Amusing- music streaming platform for bars/coffee shops/clubs (South Korea market entrance plan)

Mission
“To use music as the key connection bridge and
communication tool between venue owners and
visitors and provide customizable and ultimate
in-venue music experience, through online and
real-time interaction based on musical taste.“

Problem

Solution?

Media Player
App
 Choose the venue and perform check in
 Vote and suggest songs
 Play their songs
 Match people with similar music taste
 Licensed music for businesses
 Improve customer satisfaction
 Customer analytics
 Greater visibility of the venue
Solution

Market trends
The global recording industry passing through a new transition
Global digital revenues increasing year over year
Music subscription services becoming a major driver of digital growth
46%
46%
8%
Share of industry revenues - 2014
Digital
Physical
Performance
rights and sync
52%
23%
3%
9%
12%
Permanent downloads
Subscription streams income
Mobile personalization
Ad-supported streams income
Other
0 0.1 0.2 0.3 0.4 0.5 0.6
Global digital revenues by sector - 2014
* Taken from IFPI Digital Music Report 2015

Competitors
Competitors AMUSING MelOn Rockbot
Spotify
Business
Social Jukebox experience
Search for a venue based on user’s music taste
Users participation in the music played in the venue
Unlock of the rewards and special discounts
Licensed music for business venues
Improved visibility of venue owners
Engagement with customers through notifications
Analytics
Easiness of use
Presence in South Korea

Licensing
LICENSED
MUSIC
PERFORMING
RIGHT
ORGANIZATIONS
RIGHT HOLDERS
Right holders % of revenue
Writers 10% of revenue from one
subscriber
Performers 6% of revenue from one
subscriber
Producers 44% of revenue from one
subscriber
* Taken from government pay-per-stream system in South Korea

Selection of the country
Highest
number of
bars per
capital
App addicted
population
Android
driven market
Government
pressure on
venue owners
No direct
competition
Indicator Japan USA Brazil South Korea
Number of bars in capital per 100.000 people 108 88 133 231
Performing market size (millions) 78,837 391,864 55, 545 7,974
Performing market growth rate 13% 46 % 103 % 89 %
Competition presence NO YES NO NO
Number of apps installed 36,4 32,8 22 40,1
Internet Bandwidth (kb/s per person) 52 36 44.8 63
* Sources : IFPI Digital Music Report 2015 , WCCR 2014, Statista 2013

Target groups and size
Venues
Festivals
App users
1. Single location venues with normal capacity
of visitors (10 -100)
2. Low number of locations (<5) with large
capacity of visitors (over 200)
3. High number of locations (10 to 1000) and
normal capacity of visitors (30-200)
 Music festivals, public parties and similar
events
 Visitors of the business venues, festival and
events with smartphone access
8,697
22,006
145,037
700+
9,3 M

2015
• Develop product
• PRO agreement
• Funding round
2016
• Launching in SK
• Market penetration
• Database expansion
10k
VENUES
300k
HITS
3M
SONGS
Timeline and Milestones

2015
• Develop product
• PRO agreement
• Funding round
2016
• Launching in SK
2017
• App promotion
• Token system
• Strong advertising
22k
VENUES
1M
HITS
10M
SONGS

2015
• Develop product
• PRO agreement
• Funding round
2016
• Launching in SK
FUTURE
• Finding potential
buyers
• Entering Japan
and Brazil
2018
• Maintain high MS
• Further expansion
• Keep churn rate low
70k
VENUES
1.5M
HITS
14M
SONGS
2017
• App promotion
• Token system
• Strong advertising

One time fee (200€)
+
Monthly subscription (40€ -50€)
Freemium model
(free download +
tokens for extra service)
PRICEPLACEMENTPROMOTION
MEDIA PLAYER APPLICATION
Sales agents Website Android market
Trials Special eventsStrategic partner ReferralOnline
4Ps and Marketing Strategy

Software & App development - 150,000 €
Negotiate with PROs, and label
houses - 20,000 €
Prototype testing - 10,000 €
Agreement with label house - 25,000 €
Initial marketing campaign - 25,000 €
HQ opening in Seoul - 250,000 €
Korean partner for legal issues - 20,000 €
TOTAL START-UP PHASE COST = 500,000 €
Startup phase costs

