Mikaela Allen & Jad El Alam

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Mikaela Allen & Jad El Alam

Acknowledgements
A special mention to Alexandre Perrin, teacher, supervisor and colleague in this endeavor,
without whom we would not have been able to tackle the challenges and doubts this project has
brought up. We would like to thank him for tremendous help he has been all year long through
this project as well as in classes; his contribution has been invaluable in the completion of this
project and degree.

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Table of Contents
EXECUTIVE SUMMARY

3

COMPANY DESCRIPTION & MISSION
5

COMPANY STRUCTURE

6

TEAM

7

ANALYSES

8

EXTERNAL ANALYSIS

MARKET ANALYSIS

15

SEGMENTATION
RESEARCH
RESEARCH RESULTS

18
19

INTERNAL ANALYSIS

23

COST ANALYSIS

28

OPERATIONAL & MARKETING STRATEGY
GANTT DIAGRAM

38
42

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APPENDICES and BIBLIOGRAPHY

43

EXECUTIVE SUMMARY
In today’s digital world, music has become widely accessible with the potential to reach a global
audience. With the emergence of music discovery sites like YouTube, Spotify, etc., artists no
longer need to be signed to a major record label in order to have a sustainable career. The
unheard voices of independent and unsigned music genres now have a digital landscape to
develop their careers--all they need now is vehicle to be that driving force. More specifically,
current platforms do not offer the sufficient financial support that independent artists require to
jumpstart their careers. P(£)ayback seeks to be that driving force providing a platform where all
aspects of an unsigned artist’s content can be streamed, sold, or downloaded in one place.
The UK digital music industry became an evident choice in placing the company on the map.. In
2013 along IFPI reported “3.5 Billion dollars in revenues”. 1 In addition 39% of UK music industry
revenues have come from digital channels.2 That combined with a huge number of working
independent and unsigned artists we feel that the United Kingdom is the best location to launch
our service. 87% of users also still prefer owning their music that merely streaming.3 P(£)ayback
allows for the purchase and streaming of music thus appealing to this population and their
biases on consuming musical content. Our analysis of these figures suggest low barriers to
entry in the UK Digital music market and thus a perfect environment for P(£)ayback to thrive.
As such, P(£)ayBack will act as a limited liability company in the city of London in the United
Kingdom and the team and the formalities that will enable the platform to exist must be taken
into account. We will register with an executive agency of the Department for Business,
Innovation and Skills called Companies House. In the development of the company over time,
shares will be publicly traded on a market and P(£)ayBack will transition into a public limited
company. The actualization process is fairly simple due to the low costs associated with
establishing a company in the United Kingdom. For £20, a company can be set up in about 10 to
14 days by the Companies House. As a Limited Liability company however, a Corporation Tax
must be considered. In the years focusing on the altering and creation of the platform, five
members will act as directors for the company. This group would include Jad El Alam, Mikaela

"IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf (accessed April 27, 2014).
IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf (accessed April 27, 2014).
3
"Is Streaming the Next Big Thing? - What Consumers Want." Music Business Research.
http://musicbusinessresearch.wordpress.com/2013/10/18/is-streaming-the-next-big-thing-what-consumers-want/#_ftn2 (accessed May 1, 2014).
1
2

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Mikaela Allen & Jad El Alam

Allen, Jeremy Carrion, Jane Kim, and Neda Shahram whose relevant personal and professional
backgrounds can only contribute to the creation of the company.
With major players already being solidly established, one can assume that the streaming market
we are analysing is in a state of oligopoly. Indeed, Spotify, Youtube, Soundcloud, and Grooveshark
are established as household names for online and mobile streaming platforms for music and
video content. However, a company like P(£)ayback is in a more direct competition with young
start-ups by the likes of Bluefrog, Lizzar and other players hereto and less so with the major
players. The existence of strong customer - brand loyalty ties represents a barrier to entry.
However, this relationship does not exist yet because of the novelty of the type of service we
offer. Therefore, the barriers are lowered. If we penetrate this market and gradually capture a
significant market share, we can leverage the network effect to our advantage and subsequently
raise the barriers to entry. Therefore, we could be seriously limiting further competition once we
have started running our activities. Once P(£)ayback launches we believe that with the services
being provided along with our structure will give us the advantage of being pioneers and thus
giving us a competitive advantage against our competitors. We believe that entering the industry
at a low rivalry point only works to our benefit as we will attempt to be the ones raising the
barriers of entry.
We are confident that music aficionados will use P(£)ayback because it’s an all-in-one platform
that provides a unique experience where one can discover new artists and music and connect
with their content through a faster and easier interface. However, because there are various
platforms and services that provide some of our services, users still can easily get distracted to
use other products instead of our platform. High threat of substitute products could make it our
product less attractive and decrease profit potential for P(£)ayback. Contextualized with results
from our external analysis, it can be seen that as advertisers and subscribers’ low levels of
concentration in their respective fields can lead to more attractiveness; that advertisers would
experience low switching costs, and though subscribers experience high switching costs, the
partitioned dependence on both types of customers neither decrease or increase attractiveness;
that the majority of the total cost will depend upon advertisers whose bargaining power
increases; and that overarching all of the five forces is the substantial increase of attractiveness
when the capacity to coordinate is considered. The main suppliers of our content are the
unsigned artists that would be utilizing our platform. While there are some elements that provide
these artists with more weight in terms of bargaining power, but overall, P(£)ayback holds a
majority reign which is illustrated in a five forces diagram.
In our market analysis, the level of exposure and the number of revenue streams that can be
benefited from were chosen as units of measurement for segmenting our future clients. The
level of engagement with digital content and whether the consumer is passive or active in music
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Mikaela Allen & Jad El Alam

discovery were chosen as units of measurement for mapping our future consumers. In essence,
P(£)aybackers can be described as active music listeners, or music aficionados, who are the
most social and invested type of fan. They are the target audience for P(£)ayback as they will be
the ones most likely to use our service and engage with an artists online community. The Next
Big Thing and Kickstarters are up and coming unsigned artist with varied sources of revenue (i.e.
youtube, spotify, bandcamp, distribution channels, merchandise, etc.) This artist is looking to
consolidate their content in one place and to engage with their fan base in new ways, making
them the ideal candidate as a P(£)ayback artist. Lending itself to the same, qualitative and
quantitative research methodology was employed to illustrate that there exists a niche market
for our service.
In our financial analysis we have defined scenarios for P(£)ayback to break even and we firmly
believe that with these figures we can at least break even on the first year out. We believe that
the new, innovative nature of the service we intend on offering allows the platform to fall into the
category of small entrepreneurial companies. Therefore, P(£)ayback falls into the Introduction
stage of the industry’s life cycle and it is deduced through research and analysis that the future
is bright. The vision behind the P(£)ayback idea is to build a catalog of unsigned artists that we
feel have the potential to reach a wider audience and facilitate their exposure. Our platform will
foster an online community where fans will be able to engage with their favorite artists and all
their musical content.
P(£)ayback differentiates itself from its competition by focusing on the quality of the
catalog rather than on its volume. It will be a careful blend of Artist & Repertoire with unsigned
and music discovery, made available on a digital platform. Not only are we providing fans with
the ability to get all the content in one place, but also providing the gateway for the fan to be a
part of the creative process of an artist.

