Daniel Hagan - Future Streaming Service Business Plan

STIMULUS BY DANIEL HAGAN – APRIL 2016 1

Table of Contents
Executive Summary ............................................3
1.0 Market Analysis .............................................5
SWOT Analysis .................................................5
Porters 5 Forces.................................................7
PESTLE Analysis..............................................8
2.0 Products & Services .......................................9
3.0 Market and Competitor Research ................ 13
3.1 Market Research ........................................ 13
4.0 Marketing Plan ............................................ 18
SMART Analysis ............................................. 18
Above vs. Below the Line Marketing................20
5.0 Finance........................................................ 21
Financial Projections & Explanations.............. 21
Stimulus Cash Flow Year 1 ................................25
6.0 References...................................................26

Executive Summary:
Stimulus is an upcoming music streaming service aimed not just for the
listeners, but for the musicians. It is based in Essex, only a 20-minute train ride
into central London. In comparison to otherstreaming services, it sits perfectly
in the middle, offering the professionallook of Spotify and Apple Music, but
has the independent and usercreated feel of Soundcloud – The best of both
worlds. This provides users with a professionalfeel in their workspace,but also
allows creativity and originality.
The application works by allowing users to upload their own material, directly
to the service, without having to go through any 3rd
party distribution services,
such as CD Baby (which can have costs from $9 onwards for just one song),
for a potentialrange of prices that can fit from beginnermusicians,all the way
to advanced. Starting with a free subscription month forevery user (users will
still be permitted to enterin their bank details so they can start being charged
automatically),it is either free to upload an MP3 file, or 89p for a file format of
their choice. This is due to musicians wanting theirmusic in betterquality, but
keeps it free for beginners or for those who just want a free upload.
The user is confronted with two options when first signing up. First is listener,
titled with two sub options:
Standard Listener - £3.99 p/m – Adverts played every 10 songs listened to
Premium Listener - £4.99 p/m – No Adverts
Each gives you a profile to listen and add songs to.
Next is the Musician, which also comes with two sub options:
Standard Musician – 20 Song Limit p/m - £5,99 p/m,adverts played every 10
songs listened to.

Premium Musician – No Song Limit p/m - £8.99 p/m,no adverts, includes
partnership with local venues, pubs + entered into the Top 5 Bands lottery.
In more detail, the premium option gives artists signed up to this service a
partnership with selected venues around the country,the potentialto give them
live experience,without the aggravation oftrying to find live shows themselves.
This way,artists are receiving a great dealon making sure their listeners are
hearing their music, and also that their fans are to see them performing live at
some point. Throughout the years, we intend to partnerwith biggerchains of
venues such as O2, as touring would be much easier to organize underneath
the brand due to their already established network ofvenues.

1.0 Market Analysis
SWOT Analysis:
The figure displayed below is a SWOT analysis for Stimulus, displaying the strengths,
weaknesses, opportunities & threats that the business has/faces. Through close assessment
of this analysis, we can see how we can better ourselves as a company and tackle our
competitors, and how we are providing a benefit to our customers.

Porters 5 Forces:
When evaluating the potential of an upcoming company, all measures have to be examined
to see where the business could excel or drop. The Porters 5 Forces table below helps us
see the positives and negatives in a clearer scope that might affect the use of our service.
Supplier Power
Major artists within the industry who are our suppliers may wish to make their music exclusive to specific streaming services, or
just make their music available physically. For example, Taylor Swift removed her entire music catalogue from Spotify due to
personal beliefs that “Music is art, and art is important and rare. Important rare things are valuable. Valuable things should be
paid for” (Guardian, 2014). Other artists may feel the same way. Another example is Kanye West, whose original choice was to
keep his latest album exclusive to his streaming service, Tidal. Although this choice of exclusivity eventually changed, it can’t be
guaranteed all artists will follow suit.
Buyer Power:
If our customers are refusing to upload higher quality songs for the price of 69p, then the cost of each individual song must be
decreased to avoid the risk of other online streaming services being used in our place. However, there are many ‘bedroom
musicians’ and upcoming artists who are eager to push their music towards the public and are willing to pay a small price for
higher quality sound which could potentially judge whether or not a listener becomes a fan of their music.
Competitive Rivalry:
Rivalry within this industry is extremely high, due to the potential ease of creating an application and making it available on
places such as Apples App Store, and Androids Google Play. Also, customers who are already signed up to existing streaming
services may wish to stick to the one they are currently with, as playlists or offline music may have been obtained already and
thus may not feel the need to recreate previous music listings on a service which has similar attributes to others and offers
exclusive deals which may not appeal to certain customers. Still, users who are not currently signed up to streaming, or have just
started to write music, may think that by uploading music to an upcoming service in the industry will increase the chances of
having their music heard. It is very easy for newly uploaded songs/albums by not-so-famous artists to get lost and less
discoverable in the gargantuan library that is Spotify/Apple Music.
Threat of substitution:
As stated previously, many customers may not feel the need to switch to another streaming service, as there are many others to
choose from. However, we offer more of a relationship with both the listeners and musicians using the service, offering to
organise shows and give live experience for them. Which in turn our users will appreciate and our name will be thrown further
out there. Companies such as Spotify & Apple Music may send automated emails from time to time to make the customer feel
more in touch with where their monthly subscription money is going towards, but we want to have a truly personal experience
with our users by from time to time, potentially a select few in person through the events we plan to organise.
Threat of new entry:
Threat of new entry is not likely due to most people being turned off the idea of competing with the major names in the
streaming industry. However, if any more potential businesses were to do something similar to us, Spotify, Apple Music etc., they
would have to create a new Unique Selling Point (USP). As our idea of occasional live shows held for the artists couldn’t be
replicated directly.
Summary:
With all of these factors, there come positives and negatives. Nevertheless, the positives out way the negatives due to a gap in

