Danceture.com Business Plan Brand Positioning Danceture.com was conceptualized by Electronic Dance Music (EDM) aficionados that were frustrated with a gap in the market. Currently, there are no effective and compelling websites that anyone interested in EDM can go to for the latest information about EDM. In addition, content on other sites is dry and text-heavy. Danceture.com is a new approach to keeping users up-to-date with the latest news and stories in a rapidly growing genre that is increasing in popularity. We want to provide fellow EDM aficionados with a great source of high-quality and unique content on everything about EDM – yet keeping it simple for those that only want news in a particular subset. We also intend to be the “Wikipedia on steroids” of EDM, with our “Brain” technology indexing content to be the best source of EDM information. Business Model We have four primary revenue drivers: 1) Ad Network Our own advertising network with partner EDM music blogs and event sites, would allow us to rapidly establish the Danceture brand and generate significant revenue through advertisers looking to target the dance music community. 2) Display Advertising We intend to drive our initial revenue through direct sales to local advertisers (City Guide) as well as enable users to advertise through our self-serve sidebar widget with fixed 12x12 banner ads. In addition, we will use Google Small Business Solutions in our beta development phase. 3) Affiliate Marketing Essential to our brand and our marketing strategy is developing partnerships with companies that sell products in the EDM genre – event tickets, DJ equipment, and songs. We can generate a percentage of sales through affiliate marketing by leveraging our editorial content. 4) Premium Content Once our site moves beyond the beta phase and is well established and our “Brain” and guides (city, tech, music) have been developed out with significant high-quality content, we will offer a premium service that allows downloads of music, access to exclusive content (such as DJ techniques), as well as downloadable city guides from our site for a subscription fee. Management Team 1. Editor-in-chief / Resident Music Guru: Kevin Kaiser Kevin founded his own music website Dancing Astronaut, which is the precursor to Danceture. He has written and edited this site for six months and managed all of its advertising. 2. Finances/Advertising: Alexander Ingram Alex will soon be graduating with a B.A. degree in Economics from Stanford University. He founded and served as CEO of the college media website GuruCampus.com, which aggregated virtually every online college newspaper in the country. He will be working at Credit Suisse in their Technology, Media, and Telecommunications practice in the fall. Alex previous served as a summer associate at O’Shaughnessy Asset Management in Stamford, CT. 3. Advertising/Business Development/Site Design: Tim Lim Tim is Biomechanical Engineering major with an additional degree in Management Science and Engineering. He has a strong interest in the Internet industry and will be working in operations strategy management in Yahoo's SE&O division after graduating in June. He has previous experience consulting for Booz & Company, an internet/telecommunications technology company on their broadband strategy, as well as in product design for the 2010 iPhone division at Apple in Cupertino. 4. Content producers/editors/PR: Stacie Chan and Miranda Simon Stacie produces content and social media for B-net. She has written for two community newspapers and did investigative reporting for KNBC L.A. Miranda has had experience producing content for the online news site Salon.com, where she also manages part of their social media communications. She has also reported for El Universal, one of the largest national newspapers in Mexico City. 5. Website coding/maintenance/Business Development: Emmanuel Emmanuel is a Management Science and Engineering major and has had experience working with Java, C++ and HTML. Upon graduation Emmanuel will be working at Google on The Online Sales and Operations (OSO) team. Product Marketing Strategy Once we launch the beta version of our site on June 3, 2010, we intend to drive our user traffic and increase brand recognition through the following strategy: Initial Growth 1. Advertise through EDM (Electronic Dance Music) blogs on a content sharing basis. 