Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Nico PerezMixcloud Co-founder
Contents Mixcloud context Revenue   - Models   - Checking assumptions   - Challenges   - Mix/single streams   - Ad space m...
REVENUE
Revenue Models• A tool for forecasting• Built on (realistic?) assumptions• Verifications help
The simple modelRevenue – Direct costs = Gross profitAds        ServersFreemium   LicensesServices   Customer acquisitionG...
The complex (acronyms) model Net sales revenue – Cost of goods sold 	 = Gross profit 	 – SG&A expenses (costs of operating...
Checking your assumptions • Market data • Will it work? What has worked historically? • Building in sensitivity +/- %
Business Model Challenges• Traditional radio ad spend moving online (Google, Spotify, TargetSpot)• Display vs Audio vs Spo...
Content challenges• What type of content are consumers willing to pay for and how?• How do brands fit into the picture?• St...
Revenue Stream Mix • Who pays (asymmetric vs symmetric)? • Multiple streams or concentrate on one? B2C vs B2B? • Mixcloud:...
Online Radio/Music Space: mapping out theoptions                        Consumer                        pays              ...
Ad-funded content: Challenges and ideas • Fragmentation of media -> blog / audio ad networks? • UGC vs Professional • Paid...
The mix within              The need for ad revenue                  FOCUS                             • Increase inventor...
Transactional Models
Transactional Models “We believe the future business model for social games will be primarily transactions… consumers play...
Transactional Models: What can we learn?                                       Distribution platforms                     ...
COSTS
What you can controlRevenue – Direct costs = Gross profitAds         ServersFreemium    LicensesServices    Customer acqui...
What you can controlRevenue – Direct costs = Gross profitAds         ServersFreemium    LicensesServices    Customer acqui...
Customeracquisition costs: • SEO • Affiliates • Advertising / PPC • PR • Viral
More Social internet music & radio• Destination -> Distribution• Sharing what you love (via Facebook, Twitter, blogs, etc)...
Conversion funnel !   !   !   !   !   !    !   !     Visitor             !   !   !    !   Registered user          18%    ...
Lessons & Tips from Mixcloud • Do you have a “social object”? • Convert users -> marketers • Build features and processes ...
Mixcloud <3 partnerships
Biggest cost = Biggest Asset • Headcount -> burn rate • Equity/Debt financing vs self funding • Short term revenue vs long...
PROFITS
Profits • Offset past losses against profits • Re-invest to help scale • Reward contributors
The end.Flickr CC credits:http://www.flickr.com/photos/thomashawk/228228018/http://www.flickr.com/photos/8078381@N03/32797...
Please get in touchWeʼre keen to hear your thoughtsEmail: nico@mixcloud.comTwitter: @nicoperez / @mixcloud
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Nico Perez + Founders Institute talk: Revenue, Costs & profits
Upcoming SlideShare
Loading in …5
×

Nico Perez + Founders Institute talk: Revenue, Costs & profits

2,714 views

Published on

Founders Institute talk given by Nico Perez in Brussels (October 2010)

