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)
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 Sponsorship• Transactional (Afﬁliates, Premium Accounts)• Experimental (Talent services, Micropayments, Subscription)
Content challenges• What type of content are consumers willing to pay for and how?• How do brands ﬁt into the picture?• Still early days
Revenue Stream Mix • Who pays (asymmetric vs symmetric)? • Multiple streams or concentrate on one? B2C vs B2B? • Mixcloud: Ads + freemium plan
Online Radio/Music Space: mapping out theoptions Consumer pays PIRACY!Specialist Mass market Mixcloud Someone else pays
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?
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!
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
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
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@N03/3279725831/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/
Please get in touchWeʼre keen to hear your thoughtsEmail: email@example.comTwitter: @nicoperez / @mixcloud