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Business Plan for a musician
Citation preview
The Recorded
Music Industry A Business Plan
n. Contact n. Contact
p. xxx-xxx-xxxx p. xxx-xxx-xxxx
e. name@mail.com e. name@mail.com
Table of Contents
I. Executive Summary ............................................... 2
Highlights
Objectives
Mission Statement
Keys to Success
II. Description of Business......................................... 7
Company Ownership/Legal Entity
Location
Interior
Hours of Operation
Products and Services
Suppliers
Service
Manufacturing
Management
Financial Management
Start-Up/Acquisition Summary
III. Marketing ................... Error! Bookmark not defined.
Market Analysis
Market Segmentation
Competition
Pricing
IV. Appendix ..................... Error! Bookmark not defined.
Start-Up Expenses
Determining Start-Up Capital
Cash Flow
Income Projection Statement
Profit and Loss Statement
Balance Sheet
Sales Forecast
Milestones
Break-Even Analysis
Miscellaneous Documents
THE RECORDED MUSIC INDUSTRY - APRIL 2014 2
Executive Summary
The purpose of this business plan is to demonstrate the potential income earned through a successful musical record
single release. This is intended to gain investment funds on behalf of said artist, in exchange for a portion of the profits
of the expected returns. This is in no way a guarantee of income, but a risk to be considered by a sophisticated investor.
Revenue
In order to outline the details for such a campaign, an understanding needs to be met in regards to the music industry in
general, and the genre of music for the said artist. The entertainment business is a very profitable one, existing in an
industry that generates billions of dollars a year for musicians, executives, writers and publishers alike. There are multiple
avenues of growth regarding the business model of a successful company and the same goes for a successful artist.
In order to generate revenue as a musician, an aspiring artist has 5 basic forms of activity that needs to be mastered:
1. Single Distribution
2. Music Licensing
3. Shows/Concert Tours
4. Merchandise Sales
5. Endorsement Deals
Each one of these is a separate stream of income that the artist can collect assuming they generate enough support from
music consumers (fans) and industry executives.
Platforms
Before the artist can generate income in the aforementioned fashions, a legitimate music platform needs to be
established, along with, generally, a strategic marketing plan outlining specific target goals to reach in the music
campaign, as well as a target release date. Without a complete platform, an artist suffers the potential for funneling
money into a project that cannot be sustained. Liken it to a crew of sailors who attempt to throw out cargo to save a
sinking ship, yet have not plugged the holes. Below are the following platform components that every musician should
have before commencing on his or her career:
1. Registered copyrights for all music
2. Associations with relevant music publishers and licensors
3. Active online presence
4. Effective public relations support
5. Relevant distribution platforms
Marketing and Promotion
Once these platforms are established and in effect, the artist can go ahead and promote their work! In order to do this,
an effective marketing strategy needs to be implemented, as mentioned earlier. Without proper marketing, the artist will
not gain the exposure he or she needs to convince music listeners to consumer their product via sales, or music licensors
THE RECORDED MUSIC INDUSTRY - APRIL 2014 3
to implement their product for commercial use. In order to create as much exposure as possible, the artist should factor
in the following marketing strategies:
1. National, Regional and Local radio exposure
2. Positive features and placements in relevant media outlets
3. Collaborations with established artists or talented up-and-comers
4. An effective college marketing plan
5. Consistent interaction with fan base
Financial Projections
In this section, we will discuss our financial projections for the next 5 years. Our overall strategy is to generate revenue
though sales of merchandise by developing mass commercial appeal to the Mackalevin brand. In year 4, merchandise
sales take over as the largest revenue stream, followed by licensing and endorsements, booking and recorded music sales.
