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AudioRush – Executive Summary

Mission Statement
It is’s goal to enhance the development of electronic music by being the premier, comprehensive resource on the Internet for electronic music aficionados and producers. will democratize music, creation, distribution and consumption by:

  • assisting artists in the production of their music by providing samples and sound fonts at no cost
  • giving talented artists with few connections or resources the chance to distribute their music
  • giving small record labels the chance to distribute their music online, increasing their viability
  • allowing a fan of the music anywhere in the world instant access to a huge selection of releases from across the globe at very reasonable prices.

Executive Summary

A formidable opportunity has arisen from the combination of the advent of the Internet as a medium for music distribution, and the rise in popularity of a genre of music that is entirely composed with computer software – electronic music. Analysts predict that as much as 10% of music retailed in the U.S. in year 2002 will be purchased over the Internet1. “While sales (of this genre of music) account for less than 10 percent of overall music sales, the genre is growing.”2 This genre has been largely ignored by most mainstream retailers and labels because of its non-traditional song formats that make it non-conducive for radio play.

It is inc.’s (’s) plan to market the electronic genre of music via a web site (please see Appendix 6 on page 35) whereby consumers will download the music to their PCs. As a convenience, will write the purchased songs to CD and ship them directly to consumers who are not yet equipped to download music. The web site is designed for maximum user-friendliness, unlike any other music site today.’s unique web design allows users to browse the selection effortlessly, while being able to automatically hear excerpts from each virtual CD.

The electronic genre of music is ideal for online distribution for the following reasons:

  • There is a proliferation of artists worldwide within this genre because of the low price and accessibility of the necessary equipment and software
  • The music is created on PC; artists simply send music files via the Internet from anywhere in the world
  • Even very popular artists within this genre are accessible to negotiate contracts with since they tend to be self-distributed, or own small record labels
  • Because of the genre’s rapid evolution and its individualistic nature, aficionados constantly demand new material is distinguished from its competitors in that:

  • The site uses flash software, the latest generation in web site technology that allows users to view complex graphics and animations, and hear high-quality audio
  • It uses a “push” marketing approach in that there is no need to download individual music files
  • It combines the advantages of CD-quality, piracy-protected downloadable music, custom-mixed shipped CDs, an electronica focus, event information, and musician resources

Music sales over the Internet are made possible by:

  • Rapid penetration of high-bandwidth connections
  • Compression software that renders music files 1/20 their original size with CD-quality sound
  • The resulting combination allows the user to download a 45-min. CD in 11 minutes versus 36 hours
  • Secured online credit card transaction processing

The market

The market for electronic music is largely composed of University students. According to Jupiter Communications:

College students, typically have free broadband access that makes digital distribution much more feasible, not to mention the highest penetration rate of any online demographic. This audience is the first that will be compelled to purchase writable drive peripherals specifically for the digital delivery of commercial music.3

Aficionados of electronic music are raised in the age of the World Wide Web, making Internet distribution in tune with their lifestyle.

Management Team’s management has the proven entrepreneurial and management skills to succeed in running this innovative, market-driven company. They have the rare combination of top business school training and a strong connection with the electronic music market.

Offer and Use of Proceeds
The estimated net proceeds to be received by from the sale of common shares, is $330,000 (including $30,000 of expected expenses associated with the offering). intends to allocate $50,000 of the net proceeds towards the purchase its web site design, and the balance, in the amount of $250,000, towards funding salaries and working capital. The investor will receive 10% of the common shares in exchange.

The following table sets forth the capitalization of as at the dates indicated, before and after giving effect to the issue of common shares contemplated hereby.

Shareholders’ equity Pro forma as at April 30, 1999 Pro forma as at April 30, 1999
after giving effects to the Common shares
No. of common shares (without par value) 2,970,000 3,300,000
Book value of equity (in $US) $297 $330,297

Ownership of Common Shares

As at April 30, 1999, on a pro forma basis, before the issue of common shares being offered, the ownership of’s common shares will be as follows:

Office Number of Common Shares
Christianne Brunelle President 1,782,000
Ranya El-Masri Vice President Marketing 1,188,000

Exit Strategies

Three exit strategies are possible through which investors should be able to realize on their investment:

  • with the accumulation of substantial cash flow, dividend payments could repatriate the investment
  • in view of the rapid growth anticipated for the downloadable segment of the music industry, it is entirely possible that a company wanting to capture’s market penetration would acquire
  • should future public equity markets react as current markets, an initial public offering of’s common shares, coupled with the offering of the investors shares, could provide an extremely lucrative exit route for investors

Summary Financial Information

3,300,000 outstanding shores 2000 2001 2002 2003 2004
Revenue $730,354 $2,921,377 $8,821,193 $23,336,002 $54,262,701
Net Income ($101,670) $418,280 $1,893,405 $5,896,208 $14,462,886
Net Book Value $71,044 $489,324 $2,382,729 $8,278,937 $22,741,824
Return on Ave. Equity $186,739 $282,368 $1,436,263 $5,368,429 $15,822,695
Gross Margins 54% 54% 54% 54% 54%
Earnings per share ($0.05) ($0.03) $0.13 $0.57 $4.38

1 Jupiter Communications, “Music Industry and the Internet”, p.5
2 “Techno Tackles the Net”, Niall McKay and Christopher Jones, version/culture/story/16764.html?wnpg=all
3 Jupiter Communications, “Music Industry and the Internet”, September 1998, p.9
Table of Contents Appendices
1. Executive Summary
2. The Opportunity
3. Operations
4. Marketing Plan
5. Industry Analysis
6. Management Team
7. Financials
Technology Dissemination
Industry Information
Curriculum Vitaes
Media Calendar web site
Sample Advertisement
Internet Banner
Positioning Map
Sample CD
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