High-level valuation of the live music streaming opportunity for brand marketers.

1. 1
brand investment and activation of live music & streaming platforms
mauro cellore
managing partner, mc[co] labs

2. 2
To offer a strategic perspective on the live
music streaming opportunity for brand marketers
considering an investment and activation of
live music properties.
To provide an overview on the key drivers
responsible to drive marketing ROI from the
investment in live music content platforms.
To present a point of view on the evolution of
music-related content marketing initiatives, as
live experiences, artist engagement models and
content distribution fuse into multi-platform
business models.
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3. 3
The ~$13B U.S. music industry is projected to grow at a
3% CAGR over the next four years, primarily driven by
live music (sponsorships/tickets) and online streaming
(audio and video).
· Live music and online streaming counterbalance declining
physical retail and flat digital download revenues.
· The music industry still profiles as “superstar economy”, with
highly concentrated demand patterns (<7% of artists driving ~75%
of total music revenue).
Online music streaming is dominated by audio (~64%)
and music videos (35%).
· While audio streaming is primarily monetized through
subscription models, music videos is advertising-based.
Profitability is still widely challenged across all business models.
Brands have five key “entry points” into music:
(1) Production (“record label” model), (2) Digital
streaming, (3) Live music, (4) Promotional/marketing,
and (5) Ventures / artist collaborations.
· To date, branded music assets derived from these investment
models are still “disconnected” and not integrated into higher
yield platforms.
If left isolated operating at sub-scale, live streaming
and live music sponsorship are both ROI challenged
and inhibited by low differentiation, high entry costs,
audience fragmentation and deal structures with
partnering distributors. We have witnessed a 20-
40% value shortfall for live music investments
compared to similar media dollar allocations.
Live streaming is currently <1% of the online music
streaming market. Consumer demand continues to grow
from a low base (~400M views annually).
· Average live performances remain in the low 20-100K unique
views, requiring large volumes of top concerts to support a real
business case behind the investment.
· Multi-artist (headliners) festivals and must-see events (e.g.,
Coachella, Bonnaroo) are the exceptions with viewers reaching
>4M (500-800K for an individual concert).
· Investment activity has picked up in the past 12 months, due to
sizeable brand investments, new equity partnerships, and
promoters/digital portal deals.
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Scale for brand marketers, however, appears to be
elusive, underscoring business model challenges,
distribution fragmentation, clutter and creative
challenges inherent with the streaming model.
· Consumer demand appears to be “capped” at 30-40M engaged
digital viewers
· Intention behind live streaming still anchored on a “content
repurposing” strategic driver.
· Content repurposing still lacks a compelling value proposition
against the live experience.
However, live music streaming can have a place in a
cross-platform music investment model for marketers
with meaningful budgets and a clear music strategy.
· Highly engaged fan base around music and music artists.
· Possible direct-to-consumer distribution channel for music artists.
· Integration opportunities with live music experience and other
music assets.
To date Brand investments in live streaming has faced
ROI challenges, driven by misaligned distribution
models/partnerships, poor targeting and inefficient/sub
scale resource allocation.
Live music ROIs can be improved by working on the
creative, strategic and financial side of the investment,
defining value-add creative initiatives on top of the live
streaming platform, integrating live music sponsorships
and artist collaborations and using cutting edge
techniques for sizing and matching audience metrics
with investment deployment.
Those initiatives require the augmentation of
traditional marketing approaches with a dual creative/
strategic skill set to lead opportunity assessment,
partnership architecture design, artist deals and
collaboration opportunities.
(cont’d)
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5. 5
music landscape
brand investment in music
live streaming
mc[co] labs
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6. 6
u.s. music market
(2013-2018, US$B)
4%
33%
cagr
2008-2013
cagr
2013-2018
100%
80%
60%
40%
20%
0%
-3%
20%
2013 2018
Note: Digital streaming and subscriptions ($1.44B) encompass on-demand streaming ($220M), SoundExchange distributions ($590M, mainly from Pandora), and paid subscriptions such as Spotify
($628M), fastest growing segment with 40% growth last year; Digital downloads are 57% singles and 43% albums; Music synch and ringtones is a sixth category at ~$300M with limited growth.
