Business plan for the ultimate new zealand online music industry portal (extensive post)

Hi and welcome to my business plan for the ultimate local - in this case New Zealand - online music portal!!! I slaved over this over new years and I was uncharacteristically anal in wanting to keep this under wraps worried about people stealing my ideas. Well Good Luck getting it to happen without me, I say! Also publishing it on my blog does give credibility to claim it as my intellectual property.

In the past I've been very worried about local market competition for kurb but that hasn't seemed to materialise yet either. What is more important is that the ideas are out there and the possibility for opportunities, networking, and innovation exist around a positive concept.

If other innovators and entrepreneurs can engage with the ideas here or my skills personally, or both, that could lead to an equally exciting outcome.

But most importantly, readers, I am posting this simply for the rich keyword content.

Yes, I'm interested in meeting people with between 20-50k $NZ to put into this project which I feel requires a budget of between 50-100k to launch successfully. Believe it or not, there has been some initial interest but I ended up saying I didn't want to try and make it work for 20k, I wanted to know that it would work with 50k.


Lets reflect on this with some do's and don'ts of tech start ups:

Don’t wait for a revolutionary idea. It will never happen. Just focus on a simple, exciting, empty space and execute as fast as possible

Share your idea. The more you share, the more you get advice and the more you learn. Meet and talk to your competitors.

Build a community. Use blogging and social software to make sure people hear about you.

Listen to your community. Answer questions and build your product with their feedback.

Gather a great team. Select those with very different skills from you. Look for people who are better than you.

Be the first to recognise a problem. Everyone makes mistakes. Address the issue in public, learn about and correct it.

Don’t spend time on market research. Launch test versions as early as possible. Keep improving the product in the open.

Don’t obsess over spreadsheet business plans. They are not going to turn out as you predict, in any case.

Don’t plan a big marketing effort. It’s much more important and powerful that your community loves the product.

Don’t focus on getting rich. Focus on your users. Money is a consequence of success, not a goal



CHOICE AS BUSINESS PLAN

By Matt Turner. Copyright 2007. DEFINITELY Don't steal without asking or I will be MAD!!!


choice.as

So what is Choice.as? Choice.as is as much Choice.as you like.

Choice.as is a new concept in online entertainment delivery, marketing and merchandising platforms designed specifically to engage the New Zealand market, and expand then to showcase it worldwide.

The aim of Choice.as is to create a fully functioning online environment designed to monetize New Zealand entertainment content delivery, social networking online and third party commerce through:

1) Retail of digital content
2) Artist and creative / marketing and networking services
3) Advertising revenue and platforms for related business services
4) Artist generated merchandise - manufacture and retail
5) User generated merchandise - manufacture and retail +
6) User generated repackaging of digital content = user generated commerce
7) Licensing/synching of digital content

The proposal presents the Choice.as online community developing and expanding new revenue streams enabled by access to improving third party applications. Choice.as will follow a steady programme of incremental developments to the sites functions, features and uses as set out.

The end outcome is a website that functions as a marketplace for digital content, entertainment services and skills, providing comprehensive support systems and tools for creative entrepreneurs, building social functions and community around retail content, user content, shared content - both licensed and fair use.

In theory revenue would not only come from "rent" of digital space to those receiving commercial frontage and "fees" on services, but "commission" on all sales through the site and it's widgets, and "advertising" revenue from the communication of commercial messages through the site to users.

Borrowing elements from the ill fated Burnlounge and merchandisers such as cafépress or lulu.com, the goal is to eventually create fully functioning third party retail and monetized usage driven and shared by fans and users themselves.

Widgets and other third party technology used to gather and aggregate data on a local level will eventually create new possibilities for rendering creative projects - such as event management - profitable and manageable by content providers and then entrepreneurial users themselves. The theory being that the technical possibilities governing the growth and access to communication, information and applications could replace most commonly essential mechanisms of the entertainment content and performance industry over the next five to ten years.

Grounding the Choice As concept and commerce systems in the NZ environment will allow the team to be uniquely responsive to the functioning of systems and commerce for the locally based content providers, service providers, advertisers and users.


BACKGROUND

The Choice.As business plan is designed to be responsive to anticipated growth, developments and dramatic changes already foreshadowed in both the online social media sphere and business models for the music industry - and eventually introducing new concepts in third party / user generated commerce.