COMPANY DESCRIPTION & MISSION
In today’s digital world, music has become widely accessible with the potential to reach a global
audience. With the emergence of music discovery sites like YouTube, Spotify, etc., artists no
longer need to be signed to a major record label in order to have a sustainable career. The
unheard voices of independent and unsigned music genres now have a digital landscape to
develop their careers--all they need now is vehicle to be that driving force. More specifically,
current platforms do not offer the sufficient financial support that independent artists require to
jumpstart their careers. P(£)ayback seeks to be that driving force providing a platform where all
aspects of an unsigned artist’s content can be streamed, sold, or downloaded in one place.
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Mikaela Allen & Jad El Alam

The vision behind the P(£)ayback idea is to build a catalog of unsigned artists that we feel have
the potential to reach a wider audience and facilitate their exposure. Our platform will foster an
online community where fans will be able to engage with their favorite artists and all their
musical content.
P(£)ayback differentiates itself from its competition by focusing on the quality of the
catalog rather than on its volume. It will be a careful blend of Artist & Repertoire with unsigned
and music discovery, made available on a digital platform. We are not only providing fans with
the ability to get all the content in one place, but also providing the gateway for the fan to be a
part of the creative process of an artist.
This way, the fan feels as though they have an integral part in the creation of the music they like
and the artists they want to support. In the beginning stages of an artists career, a solid support
system is key. P(£)ayback is the platform that allows the artist and fan to create their own
communities.
From a consumer’s point of view, P(£)ayback represents a hassle-free music discovery
experience. It aggregates all of the dimensions mentioned above onto one platform. People
appreciate it when they don't have to go through a lot of trouble to get what they want. With
P(£)ayback, you take out the effort the fan has to put forth to discover an artist in every way
available.
COMPANY STRUCTURE

Legal Status
P(£)ayBack will act as a limited liability company in the city of London in the United
Kingdom. In the years focusing on the altering and creation of the platform, five members will
act as directors for the company. This group would include Jad El Alam, Mikaela Allen, Jeremy
Carrion, Jane Kim, and Neda Shahram. To anticipate the launch of our platform, we will register
with an executive agency of the Department for Business, Innovation and Skills called Companies
House4 . Although all five members will serve as directors on the board, Jad El Alam, the founder
of P(£)ayBack, is the nominated director for the registration with Companies House.
Ownership
While it is not compulsory that directors own shares, the owners of Team P(£)ayBack will each
own 20% of the available shares. With the uncertainty of starting any business, the choice to
categorize P(£)ayBack as an LLC will guarantee a higher level of protection should issues arise. In
the primary stages of advancement for P(£)ayBack, it would associate with private limited
4

"Setting up a Business in the UK ." Enterprise Europe Network London. http://www.londonchamber.co.uk/DocImages/7706.pdf (accessed May 1,
2014).

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companies in the limited liability sector only offering shares to the five directors. P(£)ayBack will
be limited by shares in that the financial responsibilities of the company are limited to the value
of shares each director owns but hasn’t paid for5 . In the development of the company over time,
shares will be publicly traded on a market and P(£)ayBack will transition into a public limited
company6.

Tax and Financial Duties
The cost associated with establishing a company in the United Kingdom is very minimal
for Limited Liability companies. For £20 a company can be set up in about 10 to 14 days by the
Companies House7 . As a Limited Liability company however, a Corporation Tax must be
considered. The directors would pay income tax on their salaries in addition to any future
employees. For any profits under £300,000 or less, a tax rate of 20% must be paid. In addition
to this tax, Income Tax and National Insurance are also necessary.
The amount of income tax varies depending on the amount of profit made by P(£)ayBack.
Once the company evolves to a point where employees are necessary, this tax is required to be
deducted from their wages and salaries and paid to HM Revenue and Customs8. National
Insurance is also needed when adding new members to the P(£)ayBack team in order to account
for retirement pensions, unemployment, and incapacity benefits.

TEAM

Jad El Alam
Former independent musician with a background in DIY music, bedroom studio production,
self-managed band, self-published music etc. WIth prior education in International Business &
Economics, he is responsible of overseeing all of the financial operations that P(£)ayback
undergoes. With prior work in Bar/Restaurant management, he has some of the experience and
skills to lead a team of people as well as manage them towards the same goal.
Mikaela Allen
Mikaela has studied the ins and outs of the music business for the past four years. Focusing in
the sector of Marketing, she has used this information to heighten her experience in the field
interning at the Legendary Harvard Square venue, Club Passim in their marketing and promotions
5

"Tell us what you think of GOV.UK." Choose a legal structure for a new business. https://www.gov.uk/business-legal-structures/limited-company
(accessed May 1, 2014).
6
This can only happen after P(£)ayBack is sustainable enough to issue shares with a value of at least £50,000 or the prescribed equivalent in euros
before the company can start trading http://www.londonchamber.co.uk/DocImages/7706.pdf (accessed May 1, 2014).
7
"Companies House Prices." Companies House Gov. http://www.companieshouse.gov.uk/toolsToHelp/ourPrices.shtml#LLPs (accessed May 1,
2014).
8
"Setting up a Business in the UK ." Enterprise Europe Network London. http://www.londonchamber.co.uk/DocImages/7706.pdf (accessed May 1,
2014).

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department. Her interest in digital platforms began with her internship at Spotify as a brand
ambassador. This sparked her interest in new and innovative music discovery platforms and led
to wanting to create one that encompasses all the needs of an artist and a fan. At P(£)ayback,
her primary activities concern the creation and functionality of both online and mobile versions
of the platform.

Jeremy Carrion
Jeremy Carrion began his music industry career working as a Social Media/marketing intern for
San Diego based talent and booking agency, Sleeping Giant Music. There he managed social
media pages for artists in the Sleeping Giant Music roster as well as assisting in developing and
executing new marketing strategies. He later went on to work as a College Marketing
Representative for Red Bull Records, collaborating with events, programs, stores, and more to
enhance the reach of Red BUll Records and its array of artists.
His experience combined with his academic background at both the University of California San
Diego and Berklee College of Music Communication make him an ideal candidate to help guide
the marketing direction of P(£)ayback.

Jane Kim
Jane was an artist manager and an online marketing director at a Korean major label for
numerous years. The main act she managed was the most viewed K-Pop artist on Youtube in
2011, an opening act for the Jonas Brothers World Tour in 2009 and Justin Bieber’s concerts in
2010. Also the group was the first Asian group to break Billboard 100 in 30 years. As an Online
marketing director, she managed artists’ facebook, twitter and other social networking sites,
generating more than 1.5 million likes on facebook and raising over 400,000 followers on
Twitter by interacting with the artists’ fans.
From her background communicating and dealing with numerous artists, Jane is in charge of
reaching out to the chosen artists regarding their content for P(£)ayback and also to assist the
artists to collaborate with other artists as well.
Neda Shahram
Former independent musician and current independent contractor for attorney Martin
Frascogna. She specializes in artist visas and Middle Eastern Expansion. Her involvement began
in the Iranian music industry with her father, Saeed Shahram, who is an award-winning film
composer while remaining an active musician herself, touring China as a member of the Beijing
Olympic Orchestra. After working at One, LLP and Steve Gordon Law, Neda’s global experience
grew quickly in North America while attending Berklee College of Music and Berklee Valencia.
Now advocating for transparent music globalization, Shahram helps a signature roster of clients
navigate immigration law and serves as the legal representative for P(£)ayback.
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Jad El Alam and Mikaela Allen are the founders of the company P(l)ayback, however, the
remaining three contributors aforementioned have supplied valuable time to the development of
this project. Within their fields of expertise, whether it being Legal, Marketing or Industry Analysis,
the additional value that these members have brought to the project makes them the first
candidates to be considered in the eventuality that this enterprise comes to fruition.

