NEXT GEN CEO ROUNDTABLE - AVL Digital Group - Scion Advisors
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NEXT GEN CEO ROUNDTABLE
AVL Digital Group
May 2019
CONFIDENTIAL AND PROPRIETARY INFORMATION
Agenda
1. Overview
2. Distribute
3. Monetize
4. Promote
2
CONFIDENTIAL AND PROPRIETARY INFORMATION
1 OVERVIEW
CONFIDENTIAL AND PROPRIETARY INFORMATION
“Culture Eats Strategy for Breakfast”
CD Baby circa 2011
- High turnover (as high as 40% in contact center, 20%
overall)
- Broken culture
- Growth flat, profits flat
CD Baby circa 2013
- Define the mission and vision
- Who do we serve?
- Why do we work?
- Actively engaged ‘Culture Crue’ seek to define that which
is unique, engage with team members
- Seek to promote from within
CD Baby circa 2018
- Elective turnover reduced to
Mission Vision
Give artists and Be the most trusted and
songwriters the tools to useful service for
get their music independent artists in the
everywhere. world.
5
CONFIDENTIAL AND PROPRIETARY INFORMATION
A Note on Strategy
• Monthly discussion with key executives helped us focus our business
• Spent time in discussions about who is our ideal client…and who isn’t
• Seek alignment on what the business is and where it should go.
– Identified areas that were non-core. Discontinue investment.
– Identified growth drivers. Invest. (Soundrop)
– Identified strategic and existential threats
• This is not ‘solo’ work.
• You can’t outsource it.
• To truly get buy in, it has to be a collective work product.
• The combination of a healthy work culture and focused, aligned strategy has
been the secret of our success.
6
CONFIDENTIAL AND PROPRIETARY INFORMATION
AVL Enables Music Artists & Songwriters to Monetize Virtually All Aspects
of their Careers
Digital Music Streaming
Revenue generated and paid by a DSP
when a music fan listens to a stream or
buys a download
Physical Sales Mechanical Royalties
Artists generate revenue from selling CDs Royalties paid to songwriters and artists
and vinyl records at live events when music is sold or streamed on-demand
Direct-to-Fan Online Sales Performance Royalties
Income received from online download, The fees for the use of music when
CD and vinyl sales performed publicly (live or recorded)
Online Video Revenue Synchronization Rights
YouTube Content ID revenues generated Revenue generated from sync licensing for use
from ad-supported plays in YouTube, of music with some kind of visual media output
Facebook and Instagram videos (TV, film, commercials and video games)
Neighboring Rights
Revenue generated from non-terrestrial
radio and international radio play; AVL
Digital is launching international admin soon
7
CONFIDENTIAL AND PROPRIETARY INFORMATION
Distribute, Monetize and Promote: Core Business Levers & Growth Drivers
Different business segments create multiple levers for managing all aspects of an artist’s career
§ Monetize rights directly
adjacent to distribution
§ Caters to different
(e.g., publishing, video)
customer segments,
including DIY artists § Higher margin
§ Mix of upfront pricing and 1 Distribute Monetize 2 § Consistent growth
evergreen royalty models expected in music
publishing
§ Driven by global growth in
streaming § Increasing total
addressable market with
§ Near-term opportunities
new platforms for
for global expansion
monetization (e.g.,
Facebook, Instagram)
Promote
3
§ Build a fan base, expand reach and monetize direct-to-fan relationships
§ Recurring revenue subscription models
§ Critical to drive artist retention by providing greater reach and data
8
CONFIDENTIAL AND PROPRIETARY INFORMATION
Distribute, Monetize and Promote: Multiple Brands Cater to All Artist Needs
Multi-brand strategy serves distinct artist needs in today’s modern music economy
1 Distribute Monetize 2
Promote
3
9
CONFIDENTIAL AND PROPRIETARY INFORMATION
2
DISTRIBUTE
MONETIZE
PROMOTE
CONFIDENTIAL AND PROPRIETARY INFORMATIONExplosive Growth in Music Streaming Adoption
Increasing streaming adoption is the primary tailwind for AVL’s business model
§ Independent, DIY artist segment is the fastest-growing constituency in music, driven by streaming
§ AVL benefits with double digit growth for both submissions and its evergreen royalty base
Global Recorded Music Revenue by Format Gross AVL Digital Distribution & Submissions Revenue1:
(Physical, Download, Streaming, Other) 2015A – 2021E ($ in millions)
Historical Projected
$197.6
$45
$175.2
$40 %
21.3
R:
1%
$151.5
$35 G
CA
7.