PESTLE Analysis:
the market where a streaming service in-between the professional/major feel of Spotify/Apple Music, and the independent,
upcoming musician feel of Soundcloud/Band Camp does not have a concrete position in the industry.
Political
Although the idea of this application has been done before, ideas such as the Listener option & Musician option must be
copyrighted so no one can come up with the idea in the future. Legislations on App Stores may change thus potentially meaning
parts of the application must be changed as well, adding to costs.
Economic
Other competitors use similar pricing for their streaming purposes. Spotify uses three tiers of listening, £4.99 for unlimited, £9.99
for premium. Apple Music £9.99 & Tidal for £19.99, all being monthly costs. Also, the low cost of upload per song attains well
with the target for music students who are tight for money.
Social
One of the strongest factors to this application is the social aspect, mainly due to the rewards that can come with producing
great songs. Many bands or artists have the potential of playing great live shows but can never achieve the experience, as
venues do not want to risk potentially having a bad show. However, if a venue is funded via an organisation such as our
company, there is a much higher chance.
Technological

2.0 Products & Services:
The music streaming service, ‘Stimulus’, is designed specially for
musicians, music students and fans of music. Mostly between the ages
of 16-32, targeting college, university students and postgraduates who
are starting to make their way into the industry.
We seek for musicians to have their uploaded music displayed in a
professional context, which takes away the amateur feel that other music
upload sites tend to display. As their music is presented in a more
organized manner, listeners are more likely to appreciate the music and
feel like they are listening to a well-defined band. Although the quality
of how the music sounds is down to the up loader, we can make sure it
Streaming music has not been around very long, due to the market for buying music only recently changed in the last decade to
downloads, and previous to that it was CD buying. Nevertheless, convenience of not taking up room with physical copies, and
having millions of songs at your disposal for only a few pounds a month is an incredible offer that many people wouldn’t ignore
anytime soon.
Legal
Legal factors such as the Data Protection Act 1998 have to be taken into consideration, as information of our users will be held
in a database. Also bank account information will also be held from our users who wish to upload songs or take up a monthly
membership.
Environmental
As this is an online application, there does not need to be a large focus upon environmental effects. Yet when we decide to
advertise at events using flyers, posters etc., disposal of these items needs to be taken care of properly.

is presented in a true professional fashion that will play well with our
users.
Once the site/application is established and has gained a significant
following, we plan to hold occasional live events that not only assist our
users with confidence and live performance experience, but boosts our
brand name through the people attending the events and the bands
involved.
The app will be available for download via our official website, free of
charge, and also accessible on smartphones/tablets on iOS/Android.
However, music uploads can only be done via the desktop method.
The main features of the service are listed below:
Feature Description
High Quality Audio Many music upload sites do not
understand the need for high quality
audio, and only accept MP3 uploads.
We understand how important it is
for musicians/producers to have their
music stream able at the best quality

there is.
Professional Layout As stated earlier, some sites may
accept audio uploads, but will not
present them in a manner where it
looks professional.
Listener/Musician Choice Most sites only offer one or the other
features; for example, Spotify/Apple
Music’s sole purpose is for the
listeners, whereas Soundcloud seem
to have a bigger focus upon the
musicians using it. We offer 2 unique
ways on how to use our service, and
each way is different yet appealing to
the people it is designed for.
Live show Partnership Once out of the early stage of
release, plans to organize frequent
‘Stimulus’ events will come underway.
Top 5 artists over a set amount of
time, of different genres will be
selected to take part in the event.