Porter’s Five Forces Model

EXTERNAL ANALYSIS

Competitors

Substitutes

blueFrog

Indie Music Blogs

Lizzar

Indie Internet Radio

Looplay

Spotify

The Atmosphere

Soundcloud

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Lyynks

Grooveshark

Emerging Ibiza

Youtube

Barriers to entry:
With major players already being solidly established, one can assume that the streaming market
we are analysing is in a state of oligopoly. Indeed, Spotify, Youtube, Soundcloud, and
Grooveshark are established as household names for online and mobile streaming platforms for
music and video content. However, a company like P(£)ayback is in a more direct competition
with young start-ups by the likes of Bluefrog, Lizzar and other players aforementioned and less so
with the major players. Therefore the young nature of the market we are setting-up in, we cannot
qualify it as either a monopoly or an oligopoly.
According to Moffatt’s theory of market power of advertising (2008), the established image
and brands of these important competitors represent a challenge for a new player’s image to
shine through and get noticed. Because our competitors’ images aren’t yet established, it makes
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it easier for a new entrant like us to represent a potential substitute with the help of a
consequent advertising/marketing campaign. This lowers the level of barriers to entry.
This previous point ties in with the matter of existing customer loyalty towards the players that
are established. Again, the question of perfect substitution of an existing product or service for a
new one like ours presents a realistic situation that has potential to occur. The existence of
strong customer - brand loyalty ties represents a barrier to entry. However, this relationship does
not exist yet because of the novelty of the type of service we offer. Therefore, the barriers are
lowered.
Shapiro (1999, Information Rules) mentions the network effect to have an important impact on
a specific market’s threat of new entrants. He describes the challenge as lying in a situation
where existing players have captured a significant customer base. However, none of the players
are fully established or even launched. Therefore, none of them have indeed captured a
significant customer base. Or at least not yet. This argument lowers the barriers to entry to this
market. Furthermore, if we manage to penetrate this market and gradually capture a significant
market share, we can leverage the network effect to our advantage and subsequently raise the
barriers to entry. Therefore, we could be seriously limiting further competition once we have
started running our activities.
Competitive Rivalry
At the moment the competitive rivalry for P(£)ayback is low, standing at a 3. We realize that
when entering a market we want that number to be low enough to enter the market but also high
enough to keep unwanted competitors out. As it stands that market is considered to be very
fragmented where there is no one company exerting any influence of dominance. New
companies that are attempting to provide similar services to that of P(£)ayback are either in
their berts testing phase or still waiting until to be launched. The only competitor to have fully
launched is blueFrog and they focus on a niche market. Regardless none of these platforms
provide the same array of services still do not hold enough clout to be considered as dominating
this particular market.
Once P(£)ayback launches we believe that with the services being provided along with our
structure will give us the advantage of being pioneers and thus giving us a competitive
advantage against our competitors. We believe that entering the industry at a low rivalry point
only works to our benefit as we will attempt to be the ones raising the barriers of entry.
P(£)ayback sustainability will depend on the value we create from providing our service to
unsigned/independent talent, music aficionados and fans alike. We seek to develop a unique
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experience for the artists and the fans. We are very transparent in our focus to provide a service
to consolidate an artists overall content in one place to better reach new fans and engage with
the one they already have. This is evident in the way we acquire revenue from subscriptions,
advertising, and sponsorships.
Threats of Substitute Products
P(£)ayback’s threat of substitute products is very high as it stands at 8. This is because there are
multiple music platforms such as Spotify, Grooveshark, SoundCloud and Youtube. In addition
there are independent blogs, Internet radio, music sites, social media, and other sources of
artists discovery that can introduce new artists and music to our potential consumers
We are confident that music aficionados will use P(£)ayback because it’s an all-in-one platform
that provides a unique experience where one can discover new artists and music and connect
with their content through a faster and easier interface. However, because there are various
platforms and services that provide some of our services, users still can easily get distracted to
use other products instead of our platform. High threat of substitute products could make it our
product less attractive and decrease profit potential for P(£)ayback.
To prevent P(£)ayback users from switching over to different platforms, our focus is to maintain
the perception of our service as being beneficial for the unsigned artists and present customers
with satisfying content. Also the product quality will be superior by paying back the artists what
they deserve and providing quality service to the consumers.

Consumers Bargaining Power

In the fourth force, the clout of (a) our advertisers and (b) subscribers are assessed in order to
illustrate that because both types of consumers are in fragmented industries where there is a high
level of competition, P(£)ayback can effectively set the prices and negotiate with the upper-hand for
the music discovery platform business. The following will evaluate both types of consumers with
each of the four corresponding criterion.
1. Concentration of Customer’s Industry
*Both experience LOW levels of concentration in their industries
*Less clout
*Attractiveness increases
(a) Advertisers - In any fragmented industry, competition is high as there are many
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the

players and low barriers to entry. For the purpose of this analysis,
this becomes favorable to P(£)ayback’s benefit because the platform
has a plethora of partners to choose from when deciding who to allot
screen real estate. For example, Future Music Magazine9 based in UK
contains various upcoming softwares and tools for musicians that are
useful during the creation process. Since this industry is also
fragmented, the bargaining power of the developers would be lower
than P(£)ayback’s as our clientele’s metadata is valuable information for
sustainability of their up and coming devices.
(b) Subscribers - As there are multiple music discovery platforms, the subscribers clout
as music discoverers matches a many-to-many model furthering the
fragmentation of the industry for both types of our consumers. It is due
to the fact that there are many potential customers that P(£)ayback is
not bargaining with a limited pool of future clients.

2. Switching Costs for Consumer
*Advertisers experience low switching costs
*Subscribers experience high switching costs
*Moderate clout
*Attractiveness neither increased nor decreased
(a) Advertisers - Despite the fact that advertisers prioritize reputation, the advertisers
that are targeted as mentioned supra will have no substantial switching
costs and considering the additional exposure that they would be
earning is adequate enough to decrease their clout during negotiations
for screen real estate.
(b) Subscribers - Though there is little to no clout from the advertisers in terms of
switching costs, the subscribers high switching costs balance the
attractiveness of the situation to 0 regarding this criteria. The time it
takes to get used to any new interface and availability of piracy for the
retail aspect of P(£)ayback are the logic behind the consumers’ clout
here.
3. Proportion of subscription income and advertising income in the total cost
*Advertisers account for an obtuse amount of the total cost
*Subscribers account for a moderate amount of the total cost
9

"MusicRadar.com." Computer Music Magazine. http://www.musicradar.com/computermusic/ (accessed May 1, 2014).

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*More clout
*Attractiveness decreases
(a) Advertisers - The clout of the advertisers is more than that of P(£)ayback here as the
transactions between the two parties create a majority of the total
income for the platform.
(b) Subscribers - The attractiveness based on this criteria continues to decrease in this
instance as the subscribers also account for a moderate amount of the
total cost in the beginning--but, in the future, P(£)ayback counts on the
A&R of the subscribers to reduce its costs as will be discussed in the
most important criteria before.
4. Capacity to Coordinate
*Advertisers experience no capacity to coordinate
*Subscribers experience an enormous capacity to coordinate
*Less clout
*Attractiveness increases substantially
(a) Advertisers - By nature, advertisers cannot experience any capacity to coordinate as
they are in direct competition with the other advertisers who compete
for the screen real estate. From this stance, the attractiveness remains
unchanged, however;
(b) Subscribers - The main slant in the Porter’s Five Forces diagram for P(£)ayback rests
in this criteria. This is due to the co-creative nature of the platform and
delegation of respected opinion granted to subscribers whose voice is
amplified through artist recommendations and ability to coordinate
with other artists and fans to the fullest extent through the new music
discovery experience.

Bargaining Power of Suppliers
The main suppliers of our content are the unsigned artists that would be utilizing our platform.
While there are some elements that provide these artists with more weight in terms of
bargaining power, overall P(£)ayback holds a majority reign which results in a lower level of 2 on
the five forces diagram. When considering the differentiation of inputs made by our suppliers,
they have a higher bargaining power. This is due to the fact that when we select our catalog
from the pool of talent we are provided with our goal is to not discriminate against any certain
genre or restrict artistic creations. We encourage our artists to explore the various realms of
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expression and express their work in a way that represents them as unique and individuals.
That being said, the level of differentiation between our suppliers and the wide range of styles
collected by P(£)ayback our ability to produce a variety of substitute inputs. Considering we are
focusing our efforts on the unsigned artists, our market of suppliers is one that will never run out
of content. With the creation of various programs, equipment, and software that allows an artist
to create their work from the comfort of their own homes on their computer, more and more
artists are able to provide musical content quickly, easily, and cheaper than before. This allows
us to have a never ending pool of music to add to our catalog even if other suppliers transition to
alternative platforms.
Since P(£)ayback is in a fragmented market, our suppliers are also quite fragmented. Seeing that
we are dealing not only with unsigned artists who would usually conduct their business on their
own, but also with artists who are in the premiere stages of their career, they have less weight
than an already established artist would have. Because of this, we are able to have more control
over the fees we charge and the prices we set for our catalog and platform. Another key point to
mention is our 80/20 monetary distribution term. Considering we are already providing these
artists with a better deal than they would get going through other platforms, they have a higher
likelihood of seeing the value in P(£)ayback and the reasoning behind our fees.
Lastly, the artists on our platform are able to upload 20 minutes of content for three and are
then able to purchase additional space if needed. P(£)ayback does provide them with 80% of
their generated revenue, but we do not spend any money for the artist to supply the content. If
anything, the artist ends up paying us to utilize the platform so the cost relative to the other
expenses we will incur being in this industry will be a negative number.