Social networking

Social networking is a modern phenomenon which has foreshadowed the swing from media generated entertainment to user generated media.

No site will ever dominate like myspace did, but as users take their myspace experience to what will be increasingly niche networks - a fundamental divide has already opened up between Myspace's competitors - Bebo being a predominantly teen social site and Facebook for more sophisticated social networkers - it is expected that social networking will continue to grow cumulatively as a social and media experience, but into ever more specialized niche-driven communities.

But neither of the two big newcomers has attempted to address the needs of artists and primary content creators, which in many ways, drove the expansion of myspace by having acts at all levels actively recruiting their fans to the site in for what for some was the first attempt to actively manage a growing fanbase. This is a cornerstone technique to be applied in building Choice.as.

Music Industry

The music industry is in such turmoil, that musicians and what's left of their label/management will increasingly look to the internet to provide solutions to the problems faced in monetizing emerging artists - there will no longer be infrastructure provided by labels to break new acts and the old chart topping hype won't be the same.

This is why Choice.as will look not only to monetize by providing services for artists to manage their own development, but look to become part of a new wave of digital content distributors and the first to deliver a forward looking new proposition to New Zealand - blanket access to download unlimited high quality digital content off the choice.as site for a limited duration for one set fee.

It's important to recognise that the external speed with which this transition unfolds in the global music industry will to some extent set the pace for the release and pricing of most subscription features - when it is quite plausible to conceive that within 5 years music will have become "feels like free" just "like water". I believe the big labels will respond soon by beginning to shift their business models and putting pressure on the "per unit" model.

The choice.as model allows for artists to make use of and develop the revenue models they are most happy with through the site. Initially, an Itunes/Amplifier style retail operation will give way to additional ad supported downloads, which will then give way to premium access and subscription, and finally user generated commerce.

Eventually, Choice.As will possess the group bargaining power of a big label to negotiate with media services - Internet and mobile providers to provide "feels like free" access packages.

Choice.as very much draws a line from here to there. In terms of what consumers of digital content are likely to come to expect.


THE CHOICE.AS BRAND NICHE

The Choice.as brand niche will be committed to 100% New Zealand content. As a social network, it relates directly to users networking around their involvement and enjoyment in NZ music and local crossover industries. By the time the user generated commerce concept is in full swing, it will represent a whole new concept in user participation in the entertainment industry.

In terms of the content allowed, there will be no strict enforcement of what constitutes a "New Zealand" band, as long as they meet the requirement of providing a NZ bank account from which to accept their funds. Once social networking is functioning for an increasing base of local users, the site would be opened up for international users to purchase digital products and services as well as participating with social and later, user generated commerce features.

The emphasis will remain that the sites content is solely of, about or related to local NZ acts, themes, interest or information.

Initially Choice As will be essentially a platform for NZ artists to present and retail digital content, then expanding to social networking and ad supported revenue community, then introducing premium artist services and subscription based premium access for users and content providers, and then commerce tools to enable premium users to repackage, market and resell.

As utilizing bands to activate their fanbases and contact lists to build presence on the site is a major part of the marketing strategy, the emphasis on continuing to develop community resources, tools and special offers available to artists will be strong.

TIMELINE

3-6 Months - DIGITAL RETAIL (EG AMPLIFIER) / COMMERCE PLATFORM (EG SNOCAP)

6-9 months - SUBSIDISED ARTIST SERVICES (EG KURB DISCOUNTS) / ARTIST RESOURCES + TOOLS (EG UNSIGNED BAND PROMOTION / NZ MUSIC DIRECTORY) ARTIST COMMUNITY / MAGAZINE (EG NZMUSIC / NZMUSICIAN) GIG GUIDE FEED (EG MUKUNA)

9 -15 months - SOCIAL CAPABILITIES (EG MYSPACE) - AD SUPPORTED REVENUE (EG WE7) PROFESSIONAL NETWORKING (THE BIG IDEA, LINKED IN)

12 - 18 months - PREMIUM ARTIST SUBSCRIPTION SERVICES // PREMIUM USER SUBSCRIPTION SERVICES

18 months - 2 years - VIRTUAL COMMERCE (SECOND LIFE) TO USER GENERATED COMMERCE (ZAZZLE, BURNLOUNGE)




STAGE 1 - RETAIL AND PRODUCTION SERVICES FOR ARTISTS


The first stage is to create the Choice As site functioning as a direct competitor to other local online music distributors - most notably Amplifier, in offering a platform for New Zealand acts to build page profiles from which to present and retail digital content (mp3's, videos, ringtones etc.). The key difference would be in developing and launching a storefront widget allowing bands to retail content off site.

