Music business plan template

The Recorded

Music Industry A Business Plan

n. Contact n. Contact

p. xxx-xxx-xxxx p. xxx-xxx-xxxx

e. [email protected] e. [email protected]

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


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


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


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


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



$320,000

Year 2Revenue

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000



$5,000,000

Year 3Revenue


Brand Endorsements Amount Varies $1,000,000 worth of contracts

$1,000,000

Total Revenue $5,000,000




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


$10,000,000





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


$20,000,000


$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


$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


$280,000,000

Year 5Revenue


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


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


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


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


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


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.

Entertainment & Humor

Music business plan template