Sources: Pollstar and Mintel (tickets), IEG (music sponsorships), Billboard, RIAA, IFPI, MC[CO] Labs elaboration and forecasts
13.1
2.8
1.4
2.5
1.3
15.2
2.5
3.6
1.3
1.6
digital downloads
digital streaming and subscriptions
physical sales
live music sponsorships
concert tickets
-16%
4%
3%
-12%
5%
4%
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profitabilitymusic segment consumption trends key players
Digital Downloads
Digital Streaming and
Subscriptions
Physical Sales
Live Music
Sponsorships
Concert Tickets
1-2%
Largely unprofitable
-3-1%
10-12%
7-9%
· Maturing market with first signs of plateau/slight
decline in 2014 despite projected growth.
· Decline in single track purchases accelerated
compared to albums.
· High-growth segment includes on-demand streaming
(e.g.,live streaming) and subscription services.
· Scale/ongoing investment required to maintain
consumer interest.
· Most valuable download buyers are fueling recent
growth by switching to subscriptions.
· Continued decline amid decreasing consumer interest
and lower profit margins compared to digital.
· Growth accelerating as consumers continue to place
value on live music experiences, including concerts and
festivals.
· Sponsorships now a critical revenue stream for promoters
and increasingly valuable touch-point for brands involved.
· Minor year-to-year fluctuations in ticket sales have been
offset by a steady increase in ticket prices.
· Consumer demand for top artists has created a megastar
economy in which top 1% of artists drive 70% of revenues. 7

8. 8
music artist concentration
(2012, ww share of revenues)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
93%
75%
25%
share of artists share of revenue
Limited “scale” in “long tail”
Challenged “discovery” economics
Power concentrated among mega artists and top labels
Increasing A&R talent costs
implications
7%
Notwithstanding recent technological advances and consumer adoption,
the fundamentals of the “music super-economy” remain unchanged.
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9. 9
music landscape
brand investment in music
live streaming
mc[co] labs
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production
digital streaming
live music
promotional marketing
1
2
3
4
5
ventures/artist
collaborations "Record label” model
· Sourcing
· Recording
· Marketing and
distribution
· Audio/radio model
· Curation
· Live music streaming
· Tickets
· Sponsorships
· Media buys
· Content sponsorship
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70
60
50
40
30
20
10
0
production
(“record label” model)
digital streaming
(at scale)   
promotional/marketing
Note: brand marketing music initiatives are defined as investments from major corporate sponsors (either sponsorships, production, or promotion) aligning their
brand name and resources against a music program, platform or talent.Source: MC[CO] Labs elaboration based on IEG, AdWeek and Billboard data
ventures / artist
collaborations
live music
brand marketing investment initiatives in music properties
(# of initiatives, 2012-2013)
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60
50
40
30
20
10
0
2011 2012 2013
Key Insights
• Average scale investment in music
sponsorship is increasing and surpassing
the $50M mark for top spenders in 2013.
• Live music sponsorship spending is largely
driven by EOS ticketing programs and
associated live activations across the Auto,
Financial Services and Beverage categories.
Nike is the main music sponsor at scale
outside of those leading categories.
• Live streaming is being pursued by a
minority of large spenders, with budget
allocations to digital streaming activation
being normally in the 15-20% range.
• Live streaming is today still viewed as an
“extension” of the live experience
sponsorship with deal structures requiring
marketing commitments to drive viewership
and engagement on the branded content(*) Top spenders include companies such as Pepsi, Coca Cola, Toyota, American Express, CITI, Chase, Master Card,
Heineken
Note: Sponsorship spend by the top spenders above represents ~34% of total North American sponsorship spend in 2013.