2. Make use of the Facebook’s social graph. 3. Email subscription and weekly Danceture newsletters: eep fresh, up-to-date content going to members that is visually exciting and media rich to help to retain traffic and potentially grow users. Members can forward email newsletters to friends or email networks Sustainable growth and growth strategy 1. Develop partnerships with local venues featured in our “city guide” section – we feature their clubs/bars/lounges in our content with user reviews and original editorial content, and they feature the Danceture name/brand in their clubs – similar to Yelp model. 2. Ad Network, blog growth, EDM network. As our site is a “one stop EDM shop”, we can leverage our content network and continue to grow through the users that visit specific niches in EDM and want to branch to other niches. For example, an online user that frequents EDM music mix sites might be interested in a club or the latest equipment, and through our network discover our site and become a regular user. With funding to launch an Ad Network, we will have significantly greater leverage as we grow our advertising network in a very targeted genre, so we can provide advertisers with targeted, specific and relevant users (and vice versa) to translate to high CPMs, high CPCs and high CTRs. 3. Building brand image through EDM networks – enthusiasts, clubbers, DJs, electronic equipment suppliers/buyers, and associated networks – is key. Through our high quality content and unique editorial reviews, we intend to draw traffic and retain traffic, as well as enhance our reputation as THE online destination for all things EDM. Competition Several “general” EDM online sites exist in the market: DJMag.com, residentadvisor.net, theuntz.com, and mixmag.net. 1. www.djmag.com DJmag.com is the online version of "DJ magazine". Its paper edition is very popular, and is a monthly magazine dedicated to Electronic Dance Music and DJs. The magazine is translated in to Portuguese, Polish, Ukrainian, Lithuanian, Chinese, Bulgarian, and Italian. Strengths The paper magazine has a significant subscriber base, and has styled itself as "the world's largest selling dance music magazine.” It currently claims sales of 27,500 copies out of a total circulation of 32,250 (with 5,000 given away free). The content on its website mirrors that of its paper version. Shortcomings While the brand is established, there are many shortcomings with the website. The navigation of the site is difficult and the content is not interactive. Information feels impersonal, and with the confusing layout the experience is not very engaging or compelling. The forum is limited, and it does not seem to translate well to social networks, hence limiting online growth. Poor website monetization: The website is highly dependent on paper magazine subscribers wanting a simple online transcription of the magazine content and monetizes predominantly through subscriptions. Poor site structure: Further exploration of the site shows that search doesn't return very relevant results for music, seems to be more event based. 2. MOG Music Network MOG is a vertical ad network that targets a wide variety of music blogs. MOG does not focus on the electronic dance music space. Our Competitive Advantage Better for users Danceture.com intends to aggressively enter the dance music niche and provide fresh and up-to-date content with an attractive and simple user interface, with compelling and media rich content that is personalized – users can sign in and indicate what aspects of EDM they are interested in, and the feeds using our “BRAIN” keyword system will pull news and stories that are relevant to them. Better for advertisers/affiliates With each user’s preferences easily visible on the site from their news preferences, as well as clear navigation through our music, events, brain and technology pages, our advertisers will be able to reach more relevant customers and hence drive higher conversions. 