Production
• Develop Content
• Create Online Platform
Registration
• US Copyright Office
• Music Publisher
Engagement
• Touring
• Radio
• Social Media
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Recorded Music Booking Merchandise Licensing and Endorsements
Financial Projections:
$36,000
Year 1Revenue
THE RECORDED MUSIC INDUSTRY - APRIL 2014 4
Revenue Item Projected Units Sold Projected Price per Unit Revenue Expected
Recorded Music 1,000 Singles $1 $1,000
Touring 100 Shows $100 average/show $10,000
Merchandise 1000 Items Sold $10 average margin/item $10,000
Licensing Revenue Amount Varies $10,000 worth of contracts $10,000
Brand Endorsements Amount Varies $5,000 worth of contracts $5,000
Total Revenue $36,000
Revenue Item Projected Units Sold Projected Price per Unit Revenue Expected
Recorded Music 10,000 Singles $1 $10,000
Touring 100 Shows $1000 average/show $100,000
Merchandise 10,000 Items Sold $10 average margin/item $100,000
Licensing Revenue Amount Varies $100,000 worth of contracts
$100,000
Brand Endorsements Amount Varies $10,000 worth of contracts $10,000
Total Revenue $320,000
Revenue Item Projected Units Sold Projected Price per Unit Revenue Expected
Recorded Music 1,000,000 Singles $1 $1,000,000
Touring 100 Shows $10,000 average/show $1,000,000
Merchandise 100,000 Items Sold $10 average margin/item $1,000,000
Licensing Revenue Amount Varies $1,000,000 worth of contracts
$1,000,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Recorded Music Booking Merchandise Licensing and Endorsements
Financial Projections
$320,000
Year 2Revenue
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
Recorded Music Booking Merchandise Licensing and Endorsements
Financial Projections
$5,000,000
Year 3Revenue
THE RECORDED MUSIC INDUSTRY - APRIL 2014 5
Brand Endorsements Amount Varies $1,000,000 worth of contracts
$1,000,000
Total Revenue $5,000,000
Revenue Item Projected Units Sold Projected Price per Unit Revenue Expected
Recorded Music 10,000,000 Singles $1 $10,000,000
Touring 100 Shows $100,000 average/show $10,000,000
Merchandise 10,000,000 Items Sold $10 average margin/item $100,000,000
Licensing Revenue Amount Varies $10,000,000 worth of contracts
$10,000,000
Brand Endorsements Amount Varies $10,000,000 worth of contracts
$10,000,000
Total Revenue $140,000,000
Revenue Item Projected Units Sold Projected Price per Unit Revenue Expected
Recorded Music 20,000,000 Singles $1 $20,000,000
Touring 100 Shows $200,000 average/show $20,000,000
Merchandise 20,000,000 Items Sold $10 average margin/item $200,000,000
Licensing Revenue Amount Varies $20,000 worth of contracts $20,000,000
Brand Endorsements Amount Varies $20,000,000 worth of contracts
$20,000,000
Total Revenue $280,000,000
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
Recorded Music Booking Merchandise Licensing andEndorsements
Financial Projections
$140,000,000
Year 4Revenue
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Recorded Music Booking Merchandise Licensing andEndorsements
Financial Projections
$280,000,000
Year 5Revenue
THE RECORDED MUSIC INDUSTRY - APRIL 2014 6
Expenses
Business expenses may vary.
Business Licenses $1,000
Incorporation Expenses $3,000
Intellectual Property Registration $5,000
Music Production Costs $50,000
Business Development Software
Recommended:
Web Site Builder and Domain $350
Web Site Theme Plugin $100
Web Hosting Platform $150
Email Marketing Plug-In $150
Email Marketing Platform $3,000
Social Media Content Manager $150
Administrative Software
Recommended:
Project Management Tool $1,200
Database Management/CRM $3,600
Accounting Software $500
Task-Management Outsourcing $800
Contractors
Recommended:
Photographer $6,000
Video Production Team $18,000
Design Team $6,000
Public Relations Team $6,000
Independent Radio Promoter $6,000
Booking Agent $6,000
Rent $12,000
Advertising Budget
Required:
Radio Promotion $50,000
Artist Features $100,000
Digital Media Placements $50,000
Miscellaneous Budget $20,000
Total Startup Expenses $349,000
THE RECORDED MUSIC INDUSTRY - APRIL 2014 7
Description of Business
Company Ownership/Legal Entity
Company, LLC is a For-Profit business venture based in Brooklyn, NY. The company produces recorded music tracks
for sale in the physical and digital marketplace, amongst other goods and services.
I. Company Info
a. Company Name:
b. Business Structure:
c. Business Type: Licensing, Merchandizing, Public Relations, Distribution
d. Industry(s): Recorded Music, Media and Entertainment
II. Licensing and Certifications
a. Is a license needed for this business?:
b. Has a license been obtained for this business?:
i. If no, when is the expected date of purchase (or n/a):
ii. If no, what is the expected method of purchase for the business license
c. In what state will this business be licensed and incorporated?:
d. In what state will this business operate and hold a headquarters?:
e. Is the business eligible for any government certifications?
i. If yes, which ones? (or n/a):
III. Owners
a. Who will be the owners of the corporation?:
b. How will the membership shares be divided?: Through internal negotiations
c. Existing candidates for ownership:
Products and Services
Music Company, LLC develops revenue streams through four major product/service offerings: recorded music sales,
concert touring/booking, advertising partnerships and sales of merchandise.
I. Recorded Music
a. Overview
i. Recorded music products are individual recording tracks composed, produced, song written
and performed by a group of individuals.
b. Sale
i. Recorded music products can be sold in physical and digital form. The physical exchange for
recorded music products currently exist in retail stores, while the digital marketplace is
centralized in the iTunes service; but with players like Amazon Music and Tune Core rapidly
emerging as contenders.
c. Consumers
i. Recorded music products can be purchased for personal consumer use, for-profit business
use, non-profit organization use (including educational use) and artistic use.
d. Royalties
i. Whenever a recorded music product is played, financial requirements are made to
compensate the owner(s) of the work. Performance Rights Organizations such as B.M.I. and
A.S.C.A.P. provide enforcement measures to help musicians collect due royalties.
e. Publishing
THE RECORDED MUSIC INDUSTRY - APRIL 2014 8
i. Often times, musicians will relinquish the rights of the recorded music product to an
intermediary seller who will use its own resources to sell the recorded music product on the
owner’s behalf for a portion of future earnings.
f. Vertical Integration
i. The intermediary sellers are often publishing companies or licensing agencies. However,
music licensing can be established in-house.
