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COMPANY OVERVIEW
There is a new, rising star in the music and entertainment
industry. Generation Entertainment Corporation (GNEN
OTC-BBS) has established a full service music division. The
company has a stable of recording artists and labels as
well as a top-notch promotion and worldwide distribution
infrastructure. Generation recently acquired Copper Sun
Records and Harvest Music from William "Bill" Craig, a
legendary fixture in the music industry. With the recent
acquisition of Bill Craig, Copper Sun and Harvest Music,
three national distribution contracts, and 18 artists,
Generation Entertainment's music division is poised for
success.
NATIONAL PROMOTION AND DISTRIBUTION
It's a fact that the record industry creates more
millionaires every year than all other industries combined.
Perhaps the single most important factor in successful
record promotion is radio exposure for the music. Bill
Craig is a master in this area with a distinguished record
spanning some 33 years. During that time, he has carefully
constructed a network of independent promoters who can
assure that Generation records will get airplay necessary
for success.
Craig has worked closely with a long list of distinguished
recording artists in promoting their efforts. The walls of
his office are decorated with gold and platinum records,
which testify of his abilities and success. In one year,
Bill had four artists ranked among the top 10 on the record
charts, all at the same time, a feat unequaled by anyone
else in the industry. Among the artists Bill has promoted
are: The Jackson Five, Michael Jackson, Latoya Jackson, The
Chi-Lites, Chaka khan, Herbie Hancock, Barbara Streisand,
The Pointer Sisters, Earth, Wind And Fire, Cindi Lauper,
Sade, Maxine Nightengale, MC Hammer, Matthew Wilder, The
Dells, 2 Live Crew and the list goes on and on.
Mercyline (Mike) Bernardo has also joined Generation to
spearhead the radio promotion effort. She has more than
four decades of experience in promotion including stints
with labels such as A&R, CBS Records and Mercury Records.
Mike is a past recipient of the Coca-Cola Award for
Excellence.
RADIO PROMOTION
As already noted, radio promotion plays a vital role and is
the life-blood of the recording industry. Making the
Billboard Top-100 cannot be done without solid
radio play. Chances are, if people don't hear it on the
radio, it's not going to sell at the retail level.
Bill Craig is the man many credit for developing and honing
radio promotion techniques. He uses secondary market
stations to create and build "noise" for a record on a
regional basis. This effort with lower powered stations in
dense population areas is the first phase of a three-phase
system. Once a record has been established on those smaller
stations, Bill moves to phase two, utilizing top stations
in the big markets. The secret lies in knowing the specific
region in which a record should break first. He has
introduced and promoted hundreds of "hit" R&B records in
this manner.
Phase three in Bill's approach involves pushing a record as
high on the Billboard charts as it can possibly go. Once it
hits the charts, offers begin coming in from overseas to
license records in other countries. These licensing
agreements alone can bring in cash ranging from $7,500 to
$250,000 and up.
DISTRIBUTION
Distribution of Harvest Music and Copper Sun records will
be handled by three of the most prominent distribution
firms in the world, PPI Distribution of New Jersey, M.S.
Distribution of Chicago and EMD of New York.
Bill Craig, capitalizing on his personal, life -long
relationships with people now in a position to provide
distribution, has inked contracts with some of the largest
distribution firms in the business. Current contracts are
with M.S. Distribution in Chicago, PPI (Peter Pan) of New
Jersey and EMD, which is part of Capital Records and will
handle worldwide distribution. With these contracts in
place, the Generation labels access all the main stream
music and record outlets.
(ex: Best Buy, K-Mart , Wal-Mart, Target, and Internet
outlets)
Distribution, of course, is vital to the record business.
Having an album with all the elements of a hit with no
distribution and no access to the major stores makes it
fruitless. One can appreciate the enormous importance of
the distribution agreements for Harvest Music and Copper
Sun a little more when the fact that only a handful of
independent labels have such contracts is considered.
Because Generation has these multiple distribution
contracts, there are many options open when management is
considering when and where to release its products.
Distributors will be selected based on the type of product
and the need for promotional support or manufacturing. Once
that decision is made, the distributor takes over and the
process is simple.
As soon as the distribution system is set, the promotion
strategy goes into motion. When the date of release for
retail sales is known, a date is set for the official radio
commercials to begin. Two separate systems monitor sales
and radio promotion. Retail is tracked by the Soundscan
System through computers at Billboard, which are tracking
retail sales throughout the country. All of it is broken
down into market areas and urban, rural and suburban
headings.