Source: MC[CO] elaborations based on IEG, Billboard, AdAge data corroborated with internal spending database and
expert interviews
average annual music sponsorship spend by top
10 spenders (2011- 2013, US$M)
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music landscape
brand investment in music
live streaming
mc[co] labs
13

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Digital music is slowing down its growth and shifting platform mix, with music and ad models emerging
as key contributors behind downloads.
from:
download economy
• almost entirely download based
• “ownership” driven
• drm dependent
• simple platform
• aggregation driven
to:
streaming economy
• downloads and streaming
• “cloud” based
• more fluid drm systems
• complex, intelligent
platforms
• access driven
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15. 15
140
120
100
80
60
40
20
0
Streaming volumes are overwhelming compared to digital units sold; however per unit monetization
clearly favors DTO (1$ per unit avg. vs. 0.005S/unit stream)
on demand streams    digital units sold
1.5b
118b
on demand streams vs. digital music “units” sold
(In B units, worldwide 2013)
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streaming music breakdown
(2013est, ww share of viewership and revenues)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
$173B $1.4B
87%
 share of
streams/views
share of revenue
68%
Key Insights
· The fast-growing audio/music video streaming
segment drove ~$1.4B in revenue in 2013, with 90%
of revenue coming from audio streaming services such
as Pandora and Spotify.
· Growth in video viewership is driven mainly by Vevo,
which is the only music video platform that has
surpassed 40M MAU in the U.S.
· The high concentration of viewership and revenue
among streaming distributors (primarily audio) has
empowered a small number of key players to act as
“gatekeepers” for the market.
· We estimate that audio (118B on-demand plays)
and music Livestreamingvideos (55B views
annually) lead viewership, leaving live
music streaming with a miniscule sliver of the
streaming segment.
· Although live concerts are growing at a fast rate (43%
CAGR in 2013), the format is building on a low scale and
continues to be challenged by underlying structural
demand limitations
· Format appeal compared to other music content
options (e.g. music video)
· Ad model (challenges in creating inventory) Small
screen experience
32%
13%0.2%
live streaming video
audio
0.1%
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live music streaming market
(Streaming + On demand, unique viewers, ww 2012-2013)
400M
300M
200M
100M
0
total events 14,000 20,000
2012 2013
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
shares
distribution shares
(Estimates market shares on total views, 2013)
other
yahoo! music
livestreaming sites
youtube/vevo
40%
CA GR
(*) Destination includes destination sites set up to distribute the live music
experience (e.g. Boiler Room)
(**) Livestreaming sites include Ustream (market leader), Livebeats, and iRocke
Note: This chart considers primary streaming channels, even though some
concerts are streamed by multiple channels
destination
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6
4
2
0
other
online
high
average
Key Insights
Live concerts have been challenged to drive TV
audiences at scale (min >1M viewers), except for
globally distributed “must-see” events.
· As such, live music has been progressively marginalized
from TV Networks programming schedules.
The expansion of online video has been driving
a renewed interest in the format from online
distributors interested in the “scarcity” aspects of the
live platform.
· Leading to live streaming recent fast growth, primarily
driven by supply dynamics.

“There was a moment when everybody seemed to be pitching
Average a live stream of concerts, whether audio or video,” says
an unnamed digital executive. “It just didn’t make sense. It
wasn’t what the consumer was trying to do.”
- Billboard
However, online viewership results to date suggest
that live music streaming continues to be structurally
challenged to reach large scale audiences, except in a
few notable exceptions.
· “Large scale must see events” (Live 8, Coachella)
· Mega star top tours
live streaming performance benchmarks
(Unduplicated Viewership or “Uniques” in M)
other
tv
online
mega
artist
tv
mega
artist
online
festival
headliners
tv
must
see
event
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brand marketer
· Potential production funding
· Marketing commitment
· Ancillary content
permormer/
artist/management
promoter/venue
online distributors
other channels
(if not covered by main deal)
pr amplification
• Vevo
• Vimeo
• Crackle
• Connected TVs
• Mobile
• Game platforms
live experience
streaming
other content
streaming
on demand
streaming
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20. 20
rights clearances/
production
marketing /
deal structures
distribution
strategy
full potential
integration
• Must fit into broader “artist
roster” strategy
(collaborations/activation).