So far, no music streaming sites offer the freedom and professional
balance we intend to do with this business, putting us at a great
position as we come across as one of the only musical streaming
services that care for both the listener and musician.
The 1st
month has a free trial, meaning that anyone can upload any
songs, at any quality, for free. However, there is a limit of 5 tracks
during this period, enough to give our users a teaser of what they could
experience with the paid for method. The 1st
month trial will include a
pattern of 5 songs played, 3 sound only advertisements will be played
for the user, all randomized from businesses we are gaining money from
to advertise through our app.

3.0 Market and Competitor Research
3.1Market Research

Geographically, the market is most likely to operate within major cities
around the world, due to mass population and a higher number of
music venues in those areas, for example, the O2 arena and Wembley
Stadium in central London. Streaming service Spotify offer a ‘Where
People Listen’ list from around the world. As you can see in the image
below, no.1 artist in the world ‘Rihanna’ has listeners operating mostly in
major cities, from London, U.K, to Brooklyn, U.S:
However, for the Stimulus app there are no geographical limitations as
to where consumers will use the app.

The customers we are intending to sell to are mainly males aged 16-24,
as they are more likely to stream in comparison to any other age or
gender (www.statista.com). Our ideal customer will have a passion for
listening to music or sharing music via social media. However, our app
also acts as a mini-kickstarter for musicians who are looking to upload
their own music and further promote themselves as up and coming
artists.
The growth of the streaming market is forecasted to increase in the next
few years. According to a source, streaming penetration in the UK is
expected to grow from 24.6%t in 2015 to 34% in 2020
(www.statista.com). This can be linked to streaming services increasing
sound quality and a wider range of artist’s music becoming available for
user consumption, as monthly subscriptions costs stay the same and
Source Data Analysis
RIAA - 2014 Digital Downloads –
37%, Physical – 32%,
Streaming - 27%,
Synchronization – 3%,
Ringtones & Ringbacks
– 1%
Compared to previous
years, (2009 – 2013) there
has been a huge downfall
in physical CD sales.

more music is offered, users will see this as more beneficial.
Looking through and analyzing the market features which are very likely
to affect the business, provide us an insight into what we need.
The bar chart above demonstrates the most successful paid for services
within the music streaming industry. By taking into account the pricing
and features each of these methods offer, I can get an idea into what
offers in the streaming business attracts the potential users at hand.
Most successful paid for streaming services, November
2014. Via Mintel

Age wise, we know we are targeting the right group, as the majority of
users who stream music are
of a younger age:
Whereas the older generation, 35+ are more likely to stick to physical
copies, due to past habits:
Under-35 free music fans, via Mintel, 2010

4.0 Marketing Plan:
The message I wanted to portray from this app is the benefits of an
application where musicians and listeners alike can socialize and be of
equal importance. By using the market research undertaken, a reliable
marketing plan can be used which will boost the popularity of our
application. However, knowing that the service is something other
companies can provide, we
need something that would
make Stimulus stand out of the crowd of other music streaming services.
SMART Analysis:
Objective SMART Reason Cost
Objective 1 S – Make the most social media marketing
by gaining knowledge and longing from
potential customers about the brand.
M – By using social media, we are able to
keep track of most of our potential
customers and see how well our campaign
of promotion is coming along.
A –Social Media Marketing is becoming one
of the most popular ways to promote a
Pick T. (2014)
states “57% of
consumers say
they’d be
somewhat or
very influenced
to think more
highly of a
business after
Optimum exposure (2015) is a
social media marketing company
from York. Their premium social
media package of £850 a month
covers monitoring and
management for social media
accounts such as Facebook,
Twitter and Blogs.
Over 35’s stay physical, via Mintel, 2010