Segmentation

MARKET ANALYSIS

#1.CRITERIA
(a) Clients:
· Varied Income measured by the number of revenue streams
· Volume of following measured by fans compiled on corresponding sources of income online
The level of exposure and the number of revenue streams that can be benefited from were
chosen as units of measurement for mapping our future clients. This way we are able to have a
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clear vision on which artist we are featuring on the catalogue and choose less known artists (for
example) in order to increase the element of music discovery. The number of revenue streams
that can be benefited from is a measure that allows us to gauge how much media the client has
to offer to a potential consumer base. Additionally, it lets us see how well we will be able to
contribute to a specific client’s exposure campaign, and how much material will be at our
disposition to work with in doing so.
This will help us in trying to predict how profitable a client is. It is also a dimension that allows us
to forecast potential revenue and profit generated from separate streams like the purchase of
additional content space. These factors considerably help in determining the exposure of our
artist clientele by computing an average following with the varied revenue streams. This
correlation can help determine if a conglomerate space on our screen estate can be the best
option for the artist to join P(£)ayback because an independent artist with many followers
spanned across many platforms that generate revenue will be a more efficient use of the
service compared to an artist who has a few number of fans on an acute number of platforms
and has ultimately, no following. In essence, these fan-to-platform calculation can help the fan
exchange take place on our platform and increase exposure for independent artists.
(b) Consumers:
· Level of Engagement with artist-related content measured by hours of interaction/day and
money spent on said activities/day
· Passive or Active method of music discovery measured by prioritization of internet radio,
referrals from word of mouth (passive), plus similar music discovery methods and attendance of
live concerts, online research, etc (active)
The level of engagement with digital content and whether the consumer is passive or active in
music discovery were chosen as units of measurement for mapping our future consumers. The
first criterion allows us to focus on specific market segments that respond positively to the type
of media we intend on distributing. It also allows us to analyse the consumption habits of the
given segments, as well as their spending habits. The more responsive and engaged they are
with the content provided by artists, the more our service answers to their needs. The second
criterion was chosen to determine whether a consumer takes part in the process of music
discovery, or if new music is introduced to him through his social circle. This way we will be able
to carefully develop our service based on demographic research and thus deliver efficiently.

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Mikaela Allen & Jad El Alam

#2. MAP

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Mikaela Allen & Jad El Alam

#3.FOCUS

Segments
Consumer
Active Music listeners (Music Aficionados): The most social and invested type of fan. The
Superfan, the active music listeners engage in all aspects of an artists music, social media, and
content. This fan is active in discovering new music and regularly engages with it. This is the
target audience for P(£)ayback as they will be the ones most likely to use our service and engage
with an artists online community.
Client

The Next Big Thing / Kickstarter: An up and coming unsigned artist with varied sources
of revenue (i.e. youtube, spotify, bandcamp, distribution channels, merchandise, etc.) This artist is
looking to consolidate their content in one place and to engage with their fan base in new ways.

Marketing Research
#4.TYPE
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Mikaela Allen & Jad El Alam

Qualitative (Artists) & Quantitative (Fans)
#5. RESEARCH STRATEGY
Qualitative (Artists)
· Delivery method(s)
(a) Interviews
(b) Focus groups
· Sampling method(s)
(a) A relevant sample will include artists whose personality aligns with our target segment of
clients, Next Big Things and Kickstarters, who are defined by their accumulated following and
varied revenue streams in order for their responses to pertain as much as possible toward the
likelihood of joining P(£)ayback.
(b) A representative sample will include a median age of 27, a proportional balance of males
and females, and a ranging income range from 25k and under to 40k and above.
(c) A significant sample for the purposes of a qualitative approach will be sufficed by a size of
10 artists maximum in a focus group and up to 6 individual in-person interviews.
· Channel(s)
(a) These samples will be conducted in Berklee classrooms.

Quantitative (Fans)
· Delivery method(s)
(a) Survey
· Sampling method(s)
(a) A relevant sample will include fans whose personality aligns with our target segment of
consumers, Super Fans and Aficionados, who are defined by their high levels of engagement with
content and active music discovery in order for their responses to pertain as much as possible
toward the likelihood of using P(£)ayback.
(b) A representative sample will include a median age of 22, a proportional balance of males
and females, and a disposable income range from 1k and under to 10k and above.
(c) A significant sample for the purposes of a quantitative approach will be sufficed by a size of
75 fans minimum who will be given a 5-10 response questionnaire.
· Channel(s)
(a) An online survey website
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Mikaela Allen & Jad El Alam

P(£)ayBack Market Research Result
Clients : Unsigned Artists
Average age: 24
Gender: 50% Male, 50% Female
Location: 50% Europe, 40% United States, 10% Asia
60% of unsigned artists who took our survey made less than 2000 euros per year with music.
About 70% of them spent less than 100 euros on discovering music physically per year and 90%
said they spend less than 100 euros on discovering music digitally. 58% of them look for a new
connection to collaborate less than once a month. Artists thought it would help them to engage
with their fans when they send out newsletters, create community forums, share their calendar,
communicate with the fans on their social networking sites like facebook and twitter. 58% of
them said it’s extremely important to develop fan community. Most of them are interacting with
their fans on their own social networking services sites. For an all in one music platform service,
they mentioned that struggling musicians don’t want to pay but 70% of them did say they would
pay about 5 euros a month. 66% said they would definitely or probably pay for the service.
Customers : Active Music Listeners, Music Aficionados
Age: 19-31
Gender: 50% Male, 50% Female
Location: 37% Europe (5 UK), 52% United States, 11% Asia
38% of our customers had less than 2000euros for their annual income. 50% of them spend
less than 100 euros on discovering music physically per year, and 88 % of them spend less than
100 euros on discovering music digitally. Most of our potential customers discovered new music
and artists through online, friends. A lot of them had mentioned twitter, billboard, youtube,
Spotify, itunes as their to-go platforms to discover music, there were also answers like
soundcloud, blogs, radio and shazam. Only 5% of them said these platforms are very effective.
And 40% of them said they are somewhat effective. Only 5% of the survey takers marked
discovering new music was very easy. 62% of them use internet for more than 15 hours a week,
and 43% of them listen to music more than 15 hours a week. 36% said it’s somewhat important
to discover new music and artist and 14% said it’s extremely important. They look for talent,
unique voice, content, quality of music, good lyrics, differentiation, and originality. These
customers want to the artists to provide exclusive content and free downloads, communicate
with them more often, have web-chat sessions and give them information how they write music.
They said they would more likely to purchase music content from an artist after being
approached with good content, live shows, giveaways and meet and greet. 40% said they would
be interested to access exclusive artist content. The price most of them preferred were of
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Mikaela Allen & Jad El Alam

course for free (45%) but 36% of them said they are willing to pay 5 to 10 euros for the all in one
platform.
*Note: All supporting graphs and datas are included in the appendices section.
(Figure 1-Figure 16)

Clients
In order to ensure P(£)ayback’s functionality, ease, and beneficiary relationship with companies
and artists, it will be important to assess our client’s needs. Our clientele would include artists as
well as representatives from independent record labels. When gathering the necessary data of
our future or potential clients, we decided to go with a qualitative research strategy. This will
entail the organization of focus groups and one on one interviews to gauge the values of our
clients with specific attention to the topics of functionality, aesthetics, and rapport between their
brands and their audience. Through this investigative research, we will be able to make more
sound and informed decisions with our client segment.
Functionality
In order to get a clear idea of what is desired in the functionality of the platform, we will be
conducting focus groups and user testing for the platform. In the initial stages of development
focus groups will be utilized to get basic analytics behind favorable as well as unsatisfactory
conditions behind general platform performance. This would include the exchange of
experiences using alternative platforms as well as suggestions in what was missing from them.
To get a broad group of people involved in this investigation, we will be conducting these focus
groups both online and in person. Virtually we will get more responses, but to have this
conversation in person there would be a greater chance of conversational development. In the
later stages of platform development when our prototypes will be in their testing stage, we would
call on our clients to analyze and inspect our platform and provide their feedback.