R:
AG
$128.5
$30
C
($ in billions)
CAG $106.6
$25 R: (2
.9%) 183.8
163.9
$20
17.6% $76.7
142.2
$15
Streaming $62.1 120.8
CAGR 100.0
$10 (2016A-2030E) 71.2
57.0
$5
-
1998 2002 2006 2010 2014 2018E 2022E 2026E 2030E 2015A 2016A 2017A 2018E 2019E 2020E 2021E
Physical Download Other Streaming Submissions Revenue Gross Distribution Revenue
Source: Goldman Sachs Investment Research.
1 Includes CD Baby digital distribution and AdRev revenue.
11
CONFIDENTIAL AND PROPRIETARY INFORMATIONA Rapidly Growing Music Industry, Growing Even Faster Outside of the US
International regions – particularly LatAm – are seeing some of the fastest industry growth globally
§ AVL is an early mover to capture growth in LatAm with an existing on-the-ground presence today
§ Growth in Asia is in its early stages; AVL has laid its initial groundwork by distributing to the major DSPs in Asia
CD Baby Submissions Fees and Gross Distribution Revenue:
Global Recorded Music Revenue Growth: 2016 vs. 2017
H1 2018 vs. H1 2017 YoY Growth
44.1%
26.7% 26.7%
17.7%
12.8%
1
10.9%
5.4%
4.3%
Europe Asia North America LatAm Europe Asia North America LatAm
Source: IFPI.
1 Onboarded Pandora in H1 2017.
12
CONFIDENTIAL AND PROPRIETARY INFORMATIONDistribution Overview: CD Baby, DashGo and Soundrop
Full-service platform for Casual, cover-song focused High-touch, enterprise-level
long-tail DIY audience distribution platform distribution service offering
Customer § Long-tail, core DIY market § Casual, cover song-focus § Independent labels
Segment / segment § YouTuber cover song artists § Established artists
Demographics § Global presence & reach § Video game music artists § Music platforms via API
§ Upfront fee of $10 - $891 § No upfront fee
§ No upfront fee
§ Additional 9% backend royalty § Backend royalty of 10% - 15%
Pricing Model (15% backend royalty for § Backend royalty of 15%
publishing, and 30% backend § Backend royalty of 20%+ with
§ License fee
for YouTube Content ID) advances
§ 349k tracks in distribution
§ 400k tracks in distribution
§ $98mm paid to artists (TTM)2
§ 225mm+ monthly streams
§ 200mm+ streams per month
§ 9mm tracks in distribution § 25k songs delivered via API for
Key KPIs § 50k artists in digital distribution
§ 850k active accounts white-labeling
§ 1k cover songs licensed
§ 1mm songs published § $7.8k avg. annual revenue /
monthly
client
1 One-time, upfront fee varies for distribution on CD Baby Pro vs. Standard and for albums vs. singles.
2 As of 10/31/2018.
13
CONFIDENTIAL AND PROPRIETARY INFORMATION14 CONFIDENTIAL AND PROPRIETARY INFORMATION
CD Baby Overview: Independent Music Pioneer and Industry Leader
CD Baby is AVL’s flagship brand, providing independent artists the ability to distribute their music to a
variety of platforms and stores
§ On pace to become the largest digital sound recording catalog in the world, currently 9mm+
§ Artist-friendly pricing model includes a modest one-time upfront fee per release ($9-$89) and a low 9% backend fee
§ No revenue concentration: no single artist, label or manager represents more than 0.2% of gross revenue
§ Stable and scalable core technology infrastructure supported by an in-house tech team of 30
§ Leading customer service with the only multi-lingual contact center of its scale serving independent artists
Integrated Physical & Digital
Streaming Distribution Artist Toolset
Distribution
ü Distributes music to 150+ DSPs ü Broad suite of upsells and ü Only independent distributor to offer