Published in: Technology
  • Be the first to comment

  • Be the first to like this

Nico Perez + Founders Institute talk: Revenue, Costs & profits

  1. 1. Nico PerezMixcloud Co-founder
  2. 2. Contents Mixcloud context Revenue - Models - Checking assumptions - Challenges - Mix/single streams - Ad space models - Transactional models Costs - Customer acquisition - Conversion funnels - Social + partnerships - People costs Profits
  3. 3. REVENUE
  4. 4. Revenue Models• A tool for forecasting• Built on (realistic?) assumptions• Verifications help
  5. 5. The simple modelRevenue – Direct costs = Gross profitAds ServersFreemium LicensesServices Customer acquisitionGross Profit – Overheads = EBITDA Salaries Rent
  6. 6. The complex (acronyms) model Net sales revenue – Cost of goods sold = Gross profit – SG&A expenses (costs of operating the company) = EBITDA – Depreciation & amortization = EBIT – Interest expense (cost of borrowing money) = EBT – Tax expense = Net income (EAT)
  7. 7. Checking your assumptions • Market data • Will it work? What has worked historically? • Building in sensitivity +/- %
  8. 8. Business Model Challenges• Traditional radio ad spend moving online (Google, Spotify, TargetSpot)• Display vs Audio vs Sponsorship• Transactional (Affiliates, Premium Accounts)• Experimental (Talent services, Micropayments, Subscription)
  9. 9. Content challenges• What type of content are consumers willing to pay for and how?• How do brands fit into the picture?• Still early days
  10. 10. Revenue Stream Mix • Who pays (asymmetric vs symmetric)? • Multiple streams or concentrate on one? B2C vs B2B? • Mixcloud: Ads + freemium plan
  11. 11. Online Radio/Music Space: mapping out theoptions Consumer pays PIRACY!Specialist Mass market Mixcloud Someone else pays
  12. 12. Ad-funded content: Challenges and ideas • Fragmentation of media -> blog / audio ad networks? • UGC vs Professional • Paid search (ROI) vs diplay. Brand awareness? • Self serve advertising… for rich media?
  13. 13. The mix within The need for ad revenue FOCUS • Increase inventory100 ➡ Grow audience • Increase yield 75 ➡ OpenX Ad Networks 50 • Optimise inventory ➡ Sell through rate 25 • Support new formats 0 Direct Sales ➡ E.g. integrated Self serve Make it scaleable!
  14. 14. Transactional Models
  15. 15. Transactional Models “We believe the future business model for social games will be primarily transactions… consumers play for free supported by advertising but have the option to pay for virtual items and premium features” Kristian @ Playfish, July 2008
  16. 16. Transactional Models: What can we learn? Distribution platforms Donʼt force them to pay Access not ownership Gaming as a service, not product “Virtual goods have a value thatʼs very tangible… maximised around social emotion and social expression” - Sebastian, COO Quality control on ads
  17. 17. COSTS
  18. 18. What you can controlRevenue – Direct costs = Gross profitAds ServersFreemium LicensesServices Customer acquisitionGross Profit – Overheads = EBITDA Salaries Rent
  19. 19. What you can controlRevenue – Direct costs = Gross profitAds ServersFreemium LicensesServices Customer acquisitionGross Profit – Overheads = EBITDA Salaries Rent
  20. 20. Customeracquisition costs: • SEO • Affiliates • Advertising / PPC • PR • Viral
  21. 21. More Social internet music & radio• Destination -> Distribution• Sharing what you love (via Facebook, Twitter, blogs, etc)• Know what your friends are listening to 23
  22. 22. Conversion funnel ! ! ! ! ! ! ! ! Visitor ! ! ! ! Registered user 18% Integrate with FB + Twitter <20% Invite friends 10%
  23. 23. Lessons & Tips from Mixcloud • Do you have a “social object”? • Convert users -> marketers • Build features and processes to help them do this • Reduce cost per acquisition (eg partnerships)
  24. 24. Mixcloud <3 partnerships
  25. 25. Biggest cost = Biggest Asset • Headcount -> burn rate • Equity/Debt financing vs self funding • Short term revenue vs long term potential
  26. 26. PROFITS
  27. 27. Profits • Offset past losses against profits • Re-invest to help scale • Reward contributors
  28. 28. The end.Flickr CC credits:http://www.flickr.com/photos/thomashawk/228228018/http://www.flickr.com/photos/8078381@N03/3279725831/http://en.wikipedia.org/wiki/History_of_radiohttp://www.flickr.com/photos/9948354@N08/763399258/http://www.flickr.com/photos/emry/369409914http://informationarchitects.jp/web-trend-map-4-final-beta/
  29. 29. Please get in touchWeʼre keen to hear your thoughtsEmail: nico@mixcloud.comTwitter: @nicoperez / @mixcloud

×