Aesthetics
Artists tend to place high importance on their personal brand aesthetic whether it be in a
physical or digital space. It is necessary that the overall look of our platform is one that can
represent the artists in the correct light. With the assistance of focus groups we will be able to
get a clear idea of what is favorable through the eyes of the artists. Additionally, through
assessment of existing artists websites and pages we can identify the similarities behind what
works and has been successful.
Rapport
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Mikaela Allen & Jad El Alam

There are wide ranges of methods used by both industry professionals and musicians alike to
engage their consumers. One of the main values behind P(£)ayback is providing a space where
fans and artists can come together and communicate so the analysis of how people do so
currently is integral research for us to assess. Artists that are familiar with doing their own
marketing and promotional activities usually possess a variety of innovative approaches to
community engagement that are looked over at times and we believe that pool of people will
provide a great source of information for P(£)ayback.
To collect this information we will be conducting in person and Skype interviews to get the insight
of a variety of artists that is provided to us through the Berklee community, but also to converse
with independent record labels that do business in our target market, the UK.
Consumers
When assessing the consumers in our target market, a quantitative approach would prove more
beneficial. Through the use of an online survey, we will be able to analyse the overall consensus
of our target market. With our existing data we will receive from our independent research, we
will be able to formulate questions to get the necessary data from our prospective users. By
targeting the specific areas where we feel as though our platform can thrive, we can investigate
the wants and needs of our consumers. Getting a good read of what our potential users would
want will assist us in deciding final courses of action regarding P(£)ayback.

B2C

The Fans

Consumer
Types

· Ages (15 - 30)
· Disposable Income (TBD)
· Location (U.K.)
· Life-style (time spent with computer)

Consumer
behavior

Needs

· Consumption Volume (hours and money/week)
· Type of mobile device

· Price Sense: (cite Business Wire article)
· Quality Sense (level of taste development)
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Mikaela Allen & Jad El Alam

· Innovative Positioning (since when have you been using
each social media platform)

B2B

The Artists

Client
Types

· Ages (20 - 35)
· Gender neutral
· Annual revenue
· Location (U.K.)
· Unsigned/Signed
· Following

Client
behavior
Needs

· Volume of Distribution
· Current distribution channels
· Satisfaction levels with current platforms

INTERNAL ANALYSIS
Industry Life Cycle of the Digital Music Discovery

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Mikaela Allen & Jad El Alam

We believe that the new, innovative nature of the service we intend on offering allows the
platform to fall into the category of small entrepreneurial companies. Therefore, P(£)ayback falls
into the Introduction stage of the industry’s life cycle. We could even go further and say that
P(£)ayback falls into the Embryonic stage of the life cycle. Indeed, this would offer a more
accurate placement of the company since it is still considered as a ‘question mark’ because its
success is still to be determined as we have not started running operations.
This therefore implies that our first efforts will be to focus on early adopters and innovators. As
far as Marketing is concerned, being placed in this stage would imply that we ought to explain
what the product is about to potential customers. We would aim to create and then raise
awareness for the product and service we offer. This also means that we need to convince our
partners and music suppliers of the advantages of being in business with us.
We can consider P(£)ayback to be even younger than its competitors because none of them
offer the same concept, experience, service, or product. One of our more direct competitors,
Bluefrog, would be considered in the introduction stage to demonstrate the young nature of the
industry we are entering. Other direct competitors that haven’t launched their services yet such
as Lyynks Music, Lizzar, or Enter the Atmosphere could be plotted on the diagram above in the
introduction stage as well. However, they focus solely on providing streaming and/or
downloading services for music content. Therefore we are able to dismiss them as being within
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our industry because of the different nature of our activities.
Value Chain

Primary Activities
● Inbound Logistics
○ Storing Content
○ Sharing and Receiving Content
○ Managing Artist Content
Music and all related content is received directly from the artist onto the platform through a
user-friendly interface. The content is stored on standardised artist pages, making the
experience homogeneous all throughout for both the artists and the customers. The artists and
the content will be managed internally. Since we function on the premise of a curated
catalogue, we need to be able to renew the catalogue with the help of our customers (A&R
privileges through subscription) and let go of some of the content on a regular basis.
● Operations:
○ Delivering Artist Content
○ Technological Development and Maintenance
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Mikaela Allen & Jad El Alam

○ Maintaining Relationships
○ Packaging and Presenting Artist
One of the main operating activities will be delivering artists’ content to the customers. This
will be initiated by A&R team who will search for unsigned and independent artists to be
presented on the website and provide various services to fans and music aficionados.
Operational activities include the website development activities, maintenance, and
maintaining the relationship with the clients and customers. Our primary activity is to contact
artists, collect artists’ content to supply the customer with. Packaging and presenting the
artists on P(£)ayback’s catalogue with consistant new updates will be the key activity. This will
raise the P(£)ayback brand’s awareness, and gather traffic to the website.
● Outbound Logistics
○ Direct distribution
○ Cloud storage system
○ Metadata
○ Online
○ Mobile
○ Order fulfillment, database, archives and catalogues
The ebb and flow of the the final service and product delivery to the consumer functions under a
direct distribution channel without the use of third parties or intermediaries in order to maintain
as much of the revenue for the artist. The distribution management system consists of a cloud
storage system where all of the archives and recorded music is protected and made available
for acquisition or different subscription options between the consumers and P(£)ayback. The
content that is intangible will be accounted for in the cloud system and users’ content will also
be stored in personal cloud storage systems with varying sizes corresponding to the dynamic
premium options. The metadata from each transaction will also be stored using the cloud for
internal usage as well as third party solicitation in selling the marketing information and
publishing catalogues. All of the services offered will be transferred digitally, via the online
platform and mobile capabilities. The aforementioned effectively ensures the fulfillment of
delivering the service to the consumers. As for the physical distribution of merchandise, concert
tickets and other tangible goods, a warehouse will be kept for the independent artists that wish
to engage our physical storage services.
● Marketing and Sales
○ What is creates the value for the consumer/customer
■ 80/20 Splits
■ Direct Contact
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Mikaela Allen & Jad El Alam

■ Consolidation of Content
These 3 factors are our key primary activities that generate value for our clients (the artists).
The 80/20 split is a differentiating factor between P(£)ayback and our competitors offering our
clients a greater share of the revenue they generate. Our service will also provide our clients
with direct contact with fan community allowing them to communicate and interact with them
in a more immersive experience. P(£)ayback will also serve as a platform where an artist can
consolidate all its content to better involve their fans in their work and to acquire new fans.
○ Advertising
○ Promotion
All advertising and promotion will be handled with and for brands and companies that we develop
partnerships. This will be essential because these companies will be chosen on the basis of
relevancy to our customers and their interests.
○ Pricing
■ Subscription
■ Freemium Model
■ Percentage
● Incentives for subscriptions
Pricing will be based one subscription and freemium models for artists and fans. This will allow
the services to be accessible to people with lower incomes and incentives for fans to upgrade to
paid subscriptions.
● Service
○ Curated Catalog
○ Element of Convenience
○ Artist Exclusives
One of the most unique elements of P(£)ayback that isn’t available on other music discovery
platforms is the curated catalog. By allowing our users to upload the content they want to
experience directly on the platform they are not creating a customized catalog of everything
they want, but they also have the ability to assist others in their music discovery process.
Additionally, the fact that we are offering all of this content on one main platform facilitates the
element of convenience for the customer. Having access to the entirety of an artist’s content in
one place eases the process of music discovery for a fan. With the time they save finding the
content of one artists, they can maximize the value of their experience by discovering the
multitude of artists and incentives offered. One major aspect of the platform that draws report is
our offering of artist related exclusives. This would include anything from hand-written lyric
sheets by the songwriters, private concerts, as well as live streamed studio sessions. This ability
to look behind the finished product of what an artist has to offer allows the fan to feel like less of
a consumer and more like a partner in the growth and development of an artist’s creative
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Mikaela Allen & Jad El Alam