product due to the high number of people
who go online everyday.
R – Kimberlee Morrison of Social Time states
“81% of shopper conduct online research
before they make a purchase”.
T – A time limit of 3 months should provide
enough publicity for our company, without
too much expense.
seeing positive
comments or
praise online,
and 16% say
they only share
positive reviews
on social media”.
Objective 2 S – Straight advertising would involve us
distributing flyers across the country. Mainly
to University’s which hold serious music
programmes, studios and venues. We will be
distributing more posters during the start up
months July and August, as there are
hundreds of festivals including
Reading/Leeds, Wireless & V. To avoid extra
payment for festival tickets, our team will
stand by entrance gates + scatter ourselves
around the town.
M – A set amount will be distributed to
certain places so we will know the target has
been reached from the activity in that area.
A – 5000 flyers will be divided out upon
selected universities and establishments,
while the remaining number will be sent to
venues and clubs.
R – Universities always want to assist their
students with new, upcoming services that
may help their studies. Whilst musicians
performing at venues, once have seen the
flyer may think of it as a way to expand their
fan base.
T – Again, 3 months will be given to this
form of advertisement. It provides
University’s enough time to show students
the service, and for enough shows to be
undertaken at venues for musicians to
discover it.
“Direct marketing
removes the
"middle man"
from the
promotion
process, as a
company's
message is
provided directly
to a potential
customer”.
(Investopedia,
2016).
10000 A4 flyers from Vista Print
(2016) comes to £281.24 X3 for
three months.

Above vs. Below the Line Marketing:
Above the Line vs. Below the Line
Above the Line:
The above the line aspect of marketing that will be undertaken to
increase the reputation of this service will mainly be done via social
media marketing. The potential customers are likely to come across the
service involuntary via sites such as Facebook and Twitter.
Below the Line:
Flyers will be sent out towards universities, more specifically the music
courses of each one, and to venues scattered around the country. With
the flyers in the hands of our potential customers they are likely to
subconsciously become aware of the service without us having to
constantly remind them that it exists.
To ensure that the marketing process is effective enough to reach the right amount of
people, all of the marketing activities planned out above must work in harmony to provide
the most effective execution of advertisement. Social media will be a great asset to us as the
service is in its early stages of development. This is because any problems that arise or any
tweaks that should be made can be told to us via our users, and the advice will be taken
into consideration.
To improve in the development and the understanding of our customers, for the first 5000
users who sign up to our service, a link via surveymonkey.com will be sent to them, giving
them a survey in which questions such as “Where did you hear about Stimulus”, “What
would you improve about the service” etc. will be asked. We will be selecting the Gold
Service in SurveyMonkey, which for £300 a year, gives us unlimited questions, unlimited

responses, text analysis and statistical significance that will help us with making the service
better for everyone.
The market Stimulus is preparing to enter itself in is highly competitive. This is mainly due
to other music streaming services such as Spotify, Apple Music & Tidal offering the
same/similar music to what we intend to offer. Top market leader is Spotify, with over 25
million global subscribers, followed by Apple Music, which reportedly has 10 million global
subscribers (Mintel, 2016).
5.0 Finance:
A reliable source of income to start up the business would be £5,000. A grant would be
claimed from ukgrants.org.uk. The money will be used to pay the design fees for the service,
and the fees for the design of the software will start being paid the moment the business
starts up. Payments will be made in installments through mainly the first year of business, to
ensure us that we have money coming into our business to pay them. Another way we
intend to make money is through the advertisements that will be played to our users during
their 1-month free trial. We will contact venues around the country, and universities with
music listed as a high option on the leaderboards opportunities to advertise their brand for
a fee, but to the right audience. Contact with these types of organizations potentially sets
up our future plans for events and shows with our top bands.
Financial Projections & Explanations:
- Revenue will come from new memberships and advertising from musical businesses.
We estimate a number of 1000 new members in the first month, yet the majority of

these be will be using the 1-month free trial. So there will be a lack of revenue
during this time.
- The revenue coming from advertising quarterly for the first year, as there are many
venues throughout the UK, which need promoting, and £5,000 for every 3 months is
a realistic amount. The starting month will have a much less revenue intake from
advertising, due to the product not being released at the time and companies not
having as much trust in the product. So this would be £20,250 for the first year, and
eventually, if more customers sign up to the service, more companies will want to
advertise as they know what type of audience they will be dealing with. Whereas
companies such as Spotify only have huge, global names advertised on their service,
we intend to have smaller business’s on ours, and £5,000 divided between each
business we potentially have dealings with, is a lot of companies and advertisements
for our service.
- At the moment, Apple offer a 30/70 subscription service for any application that is
uploaded to their app store (Apple Developer Programme), so 30% of revenue from
our Apple version of the app would be taken. However, as we a starting company we
must be careful with our expenditure. So for the first year we will have the
application only on android devices as there is no charge. Once we have seen how
well the app has done, we can expand our market and upload towards the Apple
Store.
- We intend to trademark our application, which has a fee of £170 via Gov.uk. This will
be paid for at the start of designing the app to avoid any troubles in the future.
- Design and creation of our service would come to around £32,000 and would as
stated earlier, be paid via installments and would continue to paid after our first year.
The estimate of application making pricing was made via Blue Cloud Solutions. This
estimate would include app designer, creation fees and testing fees. We will also
have the service thoroughly updated through its time and scanned for bugs. This will