promotional tools both digital and CD / vinyl distribution
ü Robust artist metadata and
compliance assurance of every track ü Detailed analytics to artists, tracking
daily streaming and global activity
$82mm 850k 1mm 9mm
Paid to artists Active digital Songs under Tracks in
worldwide in 20181 distribution accounts publishing admin distribution
1 YTD as of 10/31/2018.
15
CONFIDENTIAL AND PROPRIETARY INFORMATIONMajor Artists Prefer CD Baby to Legacy Label Partners
In addition to long-tail, independent artists, CD Baby’s artist roster includes major artists eschewing the major
label system
Ingrid Michaelson Aloe Blacc
"CD Baby makes it super easy
to drop a worldwide release on
"CD Baby has always been so your own schedule. The user
good to me, from the very interface is simple and the
beginning of my career. They terms are great. The best part is
truly helped me sustain my when you see an email with the
independent status." sales statement. Then you know
the music is making an impact
on people."
16
CONFIDENTIAL AND PROPRIETARY INFORMATIONAVL Digital’s Global Footprint
AVL Digital Group’s platform provides independent music content creators global distribution, localized
services and support in Latin America and the UK today, with an aggressive expansion plan looking forward
1
Rep
142
Toronto,
FTE’s Canada
Portland, OR
4
FTE’s
2 London, UK
FTE’s
New York, NY
27 6
FTE’s FTE’s
Sherman Oaks, Culver City,
CA CA
2 2
Reps Reps
Mexico City, Bogota,
Mexico Colombia
2
Reps
1
Rep Sao Paulo,
1
Brazil
Rep Conception, 2 AVL Office Location
Chile
Singapore Reps
AVL Presence (no office location)
Buenos Aires,
Argentina Brand Headquarters
17
CONFIDENTIAL AND PROPRIETARY INFORMATION18 CONFIDENTIAL AND PROPRIETARY INFORMATION
Soundrop Overview: Cover Song Licensing & Distribution
for the YouTube Generation
There is no other DIY distributor in today’s landscape leading with cover songs as a value proposition; zero
dollar upfront pricing and a 15% backend royalty (and a $9.99 upfront fee to license each cover song)
1 Cover Song 2 Video Game 3 Metadata 4 Collaborator
Licensing Covers Splits
§ Acquired in 2016, Soundrop is a gateway brand for novice artists, enabling simple distribution and the ability to license
“cover songs”
§ Artists can distribute their own renditions of video game music (for “VGM-ers”), in addition to pop hits
§ Soundrop delivers robust metadata – including song and rights information – so that DSPs know exactly who to pay
§ Users can split royalties between multiple accounts allowing collaborators to be paid automatically
19
CONFIDENTIAL AND PROPRIETARY INFORMATIONSoundrop: Cover Song Licensing Mechanics
With Soundrop, artists are easily able to obtain the requisite licenses to distribute cover songs of top pop
hits, video game music and other music that the user has not composed themselves
§ Without Soundrop, users must manually obtain a
✘
Without Soundrop
mechanical license from the Harry Fox Agency
(“HFA”) or Music Reports Inc. (“MRI”)
§ Obtaining traditional cover song licenses is a
User uploads DSPs will not accept
manual, cumbersome process
cover song of pop unlicensed cover
hit, video game songs for distribution § Soundrop automates this process for users for a
music, etc. (or issue a takedown) one-time licensing fee of $9.99
$9.99 $
With Soundrop
User uploads User pays $9.99 Soundrop obtains Soundrop
cover song of pop Soundrop fee cover song license administers royalties
hit, video game for cover song by filing “notice of to artists (15%
music, etc. clearance intent” backend fee)
20
CONFIDENTIAL AND PROPRIETARY INFORMATIONSoundrop KPIs: Member Accounts, Tracks and Royalties
Since relaunching as a distribution service in late 2016, Soundrop has steadily onboarded new members
and increased its distribution catalog with limited marketing spend to date
New Member Accounts Added Cumulative Track Catalog
Run-Rate 2018E1: Run-Rate 2018E1:
.9% .0%
: 76 : 78
35,000 32,828 600,000 557,787
th th
ow ow
30,000
Y Gr 500,000 Y Gr
Yo 24,621 Yo 418,340
25,000
400,000
20,000 18,554 313,339
300,000
15,000
200,000
10,000
5,000 100,000
0 0
FY2017 FY2018 FY2017 FY2018
Royalty Payments ($ in 000s)
7,000
Historical Projected
6,000
5,000
4,000
3,000
2,000
1,000
0