process.
Support Activities
● Partnerships
○ International and College Radio
● Maintenance/Updates for Website
● Purchasing
In making sure P(£)ayback operated effectively will be partnerships, advertising agreements and
making sure the site runs efficiently. Partnerships with international and college radio
stations will be vital supporting activities to make sure that P(£)ayback brand image is
established as successful and valuable. Advertisement agreements will also need to be a
focus of P(£)ayback in order to fund the various services provided and will need to be established
before hand to generate revenue and run the service. It will also be a differentiating factor for
the clients and artists as advertisements will be related to music and artist discovery.
Maintenance for the website will also be necessary to make sure it runs efficiently to meet the
needs of the artists and subscribers. Probably the most important would be the purchasing of
all needed material to execute the P(£)ayback website and service. This would include
purchases for technology, distribution rights, logo, artist agreements, etc.
● Human Resource Management
P(£)ayback will manage to recruit, train, and develop applicable candidate to generate one
successful team. The goal is to have a group of well (ear) trained A&R team for them to
discover new talents, and tech savvy employees who love music and have passion for music.
Also P(£)ayback will be looking for a group of people who appreciates the non- mainstream,
independent artists’ music. P(£)ayback requires hiring music or technology experts who can
be great assets to the team and create a good working environment.
● Technological Development
○ Domain Name
○ Servers
○ Application Developers
○ Website Developers
While the securing of a domain name for the website as well as acquiring the necessary servers
to ensure functionality, the areas where assistance and support from third parties would be in
the development of the application and website. Especially in the beta testing stage of
P(£)ayback’s development, it will be essential to have people on the team that not only
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Mikaela Allen & Jad El Alam

understand the process of application technology and website development, but also can adapt
to the changes and modifications that come with doing business with technology that is always
evolving. Along with creating these sectors of our platform, they will also be collecting the data
stored on it by our artists and fans. This information will assist us in understanding how our
platform is received by our audience as well as doing what we can to verify the experience for
both parties is pleasurable.
● Firm Infrastructure
○ Clear accountability
○ Accounting and finances
○ Legal structure
○ Administrative
○ General planning management
○ Public affairs
○ Training
The infrastructure of P(£)ayback must be constantly monitored and assessed in order to
maintain a sustainable business. The support system consists of legal and general planning
management activities that are tailored to improve the functionality of administrative tasks,
public affairs tasks, training exercises as well as financial management, all within the correct
legal boundaries. This way, all of the operations within the system will remain up to par with
British standards for the accounting and finances, copyright provisions, public relations and
collectively, this will lend to building a reputable business and legitimate practices within the
company. For example, training sessions and other value added activities will be implemented for
quality assurance of the company’s integrity in consideration of the necessary infrastructure
factors within the legal and general planning guidelines. The outreach department and marketing
department are in direct correspondence with both founders and overseen by the legal
department. The former two departments control the public affairs and general management
facilitation. The latter two will grapple with the administrative regulation. In turn, accountability will
be created and any future disputes will be addressed accordingly.

COST ANALYSIS
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Mikaela Allen & Jad El Alam

Break-even Point

Return on Investment & the P(l)ayback period

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Mikaela Allen & Jad El Alam

Primary Activities
● Inbound Logistics
○ Storing Content
- Variable costs of storing data - cloud server/physical server
$XXX per additional unit of content uploaded. (cost varies per capacity of storage used
up)
○ Sharing and Receiving Content
- Delivering the content through an app + website
- Receiving content through interface enabling automated upload to the platform
○ Managing Artist Content
- Cost of reviewing subscriber suggestions, repeating step 1 etc...
● Operations:
○ Delivering Artist Content -fixed cost
○ Technological Development and Maintenance -fixed cost
○ Maintaining Relationships -variable cost
○ Packaging and Presenting Artist -Variable cost
Delivering artist content and technological development and maintenance can be done
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Mikaela Allen & Jad El Alam

by P(£)ayback’s hired employee therefore these two will be fixed cost. Maintaining and
presenting artist, packaging and presenting artist could be variable cost because there
might be occasions that employees need to travel or attend shows to meet artist.
(approximately £2000 per year)
Other Operation costs
Insurance costs-fixed cost
Legal business insurance in UK: £250 per year
Resource: http://www.simetric.co.uk/insurance/business_insurance/

Stationery/business cards/office supplies-variable cost
£500
● £1,600 Outbound Logistics: adjusted according to (discounted costs)
○ £1,60010 Cloud storage system, 10 TB (fixed)11
One of the most important aspects of the business’ logistical set up
comprises of the cloud based storage system, which will be bought and sold by
clients, but more important, it will store the entire catalogue, archives, transaction
histories and additional documentation pertinent to the company’s historical
accountability and reliability. For this, we invest in the most recent and reviewed
source, Zoolz. The ten-terabyte cloud will cost an annual fee, but the beauty of the
service is that if we need more space, there is an option to expand the limit.
○ Online Platform (See Technological Development)
○ £0 Direct distribution (accounted for in employee salaries)
○ £0 Metadata (stored in cloud)
○ £0 Mobile (included in app development option of device synchronization
capability)
○ £0 Order fulfillment, database, archives and catalogues
● Marketing and Sales
○ Value
■ 80/20 Splits
■ Direct Contact
■ Consolidation of Content
10

"Revolutionizing business cloud backup." Zoolz. https://www.zoolz.com/pricing (accessed May 1, 2014).
"Business Cloud Storage Services Review 2014 | Best Business Backup Solutions | Business Cloud Backup - TopTenREVIEWS." TopTenREVIEWS.
http://business-cloud-storage-services.toptenreviews.com/ (accessed May 1, 2014).
11

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Mikaela Allen & Jad El Alam

○ Marketing/Advertising
■ Fixed Costs
● 1,000£ per month avg.
■ Variable Costs
● 500£ Per month avg.
■ Total
● 15,000£
■ Logic
● In order to establish the P(£)ayback brand we will need to have an
aggressive marketing and advertising campaign during our start
up year. Fixed costs will include sales promotion material,
distribution costs, etc. While variable costs sales commissions,
sales bonuses, social media marketing and management.
● Pricing
○ Subscription/ Freemium Based Model
■ Fixed Costs
● £0
■ Variable Costs
● £0
■ Logic
● Our revenue model is based on a subscription/freemium based
model where the fans will pay or not for the service with most of
our revenue will come from our advertising and partnership
agreements.
Service
Curated Catalog
● Fixed Costs
○ £0
● Variable Costs
○ £0
● Logic
○ The process of collecting the data for our curated catalog of artists as well as
their content will not be of any cost to us. In actuality, we will actually receive
funds by providing the premium service option to our users.

Element of Convenience
● Fixed Costs
○ £0
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Mikaela Allen & Jad El Alam

● Variable Costs
○ £0
● Logic
○ One of the core intentions of experiences that P(£)ayback provides is the
attention to the aspects of convenience for the artist and the fan. While we are
offering the platform for this to occur, there are no direct costs related to the act
of giving this experience.

Artist Exclusives
● Fixed Costs
○ £0
● Variable Costs
○ £0
● Logic
○ Considering that the exclusive content offered by the artists to the fans is
provided by the creator of the particular content, we have no costs associated
with this feature. Similar to the artist curation process, the users that opt for the
premium subscription will pay for this opportunity.
Support Activities
● Procurement
○ Partnerships
■ Fixed Costs
● £0 per year est.
■ Variable Costs
● £0
■ Logic
● Accounted for in our attorney fees due to partnerships being
contractually and legally based.
○ Website Maintenance
■ Fixed Costs
● £125 per year est.
■ Variable Costs
● £50
■ Logic
● To make sure the P(£)ayback site is working and always up to date
it will be important to pay for its maintenance throughout the
years. We accounted for some variable costs for unforeseen
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Mikaela Allen & Jad El Alam

glitches and issues that may arise outside the yearly maintenance.
● Human Resource Management
RECRUITMENT
Salary: fixed cost
13 Employees
JOB

Salary

CEO

£55,278

CFO

£55,278

Legal

£52,069

Publishing Affairs

£39,464

Accounting

£41,480

Marketing

£39,791

Sales

£21,555

A&R

£39,464

Web Development/ Designer

£22,000

App Developer / Designer

£25,000

Moderators

£29,104

Outreach

£39,791

These prices above are the UK’s average salaries for each occupations in 2012. Because we are
a start -up company, P(£)ayback’s employees salaries will be lower than what are stated above.
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Mikaela Allen & Jad El Alam