Pessimistic Scenario
Realistic Scenario
Optimistic Scenario
2015 2016 2017 2018
7M
6M
5M
4M
3M
2M
1M
0
-1M
-2M
1st Round 2nd Round
Distribution through Forecasted Years
CumulativeNetCashflowin€
Capital Needs for Start-up 500,000 €
Personal Funding 50,000 €
Crowd funding 30,000 €
Minimum investment needed 420,000 €
Investors 420,000-500,000 €
25% - 35% of shares will be sold to Investors
1st Round Fundraising in 2015-Q4
2nd Round Fundraising in 2017-Q1
*Optional in case of pessimistic scenario
Capital Requirements

Cost of Service Structure
Royalties 50%
Streaming 37%
Commission 13%
Average Revenue Structure
Subscription 64%
Media Player 32%
App 4%
Selected Data from P&L and ROI
Income Statement
(Realistic)
2016 2017 2018
Total Revenues 4,237,530 11,577,600 32,809,150
Cost of Service 3,166,054 9,275,112 25,320,625
Total Expenses 834,500 1,544,000 1,984,000
EBIT 236,975 758,488 5,504,525
Profit 189,580 606,790 4,403,620
ROI 37.92% 121.36% 880.72%
Revenue and Cost Structure

2015 2016 2017 2018
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
PES* -110000 0 -27450 -64395 -15909 -58062 51 38049 179655 353669 980569 1529415 2503791 3010211
REA* -110000 0 38331 65947 188229 223580 174180 417169 718552 864371 1988654 3093633 4565305 5301991
OPT* -110000 0 455207 886720 1354993 1390926 1802803 2512600 3406459 4268811 6326903 9003115 12746671 14635712
OPT*
REA*
PES*
Net Present Value 2018
19,9 M
5,03 M
1,19 M
Enterprise Value 2019
161,36 M
53,05 M
23,55 M
Q4-2016
Q1-2018
Q3-2018
Payback Period
Breakeven Point 9093 clients location
Cumulative Cash Flow With Minimum Investments
* PES- Pessimistic
REA-Realistic
OPT-Optimistic
Cash Flow and Indicators

Conclusion
Key Partners Key activities Value Proposition
Customer
Relationships
Customer
segments
 National
Performance
Right
Organizations
 Record
companies
 Hosting and
audio streaming
providers
 Korean partners
regarding legal
issues and sales
 Software
development
 Obtaining music
database and licenses
 Setting up streaming
service
 Finding right partners
 Media player
Legal music
streaming with
added extra features
 Mobile App
Better in-venue
experience
 Sales
representatives
 Online technical
support
 Website
 Venues
 Festivals
 App users
Key Channels
 PPL music licenses
 Music database
 Media player and
app
 Organizational team
 Local sales
agents
 Online selling
 Google Play
Cost Structure Revenue Streams
 Prototype development and software
 PPL music licensing
 Royalties
 Music streaming and hosting costs
 Marketing sales and wages costs
 Software one time purchase price
 Monthly subscription fees
 Advertising space in mobile app
 On request license for events
 App’s tokens system

Political factors
• Government Pressure on Streaming Services
• Good Government Incentives for Start-ups
• North Korea Disputes
• Strong Foreign Relationship (EU Improving)
• Unemployment Rate (3.2 %)
• Strong military influence

Economical factors
• Relatively low Tax Rate (20%)
• GDP, PPP Growth Rate (2.8%)
• Low Interest Rate (1.75%)
• Low venture capital availability (2.1 out of 7 rating)
• Exchange Rate (1€ = 1,25 KRW)
• Liberalized service sector

Social factors
• Tech Savvy. Population
• K-POP music Phenomenon
• Most Active App Users
• High Education Standards
• Nationalistically oriented and Language Barriers
• Growing local aversion for foreign companies

Technological factors and trends
• Most Innovative Country
• Fastest Internet and Downloading Capacities
• Android-driven Market
• Most R&D Intensive Country
• Strong Telecom Sector
• Application market is growing