II. Concert Touring/Booking
a. Overview
i. Concert touring and booking references the public appearances and performances of
musicians.
b. Talent Buyers
i. Talent buyers generally represent concert venues, colleges and universities, night life venues
or private promotional companies.
c. Payment
i. A musician is generally paid for their services by a talent buyer.
ii. On occasion, a musician may pay fees to a talent booker or booking agency to obtain
performance opportunities with a promotional value.
III. Advertising/Partnerships
a. Overview
i. When the musician has gained a significant following, brand marketers will often solicit the
promotional capabilities of the musician for the product or service they are trying to sell.
b. Digital Distribution
i. A common way for musicians to promote a brand is to distribute content through digital
intermediaries such as social media services and blogging platforms.
c. Case Studies
i. A popular example of a musician selling promotional services in exchange for a brand
endorsement is Curtis “50 Cent” Jackson, who sold his share in the company Vitamin Water
for over $100 million dollars.
IV. Merchandise
a. Overview
i. Merchandise consists of the physical goods and products that a musician sells directly to
their fans.
b. Types of Merchandise
i. Merchandise generally consists of clothing items, posters and other memorabilia
representing the musician, however, it can be used for any product or service that is directly
manufactured or sold by the artist (aside from just promoting it).
c. Payout
i. Merchandise items generally have a fairly large margin, comparable to price points for
competing products. Therefore, payout on merchandise items are extremely lucrative. The
most popular musician, selling a million items at a margin of $10 each, can make $10,000,000
just from the sale of the goods. The musician, in this case, asks as the promotional tool and
the merchandise is the businessman’s product.
Location
Green Desk |Green-Desk.com |718-210-3650
THE RECORDED MUSIC INDUSTRY - APRIL 2014 9
Green Desk, LLC, is a Brooklyn-based work-space company that leases office space for rent to various types of tenants,
with locations in Williamsburg, Greenpoint, Downtown Brooklyn, Dumbo, and Long Island City. Amenities include
lobby/receptionist service, mail and package handling, 24/7 key card access, conference rooms, high-speed internet,
copy/print/fax machine, cleaning service and more. The space is generally populated with companies with a primary
focus in art and technology. This combination of convenience and affordability make Green Desk a prime HQ.
*Principle target
Interior
Office Space | Function
The office space will serve as the setting for the core business operations. This includes, but is not limited to:
Strategic Planning and Analysis
Business Development (Preparation and Execution)
Client Meetings
Document Services
Event Planning and Execution
Office Space | Benefits
Increased work-flow professional
Professional environment
Client hub
Internal and external networking
Office Space | Pricing
240 Kent Avenue
Williamsburg
147 Prince Street
Downtown Brooklyn
195 Plymouth Street
Dumbo
68 Jay Street
Dumbo
155 Water Street
Dumbo
67 West Street
*Greenpoint
34-18 Northern Blvd
Long Island City
THE RECORDED MUSIC INDUSTRY - APRIL 2014 10
Pricing for office space and shared work-place settings range from $300 per month (single desk in a shared or open
space) to $9,000 + (30 or more employees). Rentals can also be made for conference rooms, event spaces and on
occasion, tenant-leased photography studios for video and photo shoots.
*Recommended choice
Studios and Event Space
In addition to offices, Green Desk caters to event planners and creatives through their brand of loft-spaces and studios.
2 Desk Office Space
$600/Month
3 Desk Office Space
$750/Month
4 Desk Office Space
*$1,000/Month
6 Desk Office Space
$1,800/Month
8 Desk Office Space
$2,400/Month
10-30 Person Space
$3k-$9k/Month
Greenpoint Loft
67 West Street
Capacity: 700-800
Dumbo Loft
155 Water Street
Capacity: 300-400
W Loft
240 Kent Street
Capacity: 500-600
Dumbo Spot
160 Water Street
Capacity: 200-300
Ruby Bird Studios
67 West Street
Studio Space
THE RECORDED MUSIC INDUSTRY - APRIL 2014 11
Hours of Operation
Music Company, LLC will operate during normal business hours (M-F, 9am-5pm), with additional night and weekend
hours for event and networking functions.
Suppliers
I. Services Needed
a. Booking Agent/Tour Manager
i. A booking agent provides business development services by contacting venues and arranging
for booking and payment. A Tour manager plans the strategic route of the booking tour and
helps to sell the entire package to advertisers.
b. Publicist
i. A publicist writes content for the musician to be shown to the press. The press includes
online, tv and radio media outlets. The publicist makes sure people know who the musician
is and likes them.
c. Independent Radio Promoter
i. An independent radio promoter provides music recording placement on commercial and
non-commercial radio outlets. This is a pivotal part of current music integration.
d. Music Publishing/Licensing Agent
i. A music publisher provides sales related services to a musician in exchange for a percentage
of the profits made. A licensing agent acts as a broker and secures placements for
commercial use.
e. Entertainment Lawyer/Agent
i. An entertainment lawyer provides contracts as an authority of the law and negotiates
endorsement deals on behalf of the musician.
Service
The following process will be followed for all general types of business activities. This core strategy will drive growth,
legality and publicity.
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