1Q2017 4Q2017 3Q2018 2Q2019 1Q2020 4Q2020 3Q2021
1 Run-rate through 10/31/2018. 21
CONFIDENTIAL AND PROPRIETARY INFORMATIONSoundrop: Artist Case Studies
Leo Moracchioli Pomplamoose Gardiner Sisters Andie Case
§ Family band performing § Single / songwriter who
§ Heavy-metal cover artist § Viral cover-focused duo acoustic pop covers gained popularity after
with strong YouTube covering songs by popular
§ 2.8mm subscribers on presence § ~700k YouTube subscribers artists on her YouTube
YouTube; 629mm video channel
views § 584k subscribers on § Have achieved ~95mm video
YouTube; 135mm video views on YouTube § ~1.3mm YouTube
§ Featured in WSJ article in views subscribers; 204mm video
October 2018 on § One of Soundrop’s most views
successful YouTube cover § Songs featured in several successful clients, earning
song artists advertisements, including ~$16k / month § Winner of Usher’s Megastar
Hyundai and Toyota Talent Competition in 2017
22
CONFIDENTIAL AND PROPRIETARY INFORMATION23 CONFIDENTIAL AND PROPRIETARY INFORMATION
DashGo Overview:
Extending AVL’s Distribution Capabilities and Customer Set
DashGo offers high-touch distribution services for enterprise-level customers, empowering independent
labels and established artists to maximize the value of their music catalogs
§ Acquired in 2017, DashGo is an end-to-end music distribution, monetization, promotion and analytics platform for
independent labels and established artists
§ No upfront fee and 10-25%+ backend distribution fee for label and artist clients (higher rates for clients receiving advances)
§ Customer service team dual-functions in A&R, identifying artists and tracks that can be pitched to DSPs for playlist placement
§ Sourcing clients from CD Baby and onboarded to DashGo to provide enterprise-level capabilities
Wide-Ranging, Best-in-Class Significant Artist Success to Date, with
Significant Reach on YouTube
Distribution Capabilities the Opportunity to Offer Advances
1mm+ subscribers; ~$1.0mm in
225mm+ monthly committed
14bn+ minutes
streams advances
watched
in 2018 / 2019
24
CONFIDENTIAL AND PROPRIETARY INFORMATIONDashGo: Established Artists & Labels Have Unique Customer Needs
DashGo provides established artists & labels with a greater level of distribution and artist services
DIY, Independent Artists Established Artists & Independent Labels
§ Upload single tracks and albums § Ingest existing label / artist catalog in bulk
Catalog Ingestion
§ Distribute new releases (vs. existing catalog) § Labels can upload multiple releases at once
§ Track recoupment against advances
Payments & Royalty § Bespoke accounting (e.g., split-pay,
§ Track earnings by release (singles & albums)
Reporting mechanicals, producer shares)
§ Labels can view earnings for multiple artists
§ White-glove artist services for bespoke artist
and label needs
Customer Service and § Customer support team fields hundreds-of-
§ Label-like DSP sales support services
A&R thousands of tickets annually
§ Customer support dual functions as A&R for
discovering up-and-coming talent
§ Monetizes recorded music through distribution § Collects royalties from non-terrestrial radio (i.e.,
Other Rights Monetization “neighboring rights”)
§ Offers upsell for digital video collection and
music publishing § YouTube monetization with in-house MCN
AVL can upstream promising artists from CD Baby / Soundrop to DashGo to claim additional margin
25
CONFIDENTIAL AND PROPRIETARY INFORMATION3
DISTRIBUTE
MONETIZE
PROMOTE
CONFIDENTIAL AND PROPRIETARY INFORMATIONAVL Capabilities for Monetization
In addition to traditional digital distribution / streaming, AVL allows music creators to monetize all music
rights types in an increasingly complex and evolving value-chain
The Value Chain for Music Industry Rights / Royalties (US)
Public Performance Synchronization (“Sync”) Consumer
Radio, Digital &
Bars, Foreign Movies, Foreign Online
Streams T.V., Online Video Streams Physical
Clubs Societies TV, Ads Agencies Video
Digital Sales
Paid on performances Harry Fox,
Performing Rights
Music Publisher Music Record Company
Societies
Reports
Acting as an
administration agent
Songwriter Often Same Individual Artist
Paid based on record
Paid on performances
sales per contract