Legal factors
• Anti-Piracy New laws about digital music
• Strict Copyright Policies about performing rights
• Only one PRO - KOMCA (partner)
• Open-Net Korea Legal Initiative
• Over-regulated Governance
• Strict legal mechanisms

Digital music industry factors
• High Share of Digital Music (58 %)
• Growing digital music market (+20 %)
• Local Music Oriented business
• High music Royalty Rates
• Strong Music Streaming Services (Melon, Milk)
• No direct competition

Application features
Feature Free Token
User registration  
Vote for songs from the playlist in venue  
Synchronization of music from device, Facebook, Last.fm and other similar services to
create a music taste
 
Sharing on social media  
Search for a venue based on user’s music taste or genre  
Suggest music from smartphone’s users library  
Check-in in the venue  
Visualization of all songs in the playlist  
Discovery of currently playing songs in the venue  
Ad-free experience  
Matching users with similar music taste  
“Prioritized instant request” of the song to be played next  
Vote counts for 10 votes  
Access to DJ’s Club  
Rewards unlock and participation in special offers  

Media player margins
Expected Margin from Media Player
Price Decision 2016 2017 2018
Media Player Price (one time) 200
Development Cost 10000 20000 20000
Total Expense 834500 1544000 1984000
Commissions on Software (40%, 30%, 20% with years ) 80 60 40
Forecasted Numb. of Buyers 9300 13250 46000
Unitary Fixed Cost 90.81 118.04 43.57
Expected Margin 109.19 81.96 156.46

Price calculation for subscription
Streaming, Licensing and Copyright Costs by Music Venue
Monthly based on one location
(€/month)
Franchis
e
Premiu
m
Indie
Licensing Cost (to KOMCA ) 11.67 15.17 11.67
Streaming Cost (Data Transfer) 4.15
Copyright Cost - 60% of Subs.
Revenue
24 30 24
Monthly Subscription Fee 40 50 40
Contribution Margin 0.18 0.68 0.18
Copyright Cost 41.61

SWOT analysis
Strengths Weaknesses
 Licensed music solution for businesses allowing
music to be played in public environments
 Creation of the strong social integration between
customers
 Innovative concept: easy and intuitive
 First mover advantage in South Korea
 HQ location in Seoul allows exploiting Asian
market
 Overall system architecture allows easy expansion
to other countries
 Mandatory agreement with record companies and
performing right organizations
 Lack of competences in software programming,
legal aspects and South Korean culture
 Lack of patent in the initial stage
 Big amount of revenue goes to right holders and
performing right organizatioons
Opportunities Threats
 Wide potential of the market may result in fast
growth of the company
 Exploitation of tech-savvy community
 Functional outsourcing possibilities
 Continuous product innovation through R&D
 Time required to develop a product could be
higher than expected
 High entry barrier costs
 Potential competitors copying the idea

Income
Statement
2016 2017 2018
Scenario Pessimistic Realistic
Optimisti
c
Pessimist
ic
Realistic
Optimisti
c
Pessimisti
c
Realistic
Optimisti
c
Total
Revenues
2794530 4237530 11162030 7807600 1157760
0
26659600 22587150 3280915
0
69040150
Cost of
Service
2052091.5 3166054.
5
8631373 6135187.
5
9275112 21560743
.5
17324971.
5
253206
25
54140023
Gross Profit
742438.5 1071475.
5
2530657 1672412.
5
230248
8
5098856.
5
5262178.
5
748852
5
14900127
Total
Expenses
834500 834500 834500 1544000 1544000 1544000 1984000 1984000 1984000
EBIT
-92061.5 236975.
5
1696157 128412.5 758488 3554856.
5
3278178.5 550452
5
12916127
Profit
-92061.5 189580.4 1356925.
6
102730 606790.
4
2843885.
2
2622542.
8
440362
0
10332901.
6
ROI
-11.88% 37.92% 271.39% 13.26% 121.36% 568.78% 338.39% 880.72% 2066.58%

Amusing- music streaming platform for bars/coffee shops/clubs (South Korea market entrance plan)

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