"One-Sheets" & Charting
The national sales staff uses something called "One Sheets"
to promote records to retail clients. The "One-Sheet" lists
all the information about a record. Included are the record
title, artist's name, biographical sketch of the artist,
configurations available (album, single, CD, cassette,
etc.) and the bar code information. Each distributor
includes the "One-Sheet" (example included) in their
general sales book. The books are updated monthly, ensuring
that new product will be included.
Computers are, of course, also used to track radio play. A
"footprint" (excerpt) is detected by the computer for BDS
reports. Radio and Records also tracks its reports through
stations reporting directly to them. Generations music
division access's those reports every Tuesday evening. The
reports tell which stations are playing the record, how
many times it was heard through the week, how many new
stations added the record to play lists, and how many
stations dropped the record.
Combining the information from these two reports discloses
whether the market strategy is working or whether it must
be adjusted for the next week. This is important because a
record is charted based on retail sales and airplay. Some
records have been charted without ever having been played
on radio because pre-publicity was sufficient to get the
job done. This usually happens with big names such as
Michael Jackson, Mariah Carey and Toni Braxton. Records
from these artists hit the charts without anyone having
heard them. Lesser-known artists must have success in both
areas with a marketing plan that is carefully coordinated
and monitored. The average record will take many weeks to
hit the chart and will have radio run of only 8 to 10 weeks.
Charting and creating retail sales for records is an
extremely complex science. With the average life of a
record only 8 to 10 weeks, it is easily understood how
record companies can run up millions in annual profits.
M.C. Hammer's first album sold an incredible 19 million
records (sold wholesale at $7.75 each). He was a relatively
unknown artist with an extraordinary promotion team headed
by none other than Bill Craig. With a good budget and an
excellent retail promotion scheme, Craig made hammer and
his record label very rich.
Obviously, the Hammer story is rare. His record hit the
right chord with the buying public. But consider the fact
moderately successful records, selling 10,000 to 100,000
thousand, happen every week. Sometimes a seemingly
insignificant thing, such as a" One-Sheet", can make the
difference between a record becoming a hit and a record
fading away.
CURRENT PROJECTS AND FUTURE GROWTH
Generation Entertainment's Copper Sun and Harvest Music
labels have two elements necessary to become major record
companies with worldwide distribution. The corporate
philosophy is to position and use these assets so that each
element generates its own income and has the ability to
become a profit center.
To make money, most record labels focus on recording and
producing artists and then " shop" the material to a major
label which will license the artists for the length of
their contracts and simply take whatever profits the major
decides to offer. This is known as "upstreaming." It is a
fairly common practice and does not require the label to
take much risk. There may be artists signed to Generation
labels that will fall into that category, but they will
most likely be artists who are difficult to manage.
PROFIT CENTERS
Copper Sun and Harvest Music focus on several profit
centers for an income stream. These are distribution,
promotion, publishing and licensing.
Distribution: The majority of Generation income will be
derived from the distribution and sale of the product.
$7.75 is earned with each CD and $5.50 for each cassette.
This is after payment of the distribution fee to the
distributor. If independent labels are taken on for
distribution only, it's possible a fee would be charged to
those labels for entry into the Generation system.
Normally, that would involve a one-time payment of $10,000.
Distribution always takes the lion share of the revenue.
Promotion: This is an area which will be developed more
fully when the promotion staff is solidified. Independent
labels contracting Generation for distribution must also
have the money to promote their products. This will bring
in gross revenues of $75,000.00 to $ 100,000.00 per single
release. Obviously, this could be a substantial amount of
money over a year's time. There is a profit margin of 35%
built into those figures.
Publishing: Publishing is known as the "annuity" of the
record business. It pays off year after year, long after an
artist may be gone and forgotten. As an example: when a
record is a hit, it is played on virtually every radio
station in the country. Every time it is played, the
company can receive up to 6 cents. That doesn't sound like
a lot of money until you do the numbers. Assume that 5
thousand stations (actually far less than we have playing
hits) have your record on the play list and that it is
played an average of 30 times per week. Add it up and you
find the record has been played 150,000 times per week
nation wide. Every week of play at that level and a check
for $9,000 is generated. The average hit record gets this
kind of play for roughly 22 weeks, then tapers off for many
weeks beyond that. Just for the 22 weeks, the company earns
$198,000!
If an ad agency uses your music for a national client (ex:
GM, Burger King, Victoria's Secret, etc.,) the agency must
pay the publisher of the music in the neighborhood of 600
dollars each time it is played. It's even more for a
nationally aired broadcast such as the Superbowl, the
Oscars, MTV's music awards, Miss Universe, etc. A payment
is made for every market in which the piece is played. Some
artists have been known to live the rest of their lives
without ever writing another tune. As a result, Generation
tries to secure publishing rights as a part of every deal.