3-year timeline for Danceture Year 1 The core focus in our first year is to develop our content, which will drive our site traffic growth. We will build Danceture’s brand recognition in the EDM community and establish our site as a compelling and high quality content-rich source for EDM aficionados. We want to ensure that site navigation is fully functional, build our “Brain,” increase our user base, and develop our user input through the “Brain.” We will generate revenue in year 1 through several channels. Firstly, direct sales through Doubleclick for small businesses, where we will have a sales team to reach out to advertisers. In addition we would reach out to affiliate sales partners, and advertise their products on our site. We will market our site through social networks as well as EDM blogs and similar sites to achieve our year 1 goal of reaching 40,000 unique visitors per month by the end of the first year. Year 2 Once the brand is more established and we have significant user and site traffic, we then turn to our Ad Network. At this point, Danceture will be a recognizable name in the EDM community, and given our revenue streams from advertising and affiliate programs, we will build out an Ad Network (requiring substantial investment as highlighted in the financial plan. We will hire a full sales team to drive this growth, and focus on the real value proposition – providing the link between our relevant and high-spending users (and those on network blogs/sites as well) and the advertisers that want to reach the EDM community. Year 2 is when our true value proposition comes into play, as we will leverage our users and our network to expand and capture a highly monetizeable community for potential advertisers. Year 3 After 2012 we plan a continued expansion of our Ad Network, and by leveraging our rapid user growth and established brand name we will continue to offer additional services that will improve the user experience. We will offer exclusive and custom content such as in-house electronic dance music mixes and live event recordings. We want to develop direct relationships with hardware manufacturers such as Pioneer and offer improved incentive structures to buy through Danceture.com by offering increased promotional discounts to our users, and eventually exploring branding our own recommended equipment that we review on our website. Once our content and users are established with our core products we want to improve the user experience by providing more premium and exclusive content. ! Current Offering ! Danceture has not yet been incorporated. We seek to raise $125,000 in capital to develop our site and content and to begin a direct sales effort for our advertising inventory. The capital will largely be used to build out the site’s infrastructure, hire an engineer, and fund a capable direct sales team. Summary - Income Statement 2010 121,312 130,787 2011 935,761 865,167 2012 4,350,194 1,330,167 Expense/Revenue Margin 108% 92% 31% Operating Profit (EBITDA) Operating Income Margin -9,475 -8% 70,594 8% 3,020,028 69% Cumulative EBITDA -9,475 61,119 3,081,147 Investing Income Capital Expense - - Earnings Before Taxes -9,475 70,594 3,020,028 Income Taxes @40% -3,790 28,238 1,208,011 Earnings Net Margin -9,475 -8% 42,356 5% 1,812,017 42% Revenue Expenses - Ending Cash Cash Flow from Operations MONTHLY June Revenues Expenses Net Income Revenues Expenses Net Income 0 10 -10 July 7,021 7,510 -489 August 14,042 22,267 -8,225 2010 September 21,063 25,100 -4,038 October 23,531 25,100 -1,569 November 26,288 25,400 888 December 29,368 25,400 3,968 Net Cash Provided from Financing Activities 125,000 Beginning Cash Ending Cash 125,000 124,990 124,990 124,501 124,501 116,276 116,276 112,238 112,238 110,669 110,669 111,557 111,557 115,525 59,347 64,500 -5,153 2011 June 66,987 75,333 -8,346 July 75,659 75,333 325 August 85,511 80,750 4,761 September 96,716 79,750 16,966 October 109,471 79,750 29,721 November 124,006 85,167 38,840 