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Case Analysis:

MUSICJUICE.net
By: Bryce Szela Mark Muller Mitchel Molinaro Valdimir Orlov

BSAD 356 September 29, 2011

l. Key Problems: High Competition: Two main competitors who are very successful. The two competitors pose a big threat to MusicJuice.net, one of which is the Dutch company Sellaband.com which they took the idea for their website from. Financial: MusicJuice.net is a high cost venture which isnt paying off like Lui and Wong hoped. They were delayed, and ended up being late on their financial return and no artist has yet to reach their fundraising goal. No CDs being made, plus the lack of premium members means that there is half of the expected revenue stream not being collected and this is crippling MusicJuice.net. Timing: The timing of the company was an issue since the competitors where already set up and operating. Experience: They were only one year out of university when they founded the business and had only had a short time in the business world before they decided to start the company. There lack of knowledge in internet marketing and how a business model works is holding them back from organizing there business properly. MusicJuice.net is coming into a crowded market at the wrong time and is not being run to the best possibility. ll. Situational Assessment: Company Goals and Objectives: o Breakeven/Generate Profit: MusicJuice needs to breakeven and start to generating profit which requires all four profit streams to be working to their full potential. With the premium memberships and returns from CD sales becoming feasible, there should be no reason why MusicJuice could not make a turn around. o Differentiate: MusicJuice is a company in a market segment with two leaders but they have to differentiate themselves if they want to win in this market. By advertising two of their main differences from their competition, their premium membership feature and the tour creation feature which lets bands raise money for tours not just CDs MusicJuice could stand ahead of its competition. o Sell a CD: MusicJuice has an objective which we believe should be first priority and that is that it needs to sell a CD. This objective is important to not only help their goal to Breakeven but also to show some of their clients there company works. Environmental Analysis: o Economically- MusicJuice is over budget by 40%, which is due to the complexity that Lui and Wong had not anticipated when coding and planning their business. The delays have also effected there budget and profit is the only way to turn this around, o Technological- MusicJuice is less appeal because it has less functions then competitors sites. This is due to the coding issue Lui and Wong ran it to. MusicJuice needs more features, so it will become more exciting for user to drawn them in. Other companies also have web page advertising which MusicJuice could use to help get people on their site. o Social Trends- The music market as a whole is dominated by even bigger online companies like Amazon and iTunes. These companies have dominated the markets popularity and are household names when it comes to the music business. As well as the companies who sell music, sites where u can listen to music for

free on the internet like Myspace and Youtube also pose competition for MusicJuice. Operating Trends: o Market- The music market is being overrun by the digital wave where 40% of the purchases in the market are digital and they are generating $2 billion in revenue. o Competition- the two main competitors are sellaband.com and slicethepie.com. Sellaband.com was founded two years earlier, has financed $5 million, recorded 18 CDs and has around 2000 musicians. Slicethepie.com is a British company, which has a lower investment and CD recording price. This company is high competition as it features only the best musicians and recorded 13 CDs, as well as having a refundable investment feature. Company Analysis o 40% over budget when launched o The four revenue streams were generating very little profit: 1. No musicians reached their fundraising goal 2. No premium members had signed up. 3. Google ads generated only $233 dollars in four months (.37 cents a click). 4. The funds that were available in the bank deposit generated very low interest o MUSICJUICEs marketing expenses increased every month (400, 700, 1000, 1500) between April and July o Based on the 2008 marketing expenses, the money raised in April was a loss of $300, loss of $200 in May. Broke even in June and lost $300 the following month. SWOT Analysis Opportunities -Expanding digital music market, 40% of music purchased online, expected to increase -Opportunity to expand past musicians; include independent film producers/ actors, novelists Threats -Competition: Two successful and experienced companies competing with MusicJuice Strengths -Sole ownership, non diluted by shareholder and management can act quickly on decisions -Committed and hardworking management Weaknesses -Lack online experience to manage this type of interactive website and Internet marketing -Do not understand how to adapt this type of business model -The four revenue streams are generating very little profit -Website launch was delayed by three months

lll. Alternatives o Principal Criteria: Financial Alternative One: Copy Sellaband and SlicePie business models and integrate competitions ideas Pros: This will generate more revenue because they would be using successful business models that are already in place by competition, and facts state they have generated a lot more money than MusicJuices current model. Con: Looses originality and more time/money will be required in order to adapt and innovate off the new business model. Possibly a contractor with experience should be consulted in order to help with the transition and pick up the lack of knowledge between Lui and Wong. Alternative Two: Recruit investors to provide capital Pro: Money to fund innovative promotions and other expenses such as website updates. Con: Dilution/Loss of ownership of company, a viable revenue model is needed, lacks proven profit generation and more pressure to succeed. This would be difficult for MusicJuice based on their slow start up compared to competition. As well the chance of bankruptcy increases due to the current inability to make money and be able to pay off debts or dividends to investors.