Licensing: Overseas Licensing: Once a record is charted,
the world begins to take notice and will pay to distribute
a record overseas. For this reason, Generation is reluctant
to give up worldwide rights to music unless the distributor
has stronger deals than the company can cut itself.
Licensing fees can range from 10 thousand to hundreds of
thousands of dollars depending on the music, the artist and
the territories involved.
There are several other revenue generators within the basic
structure of the company, but they do not represent the
kind of revenue described in these major categories.
FUTURE
Although our main focus today is R&B, Generation
Entertainment is well aware that it must broaden the talent
base in order to widen appeal and increase revenues by
becoming well rounded. Generation is aggressively
considering acquisitions of more labels, artists and
various Internet-related technologies.
FINANCIAL OVERVIEW
Generation Entertainment Corporation is focusing its
efforts on acquiring assets in production and worldwide
distributions of recordings, both electronic and
traditional. Generation will also be involved in original
music, video and Internet programs.
The first such acquisition took place on July 24, 1998 when
Generation purchased the assets of two record labels from
William Craig, a long-time producer and promoter of artists
and recordings, Craig then contracted to stay on as
President of the labels. His prestige and record of
accomplishments in the business were considered vital. This
also means it is anything but a startup operation.
The purchase was for assets only, thus there was no
assumption of debts and guarantees from existing record
labels. Promotion of record labels and artists in a variety
of music fields has been ongoing and included in the urban
mix are Gospel, Hip-hop, Rap and Jazz.
Among the major assets in the acquisition were the existing
contracts for distribution of recordings. There are
contracts with M.S. Distribution in Chicago, PPI
Distribution of New Jersey and EMD which is owed by Thorn
Music of London which, in turn, is part of Capital Records.
Through these distributors, Generation has access into all
the mainstream retail music and records outlets.
Additionally, the distributors reach into such major chain
stores as Best Buy, K-Mart and Target. MS and PPI will
handle U.S. distribution while EMD will be used for those
releases with worldwide appeal.
Bill Craig already has no less than seven records ready for
release, all with the potential of climbing onto the urban
and urban contemporary singles charts. If all seven were to
make the Billboard Top 100 Chart this year, it would
catapult the company into top ten status among record
labels in the country.
Generation, with its team of production and promotional
experts, has plans for imminent acquisition of additional
entities in its core business of records as well as in
allied fields, which will complement the current portfolio.
These planned acquisitions will be designed to make maximum
use of the talents and abilities of the company's
management team.
As noted, William Craig is the President and guiding light
of Generation's record business. Mike Bernardo, another
veteran of the industry is assisting him. Craig's expertise
and history in the business is unquestioned. The company
will be making maximum use of him and Bernardo, taking
advantage of their invaluable knowledge and instincts for
successful promotion of records and artists. Generation's
top management sees no reason to reinvent practices and
methods of the industry, which have been so profitable over
the years.
COMPANY BUSINESS
There are two important areas that cannot be ignored when
it comes to assessing a company's outlook. One is the
manner in which the business plan is being carried out, the
other, of course, is the balance sheet and financial
statements.
Generation has carefully carved out a niche in the
recording business and its initial acquisition has gone a
long way toward assuring a very strong immediate future.
That future could well see explosive growth over a 5-year
period, growth that could truly be labeled phenomenal.
The most recent balance sheet (see attached) shows
insignificant debt (under $5,000). Management intends to
use the virtually debt-free platform to keep the company on
a financial even-keel. This, in turn, should allow for
development of various avenues of business, arising from
the music and recording core. Financing such ventures to
facilitate growth would allow the firm to capitalize on its
business plan.
Generation Entertainment Corporation was originally
incorporated on May 9,1988 in Utah. Since then the company
has undergone a number of name changes, but has never
conducted business if any sort until the recent acquisition
of Copper Sun Records and Harvest Music. Also, Gunner
Energy (the most recent name) reversed its common stock
100:1, re-domiciled itself in the state of Nevada, and was
re-named Generation Entertainment Corporation.
As of August 26,1998 Generation Entertainment Corporation
(GNEN OTC-BBS) is capitalized with 164,000 twenty-five
dollar, non-convertible, voting (25 votes per share)
preferred shares. Also there are 5,746,286 common shares
fully diluted consisting of 2,329,000 restricted shares and
3,417,286 free trading shares.
As of the close of business July 31, 1998 Generation
Entertainment's balance sheet included total assets of $
4,125,761, total liabilities of $ 4,750 and stockholders
equity of $4,121,011.
Copper Sun/Harvest Music Proforma
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