December 140,586 85,167 55,420 January 36,779 67,167 -30,388 Februrary 41,418 64,083 -22,665 March 46,668 54,083 -7,416 April 52,612 54,083 -1,472 May 115,525 85,137 85,137 62,472 62,472 55,056 55,056 53,585 53,585 48,432 48,432 40,086 40,086 40,411 40,411 45,172 45,172 62,138 62,138 91,860 91,860 130,700 130,700 186,119 January 159,519 101,833 57,686 Februrary 181,164 91,833 89,331 March 205,936 97,250 108,686 April 234,321 102,667 131,654 May 266,884 108,083 158,801 2012 June 304,286 108,083 196,203 July 347,298 112,083 235,215 August 396,824 116,250 280,574 September 453,922 121,667 332,255 October 519,834 121,667 398,167 November 596,018 121,667 474,351 December 684,188 127,083 557,105 186,119 243,805 243,805 333,136 333,136 441,822 441,822 573,476 573,476 732,277 732,277 928,480 928,480 1,163,695 1,163,695 1,444,268 1,444,268 1,776,524 1,776,524 2,174,691 2,174,691 2,649,042 2,649,042 3,206,147 Net Cash Provided from Financing Activities Beginning Cash Ending Cash Revenues Expenses Net Income Net Cash Provided from Financing Activities Beginning Cash Ending Cash Revenue Summary YEARLY Affiliates Advertising Ad Network TOTAL 2010 29,158 92,154 0 121,312 2011 187,079 591,262 157,419 935,761 2012 707,128 2,234,873 1,408,194 4,350,194 MONTHLY June Affiliates Advertising Ad Network TOTAL 0 0 0 0 July 1,688 5,333 0 7,021 August 3,375 10,667 0 14,042 2010 September 5,063 16,000 0 21,063 October 5,656 17,875 0 23,531 November 6,318 19,969 0 26,288 December 7,059 22,309 0 29,368 Affiliates Advertising Ad Network TOTAL January 7,886 24,924 3,969 36,779 Februrary 8,810 27,844 4,764 41,418 March 9,842 31,107 5,718 46,668 April 10,996 34,752 6,864 52,612 May 12,284 38,824 8,239 59,347 2011 June 13,724 43,373 9,890 66,987 July 15,332 48,456 11,871 75,659 August 17,128 54,134 14,249 85,511 September 19,135 60,477 17,103 96,716 October 21,378 67,564 20,530 109,471 November 23,883 75,481 24,643 124,006 December 26,681 84,326 29,579 140,586 Affiliates Advertising Ad Network TOTAL January 29,808 94,207 35,505 159,519 Februrary 33,301 105,246 42,617 181,164 March 37,203 117,579 51,155 205,936 April 41,562 131,357 61,403 234,321 May 46,432 146,749 73,703 266,884 2012 June 51,873 163,945 88,468 304,286 July 57,952 183,155 106,191 347,298 August 64,742 204,617 127,464 396,824 September 72,329 228,594 152,999 453,922 October 80,804 255,381 183,649 519,834 November 90,273 285,306 220,440 596,018 December 100,851 318,738 264,600 684,188 Costs Summary YEARLY Staffing Legal Ad Network Setup iPhone Application Server / IT Total Staffing Legal Ad Network Setup iPhone Application Server / IT Total Staffing Legal Ad Network Setup iPhone Application Server / IT Total 2010 121,667 8,000 0 0 1,120 130,787 2011 776,667 10,000 20,000 20,000 38,500 865,167 2012 1,224,167 10,000 0 0 96,000 1,330,167 MONTHLY January 46,667 10,000 10,000 Februrary 52,083 March 52,083 April 52,083 500 67,167 2,000 64,083 2,000 54,083 2,000 54,083 5,000 2,000 64,500 January 85,833 10,000 Februrary 85,833 March 91,250 April 96,667 May 102,083 6,000 101,833 6,000 91,833 6,000 97,250 6,000 102,667 6,000 108,083 2010 September 25,000 October 25,000 November 25,000 December 25,000 100 22,267 100 25,100 100 25,100 400 25,400 400 25,400 July 68,333 August 73,750 September 73,750 October 73,750 November 79,167 December 79,167 5,000 2,000 75,333 5,000 2,000 80,750 6,000 79,750 6,000 79,750 6,000 85,167 6,000 85,167 2012 June 102,083 July 102,083 August 106,250 September 111,667 October 111,667 November 111,667 December 117,083 6,000 108,083 10,000 112,083 10,000 116,250 10,000 121,667 10,000 121,667 10,000 121,667 10,000 127,083 June Staffing Legal Ad Network Setup iPhone Application Server / IT Total May 57,500 0 July 7,500 August 14,167 8,000 10 10 10 7,510 2011 June 68,333 10,000 5,000 2,000 75,333 Visitor Projections YEARLY Unique Visitors Linear Growth Geometric Growth Pageviews Linear Growth (Average) High Medium Low Geometric Growth (Average) High Medium Low 2010 2011 2012 MONTHLY 348,619 143,990 2,490,138 923,847 4,880,670 3,491,988 5,926,527 8,715,481 5,577,908 3,486,192 42,332,338 62,253,437 39,842,200 24,901,375 