• Normally performed by
distributing platform, but
with significant implications:
· Video player specific
· Time coverage
· “First opportunity” for
amplification clauses
• Live vs. On demand vs
ancillary content rights (e.g.
pre-show content
production)
• Production funding and
rights ownership
• Other opportunities for
rights exploitation
• IP/content deal structures -
Content deals
- Media buys
- In-content ad
inventory share
- “Channel” options
for scale propositions (e.g.
Youtube channels and similar)
• Co-marketing support
(from distributing platform)
• PR amplification (PR
strategy and audience
engagement plan)
• Rights availability and
clearances
• Blanket ASCAP/DRM
deals for distribution at scale
(live performances)
• Distribution footprint
Windowing strategy (if
applicable)
• Live stream distribution, on
demand and ancillary
content engagement
• Deal structures
• Organization implications
(salesforce/bus dvlp)
• Brand role in the music
ecosystem and in live music
specifically
• Branded “music platform”
for activation
• Live streaming and
connections with live
experiences + artist strategy
• “Utility” propositions to
consumers
• Overall integration into
cohesive music platform
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700
600
500
400
300
200
100
0
5 concerts/
oneoffs
distributor
equity
235m
200
400
150
240
50
100
theoretical
delivery gap
high
low
tv music
sponsorship
online music
sponsorship
Stand-alone live streaming platforms are exposed to low yield returns.
media investment vehicle comparison
(M consumer impressions delivered on a sample $6M capital allocation, annual comparison)
avg 250M
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music landscape
brand investment in music
live streaming
mc[co] labs
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brand goals
music strategy
role and vision
platform design
investment
monitoring
SCALE +INTEGRATION
Reach
Engagement
Media Investment ROI
Other brands’ investments
Content clutter
Distributors’ shares
• Content format demand
• Distributors’ shares
• New entrant investments
Intangible marketing benefits
Media comparison ROI
business
model
partnerships /
deals
music assets
resources /
capabilities
market forces competitive dynamics
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Founded by former Bain and WME strategists with deep media experience,
MC[CO] Labs is a strategic advisory venture headquartered in Los Angeles and
specializing in content strategy and investments across the media and marketing
ecosystems.
•
We partner with content investors, global marketing leaders and media
entrepreneurs to support the evaluation, structuring and execution of “big prize
opportunities”
•
We engage across the entire growth execution spectrum, from consumer discovery,
to ideation, strategic planning, creative collaborations and investment/deal
valuation.
• Our track record was built over 100+ growth/content strategy initiatives, $3B+ of
media/marketing partnerships and $70B+ of media related investments across the
full spectrum of company size, stage and steps of the media value chains.
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music platform
strategy
music strategy music opportunity
valuation
deal structuring
analysis
Strategic goal setting
Content model design
Genre/Talent
prioritization
Investment approach and
sequencing
Music Platform Vision
Consumer Experience /
Value proposition
Strategic Architecture &
Design
Investment sizing and
ROI targets
Strategic partnership
architecture
Distribution strategy
Deal valuation
(rights, talent,
strategic
partnerships)
Long-term investment in music asset
building for marketing amplification

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agencies
marketers
ip creators
distributors
(labels, promoters. digital)
Operational experience at market leading talent agency
with leading music position.
Multiple projects in collaboration with agencies and their
clients, focusing on the design of investment platforms in
media and entertainment content.
Worked with marketers across industries developing
content strategies and platform investment thesis with
focus on sports, music and film.
10 cases in the past 2 years
Worked with IP creators, artists and right- holders
defining multiplatform strategies to maximize the value of
their rights
Over 15 cases in the past 3 years
26