AVL allows music creators to monetize all music rights types globally in an increasingly complex and evolving value-chain
ü Mechanical royalties ü Online video monetization ü Sync placements ü Royalty-free music for use
in sync and other
ü Performance royalties ü Channel management ü Background music use
production use cases
27
CONFIDENTIAL AND PROPRIETARY INFORMATIONAVL Capabilities for Monetization Beyond Digital Distribution
AVL allows music creators to monetize all rights directly adjacent to recorded music distribution
Monetization
AVL Brand AVL Advantages
Segment
§ Publishing services are at the core of CD Baby Pro’s value proposition
§ CD Baby Pro drives increased ASPs and additional backend (15% publishing margin)
Music Publishing
§ Capital efficient product deployment by partnering with Songtrust
§ Global coverage
§ YouTube Content ID integrates directly in CD Baby and DashGo offerings
§ Blue-chip, enterprise client base at AdRev (e.g., Universal, Warner) with strong
Online Video retention
§ Unclaimed music content on YouTube is “found money” for most clients
(Video) § Upside to current TAM with Facebook, Instagram and Twitter enabling monetization
§ CD Baby has one of the largest sync libraries on the web (3mm+ available tracks)
Sync
§ Major opportunity to build a “proactive” sync licensing team and strategy
Royalty-Free § Offers one of the largest libraries of royalty-free production music and samples
Music Licensing /
Production Music § Lucrative, ancillary revenue stream for music artists
28
CONFIDENTIAL AND PROPRIETARY INFORMATION29 CONFIDENTIAL AND PROPRIETARY INFORMATION
30 CONFIDENTIAL AND PROPRIETARY INFORMATION
CD Baby Video Monetization: Driving Fast, Profitable Growth
Included in CD Baby Standard & Pro, CD Baby YouTube, Facebook and Instagram monetization will
generated $8mm in gross revenue in 2018 with CD Baby retaining a 30% margin
§ Artists can easily opt-in for YouTube, Facebook and Instagram monetization
§ Content claiming on Facebook and Instagram is poised for explosive growth
§ Artists with more than 1,000 YouTube channel subscribers can join Illustrated Sound, CD Baby’s MCN, enabling artists to 1)
grow their audiences, 2) drive video engagement, 3) optimize content strategies and 4) boost earnings potential
1 Distribute 2 Opt-In 3 Delivery
Opt-in for YouTube
Distribute music Songs are distributed
monetization (included with
through CD Baby to YouTube
CD Baby Standard & Pro)
4 YouTube Content ID 5 Matching 6 Payments
Claimed content
YouTube creates sonic YouTube uses fingerprint to
generates payments to
fingerprint of audio recording claim content
artists (paid by CD Baby)
31
CONFIDENTIAL AND PROPRIETARY INFORMATIONAdRev: Overview & Key Advantages
Provides technology and services that support and empower content owners, rights holders, brands and
creators on YouTube
§ YouTube CID admin for music, film and TV content for labels, publishers, independent artists and enterprise rights holders
§ Range of services from providing manual claiming consultancy, to full CMS administration and royalty accounting services
§ Channel network to optimize, monetize and grow channels for creators and brands
§ Leading customer service with the fastest response times in the industry
§ Deep tech stack powering accounting, rapid claim release tools and custom integrations for major clients
Early Adopter & Sector Expertise Major Client Base Leading Client Tools & Tech
ü Early adopter of YouTube content ID ü Rights claiming, asset tracking and
earnings transparency
ü Leverage strength in YouTube
content ID to build broader MCN ü Custom data / accounting
strategy
100bn+ 550+ 56mm 14mm+
Years of video Videos Managed
Annual views
watched per day monetized copyrights
32
CONFIDENTIAL AND PROPRIETARY INFORMATIONAdRev: Pioneering Video Monetization
AdRev is an end-to-end platform enabling YouTube content claiming and payments for music creators;
Facebook, Instagram and Twitter monetization are forthcoming, as those platforms are enabling music
monetization
Customer sends
audiovisual or
music only content
to AdRev via FTP or
DELIVERY INGEST MATCH PAYMENTS
hard drive Submit AdRev scripts the
music & client’s files into AdRev continuously
videos via YouTube enabling AdRev collects
scans for exact