come as an agreed fee of £3000 every 3 months, starting with month 0 to allow
more time for the service to develop.
- Domain name must be bought, and a generic domain name comes to £11.99
- To host an online streaming service, a limited online music license (LOML) must be
purchased. This comes to £130 annually. This is for services that are to apparently
generate less than £12,500 in annual gross revenue. Which our company does fall
into.
- There are many gross and net-profit margins, this is due to having low income in
some months and high payments to be made. Meaning we have high-risk short term,
but long-term longevity, meaning we will perform better as a business long term.
- For months when minus figures are involved, I have a business account with an
overdraft facility, which has been agreed with my holding bank. This can be used for
start up months, such as months 1 & 2.
- For the first year, we will want to employ younger workers to gain a diverse look at
the business, as our youth is the future of our business, and we would like our own
target audience to have involvement in the business to help gain effective. The team
will be 4 people, including myself, paid on minimum wage as we’re all under 21. We
wanted a smaller group for better communication; ideas are shared better, which is
important during the early stages of a business. Minimum wage of £5.30 an hour, 20
hours a week part time would equal to £1.696 a month on wages. Wages are likely
to increase as the business expands and gains a better market share.

Stimulus Cash Flow Year 1

6.0 References:
Spotify Web player, (2016): https://play.spotify.com/ Last accessed:
11/03/16
Statista, (2016): http://www.statista.com/statistics/291712/digital-music-
streaming-by-demographic-group-uk/ Last accessed: 12/03/16
Ellis-Petersen, H (2014):
http://www.theguardian.com/music/2014/nov/04/taylor-swift-spotify-
streaming-album-sales-snub Last accessed: 12/03/16
King, M (2010):
http://academic.mintel.com.ezproxy.herts.ac.uk/display/523893/?highligh
t Last accessed: 14/03/16
Google User Content (2009): https://lh5.googleusercontent.com/-
Lxi5J6UeHaM/TXr4u3NbheI/AAAAAAAAABU/qSsmxg5lbv8/s1600/P
ESTLE.png Last accessed: 15/03/16
Pick, T (2016): http://www.business2community.com/social-media/47-
superb-social-media-marketing-stats-facts-
01431126#AVk1Q1wlH8oT3iHb.97 Last accessed: 17/03/16
Morrison, K (2014): http://www.business2community.com/social-
media/47-superb-social-media-marketing-stats-facts-
01431126#AVk1Q1wlH8oT3iHb.97 Last accessed: 20/03/16
Optimum Exposure Official Site (2016):
http://www.business2community.com/social-media/47-superb-social-
media-marketing-stats-facts-01431126#AVk1Q1wlH8oT3iHb.97 Last
accessed: 01/04/16

Survey Monkey Official Site (2016):
http://www.business2community.com/social-media/47-superb-social-
media-marketing-stats-facts-01431126#AVk1Q1wlH8oT3iHb.97 Last
accessed: 02/04/16
Official Apple Site (2016): https://developer.apple.com/programs/ Last
accessed: 03/04/16
123-reg site (2016): https://developer.apple.com/programs/ Last accessed:
09/04/16
Limited Online Music License (2016):
http://www.prsformusic.com/users/broadcastandonline/onlinemobile/M
usicServices/LOML/Pages/LOML.aspx Last accessed: 09/04/16
CD baby Cost (2016): http://members.cdbaby.com/cd-baby-cost.aspx
Last accessed: 09/04/16
Willens, M (2015): http://www.ibtimes.com/spotify-paradox-people-who-
pay-streaming-music-are-still-buying-albums-report-says-2222197 Last
accessed: 10/04/16
RIAA (2014): https://cnet1.cbsistatic.com/hub/i/r/2015/03/19/f8cd69b9-
9a1a-41a3-b5d0-
90d60f1b905b/resize/570xauto/d5f0c1f22f5252bc570ce15e7d63694b/scr
een-shot-2015-03-19-at-8-51-55-am.png Last accessed: 10/04/16

Daniel Hagan - Future Streaming Service Business Plan

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (12)

Similar to Daniel Hagan - Future Streaming Service Business Plan

Similar to Daniel Hagan - Future Streaming Service Business Plan (20)

Daniel Hagan - Future Streaming Service Business Plan