If we would pay 20,000 a year, (260,000 exactly) to all 13 employees, the cost would be about
£300,000. 12
Technological Development
Domain Names (godaddy.com)
● Fixed Costs
○ Domain Name Rental
■ Playbck.com
● £0.00 a year
○ 100% off free domain names
○ Hosting Fee
■ £59.88 a year
● 4.99 a month
○ Adding an email address (Business Essentials Package)
■ £59.88 a year
● 4.99 a month
● Variable Costs
○ Future Renewal Costs (assuming there is an increase in the rental price)
● Logic
○ We decided to go with the UK division of godaddy.com for the domain registration.
They offer many bundled features that help keep our cost down. Since the
domain playbck.com was available when I did a search, we were able to get the
first year of rental free13 . We will however have to pay ancillary fees to give the
online version of our platform the stability it needs. We chose to go with the
hosting package built for designers, that way we are able to keep the majority of
the backend information as far as coding goes within the company. Also, to assist
with our users identifying the P(£)ayback brand, we will purchase the business
essentials package which allows us to add an email address to the site with the
associated domain. The only variable cost connected to this is the fee of
renewing the domain in the future.
Servers
● Fixed Costs
○ Physical Server
■ HP 646901-421 ProLiant PS Base Server

"Compare your pay to the national average in your job: League table of official UK salaries across 400 trades and professions." This Is Money.
http://www.thisismoney.co.uk/money/article-2269520/Best-paid-jobs-2012-Official-figures-national-average-UK-salaries-400-occupations.html
(accessed April 19, 2014).
13
"GoDaddy Domain Name Search Tool." GoDaddy Domain Name Search Tool.
http://uk.godaddy.com/domains/searchresults-new3.aspx?ci=54814 (accessed May 1, 2014).
12

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Mikaela Allen & Jad El Alam

● £2,200.0014

● Variable Costs
○ Cloud Server Space
■ See Outbound Logistics
● Logic
○ There are a few reasons why we decided to go with a physical server as well as
using cloud space. In order to ensure the security of the data we collect through
our platform, we wanted to have a physical epicenter for all the data in house.
Having that information on a cloud based storage system could result in the
hacking of our database and theft of this personal information. By having a
medium sized physical server, we are able to reduce this likelihood. For the other
data hosted on the site, we will be utilizing cloud server space. The efficiency of
cloud computing will result in the cutting of our costs. For example, on a cloud we
are able to provide faster server provisioning. This enables elastic capacity to
provide system provisioning and deployment at a moment’s notice15 from
anywhere. Additionally, we would reduce our energy costs that would result from
physical servers.

Application Developers
● Fixed Costs
○ £7,500.00
● Variable Costs
○ £17,500.00
● Logic
○ Considering the majority of the costs associated with application development
are labor based, the expenses for this sector could vary depending on the options
we choose. Our application will host a range of features such as being universally
applicable to all iOS devices, having a custom interface to match the partnered
webpage, allowing social media as well as email login, in-app payments, device
syncing, user profiles, ratings and reviews, website integration, as well as a
custom icon to promote brand awareness. The total cost of creating an
application with all these features would amount to around £25,000.0016 . To get
an idea of both the fixed and variable costs I divided the total as 70% variable
costs and 30% fixed costs. This is to estimate the necessary funds in accordance
"HP 646901-421 ProLiant PS Base Server (1 Intel Xeon E5-2630 2.3GHz Processor, 16GB RAM)." Amazon.
http://www.amazon.co.uk/HP-646901-421-ProLiant-E5-2630-Processor/dp/B007KTI42A/ref=sr_1_5?s=computers&ie=UTF8&qid=139685802
2&sr=1-5&keywords=server (accessed May 1, 2014).
15
"Top 10 benefits of server virtualization." InfoWorld.
http://www.infoworld.com/d/virtualization/top-10-benefits-server-virtualization-177828?page=0,1 (accessed May 1, 2014).
16
"How much does it cost to make an app?." Howmuchtomakeanapp.com. http://howmuchtomakeanapp.com (accessed May 1, 2014).
14

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Mikaela Allen & Jad El Alam

to the amount of features being developed for the release17 .
Website Developers
● Fixed Costs
○ See Domain Name Section
● Variable Costs
○ 60 Hours of Labor
■ £40/hour
● £2,400
○ Maintenance
■ Twice a year
● £200
● Logic
○ The fixed costs associated with the development of the website lie within the
registration of the domain name. Everything else, similar to the application
development, is labor based. It is significantly less to do the website development
for our platform because we have and understanding knowledge of website
coding and are able to provide our professional developers with a standard layout
of what we would like they don’t have to go through the extra time of creating it
from scratch. We also cut costs with the maintenance of the website because
that would also be able to be done in house without providing an outside
developer.
● £18,500 Firm Infrastructure: adjusted according to (discounted costs)
○ £48,06718 (£15,000) Accounting and finances (fixed/variable)
■ Bookkeeper and tax work
○ £16,94019 (£3,500) Legal work (fixed/variable)
■ Attorney
● Trademark Registration
● Licenses
○ LLP Business/Company Registration
● Insurance
○ Income (WorkSafe)
● Legal documents
"How To Measure Costs When Calculating ROI." How To Measure Costs When Calculating ROI.
http://tynerblain.com/blog/2007/02/05/calculating-roi-and-measuring-costs/ (accessed May 1, 2014).
17

18

"Accountancy (Qualified) Average Salary â​
​
UK." Accountancy (Qualified) Average Salaries in UK.
http://www.reed.co.uk/average-salary/accountancy-qualified (accessed May 1, 2014).
19

"Solicitor: Salary and conditions." | Prospects.ac.uk. http://www.prospects.ac.uk/solicitor_salary.htm (accessed May 1, 2014).

39

Mikaela Allen & Jad El Alam

○
○
○
○
○

○ Terms & Conditions
○ Privacy Policy
In order to fit compliance needs with UK business policy, an attorney
and an accountant will serve as the backbone to meeting these requirements.
Protocol calls for licenses, income policies, and official terms and conditions
and privacy policies for customers that must be drafted by an attorney and
posted on the platform. In terms of the accountant’s duties, official
bookkeeping and tax work that must be completed every year will ensure that
P(£)ayback meets industry requirements. In due time, a professional lawyer
and accountant will be paid salaries according to our findings, but in the
meantime, the costs for the said services can be discounted as the term of
the agreement will last only for the first start-up year or two and many
inexperienced, yet knowledgeable professionals can be recruited.20
Administrative Salaries (See HR)
Public affairs (See HR)
■ Marketing
£0 Clear accountability (Not a cost)
£0 General planning management (Not a cost)
£0 Training (Future cost)
OPERATIONAL & MARKETING STRATEGY

Pricing strategy
Our Pricing strategy for our subscription structure is as follows:
0,89p per song
7,99£ per album
8,99£/month for subscription
89,99£ / year

20

"Common costs when starting a business." Work out your start up costs.
http://www.business.vic.gov.au/setting-up-a-business/how-to-start-a-business/common-costs-when-starting-a-business (accessed May 1, 2014).

40

Mikaela Allen & Jad El Alam

Our pricing has taken to account customer sensitivity to price based on data from our surveys
and we think we have developed a smart pricing structure that will appeal to many. In addition
we believe that the perceived value of the platform can also sway potential customers that may
not want to pay as much. The prices reflect the perceived value we have of our service and the
perceived value will be established by our marketing plan.
For the artists the service is free is chosen after the application process but will be charged if
content exceeds 20 minutes. Prices will be established an individual artists basis and will result
after a careful mix that takes into account what the artists is looking to post as content and their
relationship with the P(£)ayback service.
In our financial analysis we have defined scenarios for P(£)ayback to break even and we firmly
believe that with these figures we can at least break even on the first year out.
Service strategy
1. The Service
P(£)ayback represents the ideal online music platform for unsigned artists to not only promote
their music to their audience but also make the money they deserve from their work. The
product itself appeals to two type of people consumers and clients. Our clientele will be made
up of independent and unsigned music artists of all genres and levels while our customers will be
be the fans and avid music discoverers aficionados.
a. Core Product
The core product for the for the music aficionado/avid music discoverers the access to a
curated discovery platform to find new music from independent artists, but also give them
access to all of the artist's related creative content.
For the artist the P(£)ayback service is providing a platform where an artist can sell, distribute,
promote, and make money from their music with fair percentage rates while also having a space
to effectively engage with fan communities on a deeper level.
b. Formal Product
The formal P(£)ayback product would be the platform itself, with the help of graphic and web
designers our aim is to create a platform that is both appealing to the eye but easy to use as
well. In addition the curated content will ensure our fan customer base will always find new music
that they actually enjoy.
For the artists the formal product would also be the platform which will be created specifically so
the artists can easily integrate all of their creative products (music, merchandise, extras) and be
able to consolidate all their social networks/other media.
c. Augmented Product
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Mikaela Allen & Jad El Alam