any content to match revenue and pays
against pirated
matches of the
common file out monthly
uploads content and catches
anything that falls
through the cracks
Earnings can be
viewed anytime
on a video-by-
video basis
33
CONFIDENTIAL AND PROPRIETARY INFORMATIONMulti-Channel Networks: AdRev’s Talent Network and Illustrated Sound
§ Dual-MCN strategy allows CD Baby and AdRev to onboard their own MCN clients
§ MCN strategy is global with ISN localized in 14 languages
§ Talent Network and Illustrated Sound provide essential services (e.g., copyright screening, real-time royalty accounting,
YouTube CID submission)
§ MCN aggregation offers a host of benefits to channel owners, including simplified payment processing and lower payout
thresholds – increasing monetization potential for partners
Illustrated Sound: Notable Channel Clients
Duki Aldair Playboy Aloe Blacc Real Grumpy Cat OhItsTeddy
(290mm video views) (50mm video views) (145mm video views) (35mm video views) (20mm video views)
AdRev Talent Network: Notable Channel Clients
ChiChi TV DJ Akademiks BinBin Cars Rainbow Play TV Suranjoli
(3bn video views) (960mm video views) (110mm video views) (200mm video views) (170mm video views)
34
CONFIDENTIAL AND PROPRIETARY INFORMATIONCD Baby Licensing: Selected Direct, Proactive Sync Placements CD Baby’s direct, proactive sync licensing platform is in its early stages (
4
DISTRIBUTE
• 8
MONETIZE
PROMOTE
CONFIDENTIAL AND PROPRIETARY INFORMATIONPromotional Offerings Enables Artists to Grow and Engage with their Fan Base
Marketing & promotional tools are key for independent artists to build direct-to-fan relationships and
collect fan data, which is critical to the success of modern music marketing
CD Baby’s full suite of promotional offerings are a key value-added service and artist retention tool
CD Baby helps simplify
music marketing efforts by
providing all the tools to:
Web-based platform for music
creators to easily build websites ü Reach new listeners
& sell content
ü Boost music sales & streams
ü Increase social media
presence
ü Expand and deepen audience
Marketing & direct-to-fan
commerce tools exclusively for
engagement
CD Baby musicians
ü Build fan followings on major
DSPs
ü Grow email lists
ü Increase data capture
Promotion platform allowing
users to launch campaigns ü Launch digital & social
around their music marketing campaigns
37
CONFIDENTIAL AND PROPRIETARY INFORMATIONCreating an Ecosystem of Promotion with High User Value
Music Fan Activity
Artist created
Ad Builder
short links to
Campaigns
featured content Campaign page Artist page Website Store pages
Fan activity data creates audience pool for targeting and re-targeting
Artists pay to
target these
people
$à
Data exploded out to target look-alike audiences
38
CONFIDENTIAL AND PROPRIETARY INFORMATIONAVL Digital’s Effective & Integrated Customer Acquisition Strategy
Superior Efficient
Aggressive
Direct Responsive Cross-selling
Direct
Customer / Upselling
Marketing Marketing
Execution Service Between
Spend
Brands
39
CONFIDENTIAL AND PROPRIETARY INFORMATIONAVL Digital’s Direct Marketing Strategy Drives a Sustainable Competitive
Advantage
AVL’s sophisticated direct-to-artist marketing is an essential growth driver; the Company uses multiple
marketing channels to capture new customers and retain, cross-sell and upsell existing customers through an
advanced set of lead generation and conversion tools
Broad Range of Direct-to-Artist Marketing Channels & Tactics
Educational blogs,
Organic / paid search
podcasts & the DIY
& social media
Musician Conference
marketing drives
establish CD Baby as a
qualified sales leads
thought leader in music
Targeted email
Responsive customer
marketing drives new
service converts and
account creation and
retains clients
mindshare
40
CONFIDENTIAL AND PROPRIETARY INFORMATIONDynamic Educational Content Channels Have Established The Company as an
Industry Thought Leader
Educational Blogs, Articles &
Featured Podcasts DIY Musician Conference
Whitepapers
ü 221 recorded episodes of
the CD Baby DIY Podcast
ü 1.8mm lifetime podcast
downloads
ü Over 1,500 attendees in 2018
ü Four years of attendance
ü Over 2,300 blogs posted on growth
the DIY Musician Blog forum
ü Attendees from 48 different
