Hey, Great thread - there was a good article in the Saturday SMH business section (page 8). If anyone can track it down and scan it, would be awesome.
Mike On Feb 22, 10:51 pm, Matthew Ho <matt.h...@gmail.com> wrote: > Many organisations are banking on the paid subscription model - from > music, news, movies etc..whether its the answer is another question. > Clay Shirky understands this better than most people. He explains the > paid content model, comparing music subscription vs news subscription > model here: > > http://www.shirky.com/weblog/2009/03/why-itunes-is-not-a-workable-mod... > > I have also been thinking about the music subscription model today. > Apple has a whole ecosystem supporting the music experience. People > will pay for this convenience and experience. > > In terms of music, lets use Spotify as an example since they are most > likely to extract value from the rest of the value chain. Is Spotify > profitable? > > Spotify has 10million users. News articles suggest they have approx > 650,000 paying subscribers (~ 1 in 20 paying). > > http://eu.techcrunch.com/2010/09/15/spotify-10-million/http://gigaom.com/2010/11/22/spotify-2010-revenues/ > > MUSIC REVENUES > > 90% of users pay $10 Euros/month = $120 Euros yearly > 10% of users pay $5 Euros/month = $60 Euros yearly > > On a revenue basis, Spotify generated $74m Euros last year on music > subscriptions alone. > > ADVERTISING + "VALUE CHAIN" REVENUES > > Gigaom reckons that Spotify made $58m in advertising. I take this with > a pound of salt cause I don't see how this could be true. My estimates > below are based on the low side. > > I project the following revenue streams: > > - Advertising (PPC): 10m users x 1% of users click on ads x $0.02 x > 365 days = $730k/year > > - Ticket sales: $5 commission x 10m users x 1% purchasing yearly = > $500k/year. Using the average Posse commission prices. > > - Merchandise: $20 tshirt x 10% commission x 10m users x 1% purchasing > yearly = $200k/year > > That's roughly $76m in revenue. > > COSTS > > The only cost that's public is music royalties at $30m. That leaves > $46m on table. > > I wouldn't think the operating cost of a lean startup business would > be any more than 40% of remaining revenues (assuming 20 staff, low > overheads). Opex = $18m. > > Total profit is = 76m - 30m - 18m = $28m profit. > > So in short, their music subscription model is profitable. > > I'm sure they'll have other revenue streams from deals with mobile > companies. I think that's where the real value is for Spotify - the > mobile apps. People will subscribe to this. They probably need to get > it to 10% - 20% of paying users (currently at 5%). Their push into the > US is more likely to build a barrier to competition cause it will > prevent other people from moving in. > > On Feb 21, 11:33 pm, Edwin Onggo <edwin.on...@gmail.com> wrote: > > > > > This might sound a little funny but I've never been picked apart so > > quickly on a forum and enjoyed it so much. > > > Completely agree with Matt Ho that digital content is difficult to > > monetise. My original idea was to employ the Groupon model to live > > gigs but couldn't think of a scalable model where event management > > didn't have to come into play. > > > The localised Myspace meets Tumblr concept was envisioned to be that > > bridging gap for Aussie artists to reach TripleJ status and more than > > likely I was to employ a freemium model (premium templates, listings > > for example). By grouping communities by location I think it carries > > benefits which allows collaborating with similar artists to make a gig > > possible and also to connect with a local fan base. Music for the most > > part is free so this content (packaged up nicely and shared) would > > attract the users. On a more alarming side note, I recently discovered > > Bandpage by RootMusic which is a Facebook app solving many of the > > problems I identified (Can't believe I didn't discover this one > > earlier). > > > I've been watching Posse for a little while now and take my hat off to > > what you guys are achieving. A brilliant Clickbank-for-events model > > with an exciting future ahead. Being immersed in the space Rob, I'm > > curious as to what areas of the value chain you believe are still > > untouched? Spotify just raised 100m from DST as well - I invite anyone > > to comment on whether they think the subscription model is the answer > > to the digital content dilemma? -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://groups.google.com/group/silicon-beach-australia/msg/351e183e1303508d?hl=en%3Fhl%3Den No lurkers! It is expected that you introduce yourself. To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