There would be a pricing model introduced that allows artists some flexibility in the end price of each unit, however this would be capped within reason to keep pricing competitive with the other sites in the market, where commonly a single mp3 retails for NZ$2. A suggested launch model could be that Choice.As sets a fee of 50c per sale and the artist can set their fee up to $1.

Launching as a digital retailer, initially there would be no emphasis placed on the social developments planned for the site. Instead, the first wave of promotion would be conducted marketing directly to an estimated 10,000 NZ acts already active on well established international social networking sites Myspace, Facebook and Bebo.

The logistics of the campaign will be completely provided by my promotions company, Kurb promotions. The following incentives will be provided in the push:

- INITIALLY, artist sign up will be FREE.

- The storefront widget will be provided for each act contributing original digital content (a widget is an application that can be impended into web pages by users to provide 3rd party information - such as a commerce platform) from which to retail. Acts would be motivated to sign up for the site simply to provide a storefront throughout their social presence from which to collect retail revenue something no one else provides. It would also be non exclusive, meaning artists would still retail in competition on sites such as amplifier and itunes.

Developing a commerce enabled widget would be one of the first major technical projects. It would use as it's model an application similar to the nimbit storefront.

Some scale must be applied to this however as all transactions will be completed within New Zealand and only in New Zealand currency.

- A major incentive for acts to sign up is to offer reasonably subsidised prices on services I already offer through Kurb specifically for musicians - specifically CD/DVD reproduction, copy, print and poster placement, design, online promotion services, web development video, etc.

Offering a 50 CD run of Demo's for $50 to every band that signs up is a theoretically break even marketing idea, but again appeals heavily to any up and coming band who feels their material is ready to be presented. Kurb would create an arrangement with unsigned bands through the site for complete on demand disc production retail and fulfilment.

My thoughts are already in expanding and investing in more systematic operations as the volume increases, but as the site expands, partner with other businesses and advertisers to outsource services available through the site - even to the point of creating a forum for Indian freelancers! This way Choice.as becomes an absolute necessity for bands.

Choice.as would look to be entering into arrangements with other providers of music related products and services as users and advertisers, with the potential to offer alternative discount services for musicians in merchandising, design, web development, video, licensing, tour logistics etc. probably starting with a business directory before expanding later to full web 2.0 properties for advertisers and business partners.


STAGE 2 - EXPANDING ARTIST SERVICES, COMMUNITY, TOOLS

Continuing to build the momentum of establishing critical mass within the NZ artist community, the next phase would be to focus inward, on the networking, community and artist tools available to artists signing up. I believe confusion in the music industry and the crisis for emerging acts will continue to drive new artists to seek out tools and information to develop their music and musical career and given the unique local focus of the site this can be highly and specifically networked. Our job is to provide an environment for community and access to tools and information such as:

- As touched on, a business directory for local service providers, developing an expanding advertising platform from which to present their content

- Key tools artists need for management tasks beyond the Choice As site: EG, Email list management, access to recommended 3rd party widgets, tools to create and manage a low cost private domain site etc.

- An index of high quality and up to date advice, tutorials, articles on everything related to music, product reviews, promotional strategies, how to, practical videos, recording, the works.

- Forums obviously, which will be used actively to promote discussion on the direction of the site in terms of creating revenue and services of value for artists + classifieds

- The Gig guide, in it's initial basic feed form. Eventually this feed will evolve into a widget customised to provide selected users feeds

- Magazine content - bring in aggregation of offsite content local news and features, articles etc.

- Introduce Blogging Tools for artists/business partners
.
At this point, the social capabilities would already be creeping in - content providers and advertisers would be expand from basic profiles to allow for collecting and displaying contacts ("friends") and messaging / notice board ("comments" or "wall")

New categories of content provider would be established for filmmakers, writers, performers, and profiles would be established and indexed for creative industry professionals like www.thebigidea.co.nz.