ü 200,000+ unique web visitors
states and 15 different
per month to the blog
countries
ü Multilingual blogs provided in
English, Spanish and ü 3,000+ social media posts with
Portuguese hashtag #DIYmusician during
the conference
41
CONFIDENTIAL AND PROPRIETARY INFORMATIONVideo: DIY Musician Conference 2018
$39/month
or
$99/month
42
CONFIDENTIAL AND PROPRIETARY INFORMATIONHuman-Powered Customer Service Helps Efficiently Convert & Retain Clients
CD Baby offers the only multi-lingual contact center of its scope and scale dedicated to serving artists in
the music industry, in addition to self-service and peer-to-peer support
AVL Digital’s Multimodal / Multichannel Customer Service is a Differentiator
Self Service Through Help Center Customer Support (Portland) “Direct.ly” – Peer to Peer Support
§ A key tool to reduce inbound contacts § 40+ customer service reps available to § Peer-to-peer client support by
and generate leads assist artists directly in three languages experienced CD Baby artists who earn
money every time they successfully
§ Detailed educational resource for in- § Utilize interactive support channels like resolve a client question
depth topics (e.g., publishing phone (~ 25%+ contacts), chat (~6%)
and non-interactive support channels like § These artists also indirectly become
administration)
web based ticketing and emails (~69%) brand ambassadors for CD Baby
§ 189k+ views in the last 30 days § In a typical week, receive ~10,500 § On average, Direct.ly artists answer
inquiries 1,500+ inbound questions
§ 90%+ of those using the Help Center
answer their own questions without § Through September 2018, avg. YTD § Average satisfaction for this service is
needing further assistance customer satisfaction was 92% 98%
§ Frequently asked customer questions § Despite significant submission & business § Average reply times ofMulti-Brand Platform Creates Targeted Marketing Opportunities to Efficiently
Promote and Leverage AVL’s Full Suite of Services
Offers artists and their Exploits marketing synergies
Cross-sell other services to
representation a “full stack” of between the brands to expand
maximize revenue
modular products and services reach & grow audiences faster
Distribute
Monetize Promote
44
CONFIDENTIAL AND PROPRIETARY INFORMATIONMulti-Brand Suite of Product Offerings Allows the Company to Effectively
Cross-Sell Services to Clients
§ Ninja Sex Party, currently one of CD Baby’s top-performing clients, highlights the Company’s
ability to successfully cross-sell multiple products and services
§ In the beginning, Ninja Sex Party utilized CD Baby’s promotional tools / capabilities to help
build their following on DSPs and launch a music video on YouTube
− Due to the initial success of the campaign, the band developed a sense of trust with CD Baby,
and the Company was able to capitalize on other cross-selling opportunities
§ As a result, CD Baby cross-sold both its physical and digital distribution services
− CD Baby managed a presale of the band’s forthcoming album and handled all pressing and
logistics
− This presale and fulfillment of physical product helped the band chart in 2016 at #9 with “Under
the Covers”, in 2017 at #19 with “Under the Covers 2” and again in 2018 at #6 with “Cool Patrol”
The progression and success of CD Baby’s cross-selling efforts to Ninja Sex Party
Attract Digital Physical
Subscribers Release Pre-Release
Sold over 42,000 Generated Album charted at
pre-orders (signed $500,000+ in sales #9 on Billboard Top
CDs and Vinyl) before pre-release Albums
45
CONFIDENTIAL AND PROPRIETARY INFORMATIONIn Conclusion – What is Your Business Trajectory? CD Baby Circa 2010 AVL Digital Circa 2019 • 30% of revenue was from the sale of artists CDs, a • Physical sales (CDs, vinyl) are 5% of revenue. And declining business growing… • 50% was from the sale of artists downloads, mostly • Focusing on meeting the needs of our Digital on iTunes. A slow growth business. Service Provider Partners, we’ll administer $150 • 20% was from the sale of promotional services, million in digital royalties – mostly from streaming mostly HostBaby and the CD Baby store • Artists and rightsholders using our platforms now • The company employed
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