IV. Recommendation of Course of Action o Outline of recommendation MusicJuice should choose Alternative One, and integrate the concepts from competition into their current business model. This will take proven and more successful ideas from the two other companies, however, MusicJuice should tweak the ideas as to fit their design and retain as much originality in order to differentiate them from competition. To be more specific, the following recommendations with specific steps are outlined below: 1) Voting for the best Artists o Explanation: Members/fans will vote for their favorite artist, in which a competition will be held every month/week, the top artist will be featured and members will only be able to donate and invest money to the winning artists o Implementation: Further design is required by the website development company, as to create a voting system in which artists can upload their music, and fans receive votes to use for their favorite artist. o Expected Results: increased competition will push artists to release their best music, fans will likely choose the current top artists and be more interested to follow the

winners, fans will only be able to invest and donate money to the winning artists, this will channel more money to fewer artists, increasing the likelihood of the top artists reaching the 50,000 dollar CD Recording cutoff fee 2) Create More Activities for Users o Explanation: Update the website to make it more innovative and fun for users, including top artist blogs, music video uploads, battle of the bands contests, premium membership changes o Implementation: This requires money and time, and will need to be contracted to the website developing company. Restructuring of the website to include more activities for users such as music video uploads, a playlist setup as well as easy to download songs off the website. o Expected Results: Primary objective is to recruit and retain users to regularly visit the site and remain as involved as they can be. They should have a good policy that shows users that the site is legitimate, and acquire the proper website verification from a wellknown secure source. 3) Boost Marketing o Explanation: primarily online as they are targeting users who are willing to be active online. An advertising campaign should be set up of Facebook and Twitter. The creation of a Fan page of Facebook will promote MusicJuice to a huge market (over 500 million users), users can like the page as well it will pop up in newsfeeds and attract more potential. As for twitter a similar blog will be created in which users and MusicJuice can Tweet updates as well as provide new information on upcoming or the current status of the artists. A MusicJuice App for smartphones could possibly created, either by contracting or holding a internal contest with a royalty reward system setup through the number of times its been downloaded. Linking the music videos to Youtube would also promote good quality videos, as well attract more users from the Youtube site to check out MusicJuice is they like the video/song by the featured artist. Universities are always looking for entertainment possibilities for students, and MusicJuice should contract out there best artists and sponsor events in which they can host their bands from their website. This provides a good grassroots for starting bands to play at live performances, advertise their name as well as MusicJuice, whose primary target is younger adults who are tech savvy and enjoy new music. o Implementation: Creation of Facebook fan page and a Twitter account is free and can be completed by Lui and Wong themselves. The MusicJuice App would be more complex, as stated above, it would be preferred if it was created by Lui, Wong, or for free by an external source, in which they would receive benefits according to how many people

end up using the App. Lui and Wong could post an advertisement in selected universities and have one representative who is involved with events and student council to help promote and host MusicJuice Tours/ concerts. o Expected Results: There is a large market base on these two online social sites, as well as targeting the Smartphone advertising market through the downloadable App, which can link users to the website via their Smartphones. This recommendation will be very cheap to implement and has the potential to expand to much larger markets, and especially technology experienced users who are very active tweeting, downloading apps, and on Facebook. This should generate more traffic and interest into MusicJuice, as well as students support from University who dont have a lot of money to go to expensive concerts. Also university students are prime targets for advertising through word of mouth, and could be potential market for upcoming bands that MusicJuice features. 4) Build Additional Revenue Streams o Explanation: Review the terms and conditions for premium members, to include with the membership discounts and added perks such as more voting power and investment returns percentage. Create MusicJuice Merchandise, in which the sale of branded Tshirt, Hats, etc will generate money from the sale of the goods as well as have the added benefit of advertising when members where their items in public. o Implementation: Make necessary changes to the website with regards to premium members, and well advertise the benefits of joining as a premium member. Hold a contest in which users design clothing and source a manufacturer to produce the items, giving the winners free merchandise and setting up a online store as part of the website to sell CDs and MusicJuice products. o Expected Results: A cheap an effective way to increase advertising and generate money is the creation of products such as T-Shirts, which can be sold for profit and worn by consumers and double benefit by the consumers being walking billboards for the company. With the new changes in premium members, its expected to attract and sign the first and many more premium members, as there is a good reason to be a premium member.