At this point basic profile pages for non content providing users ("fans") would be launched in Beta for those non musicians heavily involved in NZ music and also offered to those purchasing digital products.

Once the site was complete I would be expecting to sign up no less than 200 acts within 6 months, while 1000 or more could easily be possible, if we're very lucky.

I believe it will take little effort to plug in to existing business directories and begin attracting music product and service providers, and begin building a database of potential advertisers, with adsense providing most likely initially negligible revenue.




STAGE 3 - GOING SOCIAL // AD SUPPORTED PLATFORMS

Before the big social push, beta social users would be released into full social functioning - messaging / commenting / contact lists / original content storage and presentation (Blogs, Photo Albums, Video, Podcasts etc.) so that it functions on a par with the internationally based networks that we would draw a targeted local audience from. Functionality and experience would be similar except from an initial stage, tools would be in place for user profiles to promote onsite content from their favourite providers as well as enhanced aggregation of social information related to calendars, events, gig guides etc.

Now in going to the social phase, not only do we incentivize artists to sign up their NZ fans through other established international sites, we enter into arrangements to allow kurb to access their contact lists directly for the purpose of signing up their fan base.

There will obviously be incentives included for the fans themselves but emphasis will be on communicating to and empowering the musicians to utilize their existing fanbase, mailing lists, networks etc.

Theoretically, if the average band has 1000 contacts and we can sign up 50 of them, with an incentive such as a free cd - either on demand or download - of the relevant artist . . . from only 200 artists 10,000 sign ups is almost a given.

It is at this point that the Choice.as will be looking at entering into arrangements with certain profile acts to increase exposure. Such an arrangement would most likely, again, favour the artist allowing direct contact from Choice.as to their established network contacts.

Choice.as will continue to create and introduce more tools to enable artists to manage and communicate with the local fanbase they are building more effectively through Choice.As than any other site. For acts, Choice.As will represent a place - unlike myspace etc. - where a genuine and quality fanbase can be assembled with the applications to analyse and utilize information and access.

Once the site starts creeping toward 10,000 user profiles, emphasis will then come on to developing robust advertising platforms. Rudimentary revenue streams and on site marketing tools would most likely already be in place - Adsense, per impression / per click banner advertising options, social capabilities for local business and partners providing related services, editorial content for key business partners, the events feed widget etc.

So from this point a system would be created for advertisers to create targeted campaigns, introducing the following methods of delivering advertising to targeted users similar to Adwords or Facebook advertising programmes.


But as well as banner space pay-per-click and pay-per-impression, similarly to content providers management of contact lists, advertisers would be able to purchase a targeted mail out, eventually evolving into a permission based marketing points system where users who accept advertising messages receive points that can be redeemed for products and services available through the site.

Ad supported content - represents the beginning of the next phase of transition for Choice.as with the decline of unit based models for retail of content. While streaming content is principally supported by ad clicks and impressions, ad supported platforms would also be developed for downloaded content where users could access high quality downloadable content free in exchange for first viewing or attaching short advertising messages to the download.


STAGE 4: PREMIUM SUBSCRIPTION SERVICES FOR CONTENT PROVIDERS / USERS

The goal for choice.as from this point is not to remain as a more social and network enabled version of amplifier or as a local alternative to myspace.

In delivering digital content the site is providing one revenue generating function - in supporting artists to do so it is providing another.

Premium user subscription

The next stage of Choice.as is creating a whole new value proposition for mp3's and other digital content.

Now this stage requires some foresight into the future of how digital content is payed for and delivered. It is quite clear to me from my research that the nature of music as a retail commodity is already beginning to shift dramatically, and much depends on the pace at which this shift will take place. The shift is from selling music by the unit, to subscription based services that allow complete access to download content for a limited time.

At a preliminary stage firstly offer unlimited access to download all available content from one act with price points for scaling to multiple acts, and then phase in blanket access at a higher but highly competitive price point. For example:

You could download everything from one band for one month for $10. You could choose 2 bands for $15. You could have unlimited access to all bands for a month for $50, or you could have access to everything for a year for $200.

One credit card would allow for as many downloads as requested from one ISP for the duration of the arrangement.