82,971,382 122,016,738 78,090,712 48,806,695 Geometric Growth New Visitors Linear Growth Geometric Growth 2,447,832 15,705,405 59,363,803 3,599,754 2,303,842 1,439,901 23,096,183 14,781,557 9,238,473 87,299,711 55,871,815 34,919,884 Pageviews Linear Growth (Average) High Medium Low Geometric Growth (Average) High Medium Low January Unique Visitors Linear Growth Geometric Growth New Visitors Linear Growth Geometric Growth Pageviews Linear Growth (Average) High Medium Low Geometric Growth (Average) High Medium Low March April July 2010 September October November December 0 16,601 33,202 49,803 66,404 83,005 99,605 0 8,333 16,667 25,000 27,929 31,202 34,858 16,601 8,333 16,601 8,333 16,601 8,333 16,601 2,929 16,601 3,273 16,601 3,656 0 0 0 0 282,216 415,023 265,615 166,009 564,431 830,046 531,229 332,018 846,647 1,245,069 796,844 498,027 1,128,862 1,660,092 1,062,459 664,037 1,411,078 2,075,115 1,328,073 830,046 1,693,294 2,490,137 1,593,688 996,055 0 0 0 0 141,667 208,333 133,333 83,333 283,333 416,667 266,667 166,667 425,000 625,000 400,000 250,000 474,801 698,237 446,872 279,295 530,438 780,055 499,235 312,022 592,594 871,461 557,735 348,585 2011 June May August July August September October November December 116,206 38,943 132,807 43,506 149,408 48,604 166,009 54,300 182,610 60,663 199,211 67,771 215,812 75,712 232,413 84,584 249,014 94,496 265,615 105,569 282,216 117,939 298,817 131,759 16,601 4,085 16,601 4,563 16,601 5,098 16,601 5,695 16,601 6,363 16,601 7,108 16,601 7,941 16,601 8,872 16,601 9,911 16,601 11,073 16,601 12,370 16,601 13,820 1,975,509 2,905,160 1,859,303 1,162,064 2,257,725 3,320,183 2,124,917 1,328,073 2,539,940 3,735,206 2,390,532 1,494,083 2,822,156 4,150,229 2,656,147 1,660,092 3,104,371 4,565,252 2,921,761 1,826,101 3,386,587 4,980,275 3,187,376 1,992,110 3,668,803 5,395,298 3,452,991 2,158,119 3,951,018 5,810,321 3,718,605 2,324,128 4,233,234 6,225,344 3,984,220 2,490,138 4,515,449 6,640,367 4,249,835 2,656,147 4,797,665 7,055,390 4,515,449 2,822,156 5,079,881 7,470,412 4,781,064 2,988,165 662,033 973,578 623,090 389,431 739,610 1,087,661 696,103 435,064 826,276 1,215,112 777,672 486,045 923,098 1,357,497 868,798 542,999 1,031,266 1,516,567 970,603 606,627 1,152,108 1,694,277 1,084,337 677,711 1,287,111 1,892,811 1,211,399 757,124 1,437,933 2,114,608 1,353,349 845,843 1,606,429 2,362,395 1,511,933 944,958 1,794,668 2,639,218 1,689,100 1,055,687 2,004,966 2,948,479 1,887,027 1,179,392 2,239,905 3,293,978 2,108,146 1,317,591 January Unique Visitors Linear Growth Geometric Growth New Visitors Linear Growth Geometric Growth Pageviews Linear Growth (Average) High Medium Low Geometric Growth (Average) High Medium Low Februrary June Unique Visitors Linear Growth Februrary March April 2012 June May July August September October November December 315,417 147,199 332,018 164,447 348,619 183,717 365,220 205,245 381,821 229,295 398,422 256,163 415,023 286,180 431,624 319,715 448,225 357,178 464,826 399,032 481,427 445,790 498,028 498,028 16,601 15,439 16,601 17,249 16,601 19,270 16,601 21,528 16,601 24,050 16,601 26,869 16,601 30,017 16,601 33,534 16,601 37,464 16,601 41,854 16,601 46,758 16,601 52,237 5,362,096 7,885,435 5,046,679 3,154,174 5,644,312 8,300,458 5,312,293 3,320,183 5,926,527 8,715,481 5,577,908 3,486,193 6,208,743 9,130,504 5,843,523 3,652,202 6,490,958 9,545,527 6,109,137 3,818,211 6,773,174 9,960,550 6,374,752 3,984,220 7,055,390 10,375,573 6,640,367 4,150,229 7,337,605 10,790,596 6,905,981 4,316,238 7,619,821 11,205,619 7,171,596 4,482,248 7,902,036 11,620,642 7,437,211 4,648,257 8,184,252 12,035,665 7,702,825 4,814,266 8,466,468 12,450,688 7,968,440 4,980,275 2,502,375 3,679,963 2,355,176 1,471,985 2,795,600 4,111,177 2,631,153 1,644,471 3,123,186 4,592,920 2,939,469 1,837,168 3,489,157 5,131,113 3,283,913 2,052,445 3,898,013 5,732,371 3,668,718 2,292,949 4,354,777 6,404,084 4,098,614 2,561,634 4,865,065 7,154,508 4,578,885 2,861,803 5,435,148 7,992,865 5,115,434 3,197,146 6,072,033 8,929,460 5,714,854 3,571,784 6,783,547 9,975,804 6,384,514 3,990,322 7,578,435 11,144,757 7,132,645 4,457,903 8,466,468 12,450,688 7,968,440 4,980,275