The document discusses business models and strategies for online music streaming services. It covers potential revenue streams like advertising, freemium plans, and e-commerce. It also addresses challenges like user acquisition costs, building social features, and achieving profitability. Key recommendations include testing assumptions, focusing on one main revenue stream initially, and leveraging partnerships to reduce customer acquisition costs.
7. The simple model Revenue – Direct costs = Gross profit Gross Profit – Overheads = EBITDA
8. The simple model Revenue – Direct costs = Gross profit Ads Freemium Services E-commerce Servers Licenses Customer acquisition Gross Profit – Overheads = EBITDA Salaries Rent
9. The complex (acronyms) model Net sales revenue – Cost of goods sold = Gross profit – SG&A expenses (costs of operating the company) = EBITDA – Depreciation & amortization = EBIT – Interest expense (cost of borrowing money) = EBT – Tax expense = Net income (EAT)
19. Freemium/Transactional Models “ We believe the future business model for social games will be primarily transactions… consumers play for free supported by advertising but have the option to pay for virtual items and premium features ” Kristian @ Playfish, July 2008
20. Freemium Model Learnings and Tips Distribution platforms Don ’ t force them to pay Access not ownership Gaming as a service , not product “ Virtual goods have a value that ’ s very tangible… maximised around social emotion and social expression ” - Sebastian, COO Quality control on ads