Now this pricing is designed to accommodate a massive drop in value as music becomes more freely accessible but there is always the ability to add more premium features to increase the perceived value of subscribing. There will quickly arise a point at which the choice.as proposition rivals that of any other, and even as music could possibly cease to function as a commodity within 10 years, the value of choice.as will still be in the brand of users supporting and creating revenue for local artists and artists communities.

In time, it is likely that "lifetime" memberships will be offered as the value continues to fall and there needs to be a new value proposition as subscription based "feels like free" access proliferates.

An affiliate scheme will also be offered encouraging premium users to generate commissions from signing up their friends - the first sign of the movement toward user promoted retail and commerce.

Premium content provider subscription

In signing artists from the "free" services already offered to a paid subscription model that allows them to open new revenue streams and features, choice.as is also asking them to commit as much of their content as they're willing for download by premium user subscribers, and that is why the a reasonable proportion of "carrots" that kurb has to supply artists must be held back until this point.

The initial motivation of acts to sign up for the $50 p/month premium artist subscription will be:

- no commission fees on per unit sales of digital content

- Share of 50% revenue generated from advertising and premium user subscriptions, based on their cumulative share of downloads requested by premium users.

- advanced features of the developing "gigwidget" - aggregating and displaying event information from approved feeds would be available only to premium members

- existing features held out as "carrots" for artists such as discounted artist services such as CD manufacture etc. would be revised to most likely only be available to premium members - from the very initial launch of Choice.as it could touted as a limited offer.

But also, after launching the social capabilities, new features would also be created to enable content providers to manage communication with established contacts.

Whereas the ability to maintain contact with fans on sites such as myspace is often carried out illegitimately with bots, on Choice.as, established social contacts can opt out of receiving messages and feeds from premium artists who will have these features fully enabled at no extra cost. But this way if they abuse the spam-friendly system, it's easy for users to opt out.

However as the site develops, a rewards system for users who accept these messages and display certain feeds would be developed. More on this later.

At this point new packages can be introduced periodically for example a premium package


STAGE 5: USER GENERATED COMMERCE

Now we're well into the development of the site, beyond the easily foreseeable future, the final step of the choice.as journey is to completely take the music industry and put it firmly in the hands of the users. The fans and the users, with the aid of advanced web applications, data analysis and aggregation, with direct access to service providers and on demand manufacturers, will have the power to organise gigs, run merchandising lines for their favourite bands and create all manner of media and product packages.

Now again in explaining how this will roll out I draw on another outside example, Second Life, the virtual world. Initially this family of widgets which represents the power for premium users to create and retail such products as:

- their own CD compilation featuring their favourite songs with their own art
- T-shirts and merchandising product lines for their favourite bands of their own design
- a line up of three local bands booked to play a venue on a particular night

But in drawing from Second Life the widgets will begin their life as virtual "games".

Users can customise compilations, merchandising lines and even run "virtual" gigs. And in years to come when I'm talking about the kids using this technology, it's only one step from allowing kids to design their own virtual merchandise, virtual media packages and virtual events and letting the computer crunch the data and tell them whether they would lose money or not, before teenage entrepreneurs are creating their own products and packages to sell their favourite bands in partnership with networks of music service providers.

Being a "virtual" designer, promoter or executive producer on a media project would be available to all social users but those wanting to play "for real" would have to purchase another special premium membership to access all the tools, including widgets with which to retail their products.

But it is also possible for users to become "workers" earning from a points system for accepting targeted mail outs and displaying ads or sponsored messages on their pages, or promoting various content through out their personal network in new ways.

The expanded applications of an aggregating gigwidget in the future are also something to consider. Initally used to promote events put together by promoters, data can be gathered and analysed so that promoters can cost the price of a gig through performance and services (venue, promotion) fees on the site, then use a widget to gauge social opinion on wether attendance for this gig would break even on costs.

However even cost may not be a determining factor where this technology is used to allow users to plan and book acts for their 21sts, birthdays, weddings etc. Eventually it may be possible for premium members to make a theoretical contribution - like the radiohead model - on how much they would pledge to the gig. If it reaches a break even threshold the pledge contribution is automatically deducted, the gig goes ahead FOR FREE and after the gig, the fees are paid.

Again it is likely acts and venues participating would need to be on a premium subscription in order to be accessed for bookings by users.

