One-offYouTube
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MembershipAmazon
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SubscriptioneMusic
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Vendor lock-iniPod + iTunes
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Customer Relationship (summary)
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Revenue Streams
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Advertising revenues
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User payments
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Price levels (user payments)
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Compulsory licenses E.g. Noank Media
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Revenue Streams (summary) Advertising
Per Action, Per Impression, Per Time,… User payments
Based on access to a service [€/month] All-you-can-eat; blanket license A limited usage per month [e.g. X downloads]
Triggered by a specific action [€/album] Price levels
Uniform (incl. free), Tiered, “Freemium” Dynamic pricing schemes: E.g.: Demand based, Tip jar Loss leader
Compulsory licenses
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Cost Structure
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Royalties
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Alternative compensation to rights holders
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And all the other costs of course… Bandwidth, infrastructure Marketing Admin, salaries, overhead Etc, etc…
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Cost Structure (summary) Royalties
Fixed amount per play or download. Pool of money
Percentage of advertising revenues, subscription fees, etc.
Distributed to rights holders based on downloads or plays.
Blanket license Less common: Barters, Advances, Stock Everything else…
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Value Proposition
Partner Network
Value Configuration
Core Capabilities Channels
Customer Relationships
Target Customer
Cost Structure
Revenue Streams?
Three cases
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Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
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Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
Revenue Streams
•Advertising• Premium CPM: $10-20?• Google Ads: $1.50-3?
Revenue Streams
•Advertising• Premium CPM: $10-20?• Google Ads: $1.50-3?
Customer Relationships
•Memberships•Users must visit the SpiralFrog service once a month to renew their license.
Customer Relationships
•Memberships•Users must visit the SpiralFrog service once a month to renew their license.
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Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
Revenue Streams
•Advertising• Premium CPM: $10-20?• Google Ads: $1.50-3?
Revenue Streams
•Advertising• Premium CPM: $10-20?• Google Ads: $1.50-3?
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Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Value Proposition
•Users-to-Advertisers•On-demand•Off-Service (sort of)•DRM: WMA•Sound quality: 128kbit/s•License: Temporary•Bundling: None
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
Cost Structure
•Publishing royalties• 8% of gross revenues
•Sound recording license• 50% of gross receipts (ad
sales)•Bandwidth & technology
• Assume: €100/TB
•Advances…
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Customer Relationships
•Brings the customer closer and closer…•From One-offvia memberships,and subscriptions,and eventually lock-in(heavy user investments).
Customer Relationships
•Brings the customer closer and closer…•From One-offvia memberships,and subscriptions,and eventually lock-in(heavy user investments).
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
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Value Proposition
•Music-to-Users (OTA downloads)•On-demand•Semi-off-service•Sound quality: AAC+?•MusicStation
• DRM: Locked OMA DRM 1.0 from Musiwave
• License: Temporary• Bundling: Telephony Service
•MusicStation Max• Microsoft PlayReady• License: “Almost
permanent”• Bundling: Device
Value Proposition
•Music-to-Users (OTA downloads)•On-demand•Semi-off-service•Sound quality: AAC+?•MusicStation
• DRM: Locked OMA DRM 1.0 from Musiwave
• License: Temporary• Bundling: Telephony Service
•MusicStation Max• Microsoft PlayReady• License: “Almost
permanent”• Bundling: Device
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Customer Relationships
•Brings the customer closer and closer…•From One-offvia memberships,and subscriptions,and eventually lock-in(heavy user investments).
Customer Relationships
•Brings the customer closer and closer…•From One-offvia memberships,and subscriptions,and eventually lock-in(heavy user investments).
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
Revenue Streams
•Advertising• Premium CPM: €10-20?• Google Ads: €1.50-3?
•Subscription fees (basic) €2.50/month•Music Store Commission: 5%•Powerplay: £11.5 / 100 plays
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Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Value Proposition
•Music-to-Users & Users-to-Advertisers•Personalized (adaptive) playlists as well as On-demand•On-Service only•DRM: N/A (Streaming)•Sound quality:, MP3 128kbps•License: N/A (Streaming)•Bundling: None
•Other• Share, discover, listen, express
yourself
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
Cost Structure
•Publishing royalties• 8% of gross revenues,
minimum 0.1c per musical work streamed
•Sound recording license• Radio svc: 10% of net rev.• On-demand svc: 30% of net
rev.•Bandwidth & technology
• Assume: €100/TB•Fixed costs
• Staff: 60 people• Office in East London• Strong expansion
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Patrik Wikström
Media Management and Transformation Centre
Jönköping International Business School
Jönköping, Sweden