The eventual goal of P(£)ayback is to eventually have our fan community be the ones curating
the catalog of artists available on the platform. This will augment their experience, their value,
and the type of product they’re receiving.
For the artists their augmented product is the experience being created for their content. With
the advent of digital platforms people have to go to various sites to view an artist's presence
online ( facebook, youtube, spotify, etc.). P(£)ayback will consolidate all their aspects of an
artist's work and presence into one engaging experience where you can listen to that artists
music while reading personal blogs and buying their merchandise and more.
2. Characteristics
a. Attributes
i.
Quality
The quality of the P(£)ayback service will also be dependent on the user experience for both the
artists and the fans, so appealing to them and their interest will be our main focus especially for
the first year. Providing a curated catalog of engaging and entertaining artists will be how we
define and preserve our sense of quality for the fans. For the artists it will be making sure that
the platform does what is says and assists them in developing sustainable careers.
ii.
Design
As mentioned earlier the design of the platform will be an important part of the development
phase to make sure it is easy to use and not too convoluted especially when being a site the
hosts a lot of content.
b. Branding
Establishing the P(£)ayback brand will probably one of the most essential and important aspects
of the marketing plan during our first year. The value of the brand will be developed through our
alliances and partnerships with local UK radio stations and music related that products. In
addition our advertisement will be strategically chosen to be relevant to our customer and client
bases.
3. Product Positioning
Our competitive advantage over up and coming competitors and established competitors is the
various services that we are bringing together as part of was is provided to clients and
customers. P(£)ayback differentiates itself by creating a more valuable experience overall and
establish an equilibrium across consumption methods and more profitable venue streams for
the artist.
Place strategy
In terms of our place strategy we believe P(£)ayback is at a good place in terms of the UK digital
industry. In 2013 along IFPI reported “3.5 Billion dollars in revenues”. 21 In addition 39% of UK
21

"IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf (accessed April 27, 2014).

42

Mikaela Allen & Jad El Alam

music industry revenues have come from digital channels.22 That combined with a huge
number of working independent and unsigned artists we feel that the United Kingdom is the best
location to launch our service. 87% of users also still prefer owning their music that merely
streaming.23 P(£)ayback allows for the purchase and streaming of music thus appealing to this
population and their biases on consuming musical content. Our analysis of these figures
suggest low barriers to entry in the UK Digital music market and thus a perfect environment for
P(£)ayback to thrive.
Promotion strategy
1. Advertising
Our initial strategy is to advertise to college and independent/unsigned communities in order to
reach both our potential clients and consumers. From there we hope to generate a brand
presence and loyalties with these communities that will result in an expansion of reach to other
potential clients and customers .
a. Radio
Promotion on radio will be done via Independent/Unsigned radio and College Radio to effectively
reach our audience. One of the company structures involved partnerships with these types of
radio stations so suing those alliances will be important in this phase to establish good rapport
with the radio stations to further promote our service in the future.
b. Press
For press marketing again we will target newspapers, magazines, and journals that appeal to the
our target age range of 15-30 in the sectors of independent and unsigned music. As we are
starting small this will be an affordable and cost effective decision.
c. Outdoor
Outdoor advertising will be limited to areas specific to our target audiences so targeting
bar/nightlife areas, college areas, city areas, etc.
d. Ambient
We want to develop a creative way of using ambien advertising to garner some underground
buzz for P(£)ayback. Again we will strategically choose college campuses, pubs, bars, and other
similar location to run ambient advertising to reach our target audience. Some potential ideas
are street art, secret launch parties. Also for the first year having P(£)ayback invitation that we
scatter in strategic areas that ask the finder to deliver this invitation to an music artist they know
that they believe could make use of our service and another option for fans.
e. Online/Mobile
Online/Mobile will be a huge part of advertisement campaign as the age range for our target
market are very active on these type of platforms. So again what's important here is to establish
IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf (accessed April 27, 2014).
"Is Streaming the Next Big Thing? - What Consumers Want." Music Business Research.
http://musicbusinessresearch.wordpress.com/2013/10/18/is-streaming-the-next-big-thing-what-consumers-want/#_ftn2 (accessed May 1, 2014).
22

23

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Mikaela Allen & Jad El Alam

potential alliances and connections with online sites and mobile apps that are relevant to our
client and consumer bases. Social Media campaigns will also play a large role in the promotion
of P(£)ayback. So using sites like Twitter, Facebook, Youtube, Instagram, etc will be allow us to
target online communities that fit our target audience and engage with them to hopefully
generate interest in our platform.
2. Sales Promotions
This would include both Consumer promotions and Trade Promotions that would give incentives
for people to subscribe to the service. Some of the ideas include promotions on yearly
subscriptions, student discounts, etc. Also the platform itself provides incentives for the fans in
the unlockable content that can be accessed through the service.
3. Public Relations
Building a well perceived company image is vital especially in our beginning stages of launching
the platform. Reaching out to our stakeholders will be vital so planning concerts for some
potential talent that could be features on our site or creating partnerships with radio stations at
particular colleges plays into our public relations strategies. Also thinking of reaching out to
booking agencies and promoters can be a strategic tool to enhance our brand awareness and
the platform as a whole.

Gantt Diagram

44

Mikaela Allen & Jad El Alam

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"GoDaddy Domain Name Search Tool." GoDaddy Domain Name Search Tool.
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"HP 646901-421 ProLiant PS Base Server (1 Intel Xeon E5-2630 2.3GHz Processor, 16GB RAM)."
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"How much does it cost to make an app?." Howmuchtomakeanapp.com.
http://howmuchtomakeanapp.com (accessed May 1, 2014).
"How To Measure Costs When Calculating ROI." How To Measure Costs When Calculating ROI.
http://tynerblain.com/blog/2007/02/05/calculating-roi-and-measuring-costs/ (accessed May
1, 2014).
"Accountancy (Qualified) Average Salary â​
​
UK." Accountancy (Qualified) Average Salaries in UK.
http://www.reed.co.uk/average-salary/accountancy-qualified (accessed May 1, 2014).
"Solicitor: Salary and conditions." | Prospects.ac.uk.
http://www.prospects.ac.uk/solicitor_salary.htm (accessed May 1, 2014).
"Common costs when starting a business." Work out your start up costs.
http://www.business.vic.gov.au/setting-up-a-business/how-to-start-a-business/common-costs-w
hen-starting-a-business (accessed May 1, 2014).
"IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf
(accessed April 27, 2014).
IFPI Digital Music Report." IFPI. http://www.ifpi.org/downloads/Digital-Music-Report-2014.pdf
(accessed April 27, 2014).

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Mikaela Allen & Jad El Alam

"Is Streaming the Next Big Thing? - What Consumers Want." Music Business Research.
http://musicbusinessresearch.wordpress.com/2013/10/18/is-streaming-the-next-big-thing-wh
at-consumers-want/#_ftn2 (accessed May 1, 2014).

Appendices
Market Research

24

Clients

Figure 1: Annual income of unsigned artists participants

Figure 2: Disposable Income Per Month

24

All clients are unsigned artists, producers or songwriters. Customers are active music listeners. Please
note that left side of the chart (vertical) always represents the number of survey participants.

47

Mikaela Allen & Jad El Alam

Figure 3: Disposable Income Spent on Discovering Music Physically Per Year

Figure 4: Disposable Income Spent on Discovering Music Digitally Per Year

Figure 5: Collaborating with other Artists, Producers or Songwriters

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Mikaela Allen & Jad El Alam

Figure 6: Importance of Developing a Fan Community

Customers

Figure 7: Annual Income of the Survey Participants

49

Mikaela Allen & Jad El Alam

Figure 8: Amount Spent on Discovering Music Physically Per Year

Figure 9: Amount Spent on Discovering Music Digitally

Figure 10: How People Discover New Artists and Music

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Mikaela Allen & Jad El Alam

Figure 11: Is Discovering New Content Difficult?

Figure 12: Hours Spent on Internet

Figure 13: Time Spent Listening to Music Per Week

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Mikaela Allen & Jad El Alam

Figure 14: Level of Importance of Discovering New Music and Artists

Figure 15: Level of Importance to Access Exclusive Artist Content

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Mikaela Allen & Jad El Alam

Figure 16: Amount Customers would pay for Music Discovery Platform

53