Finally, commercial platform for licensing and publishing would also be looked at so that copyright holders of original digital content can licensing reproduction and publishing to commercial entities. At which point other media artists and projects would be able to license content off the site to then be repackaged and monetized on the site. As this is not a priority revenue stream it would be developed as opportunity provided.



CHOICE.AS IN ACTION

So this proposal is designed to break down exactly what I see as the logical development and possibilities of the Choice.as concept - from what models exist now, to new value propositions that will stay competitive in a changing environment for online content delivery.

I haven't gone too much into numbers but I have indicated the role my personal experience in online and viral marketing and the provision of basic services in response to the needs of artists will play in building the community initially, and dramatically minimising the marketing expenditure otherwise required to get something like this off the ground.

Figures from Amplifier put their traffic at 36,000 unique users p/month creating 265,000 page impressions p/month from which they generate up to $10,000 per month in advertising revenue alone

My initial estimation is that an investment of between $NZ20,000 and $NZ100,000 would generate a return within two years.

With as little as 5% of New Zealand's 800,000 active social network users on board this would become highly profitable from advertising alone, while

So funding the design and engineering the technical aspects of delivering the Choice.as experience as set out is the biggest task. Many of the ideas I have set out are already functioning in some way or another, so while some features may be harder/more costly to implement than others technically, it is all perfectly possible to implement.

My next task is to seek accurate costings for this set up and ascertain what tasks can be outsourced before a beta model can be bought online and recruitment for testing can begin. I will be approaching the developers who built Amplifier and requesting competitive quotes both here and overseas. It is possible different partners could be utilized for the site platform and the commerce widget respectively.

But obviously as soon as the site is functioning at stage 1 I can begin to outline and implement the marketing campaign, and within months a critical mass of artists should be signed up, generating modest income from music sales and advertising.

Choice.as is unlikely to generate enough revenue to be profitable in the first year, and advertising revenue at first maybe slow as social elements of the site grow. It is at the point that the premium artist user subscriptions are released that the real return on investment would begin.

Once this point is reached and subscriptions could be shown to be growing steadily options to sell the concept would be reviewed.

IN CONCLUSION

New Zealanders want to support local content, and artist and users want to be involved with it. New Zealand artists want and need more of the tools first given to them by sites like Myspace, and users want the access and personalisation sites like this offer.

Choice.as is a concept which accommodates anticipated changes in the way entertainment content is delivered to offer new solutions and channels for local fans to drive consumption themselves.

It's about offering something new and exciting where old models are failing and new trends in the way New Zealanders connect and interact online offer new opportunities to create value for users.

I would not have gone to all this trouble of explaining exactly how this concept could work if I didn't believe it was a brilliant way to generate income by providing New Zealand artists with the tools and an environment to build profitable enterprise from their creations. I believe it could revolutionize the NZ music industry and reshape it collectively to the adaptions now required.

I didn't write this mainly for the sake of $NZ50,000 to get me started. It's because I know there is enough value and foresight in this proposition to make it worthwhile and whether I get the money sooner or not at all, at least I know what needs to be done.



Kurb is a New Zealand based media promotions company providing a regular blog on digital promotion, marketing digital content and creating revenue from new media online. Kurb also provides online promotion and revenue management services for musicians and artists internationally and online / digital coaching for small business. We rank #1 for "online promotion" in New Zealand. And the best value fast turnover physical media services in New Zealand including CD / DVD duplication and poster services.Our physical media services come with free graphic set up and support, free delivery, and free promotions advice and support for musicians.We provide expert and affordable promotion support in all web 2.0 areas: Cutting edge Social Network promotion (Myspace, Facebook, Bebo etc.), Social Media, Blogging, Spam management, Content creation, Content management, Content Distribution, OMD, RSS, Aggregators, podcasts, Search ranking, Search marketing and PPC campaigns on Google and Facebook, Website design, Website monetization, Video production + promotion,We also have an extensive self promotion area for independent musician and talent featuring dozens of articles, how to features and blog links.
http://www.kurb.co.nzhttp://www.myspace.com/kurbpromohttp://www.youtube.com/user/kurbpromo -http://kurbpromotion.wordpress.comhttp://kurbpromotion.blogspot.comhttp://www.squidoo.com/kurb