RadioTower.com
Interactive Internet Radio
Business Plan
1999-2001
Contact:
Tech-Equities Inc.
Toll Free: 877-454-0385
e-mail: equities@home.com
EXECUTIVE SUMMARY
RadioTower.Com went online June 9, 1996. The website is a free online
directory of radio stations that webcast on the Internet. RadioTower makes
it easy to tune in and listen to over 850 radio stations from around the
world in dozens of genres (top 40, news, alternative, rock, sports etc.).
The company projects a user base of 2 million users per month in 99/00.
Revenue is derived from the sale of onsite advertising, affiliated
e-commerce products such as CD's, video's, books, and business-to-business
audio services.
60 million people currently have the technology to listen to Internet audio
and analysts predict 250 million listeners by 2002. Technological
advancements, such as increased bandwidth and cheaper more powerful
computers will continue to improve the quality and reach of Internet audio.
The market will continue to expand until listening to Internet audio is as
commonplace as
listening to the radio in your home, car or workplace.
RadioTower has a well defined and growing market niche. In the coming years
thousands of additional broadcast and Internet only radio stations will go
online. This creates a demand for a T.V Guide type directory for these
sites. RadioTower provides information and descriptions for each station and
links to the stations' own home page. All stations can be tuned in from the
RadioTower site.
RadioTower has licensing agreements and affiliations with a variety of
e-commerce companies and content providers. This allows us to provide our
users with dynamic, interactive and everchanging site content. The company
markets a range of e-commerce products that are targeted at specific
audiences. (i.e. sporting events for sports station listeners, classical
CD's on the classical pages etc.)
There are 30,000 radio stations in the world. 8,000 of these stations have
websites and 2,200 of those webcast their audio signal. RadioTower is
developing tools to offer these radio stations services such as audio
hosting and e-commerce capabilities.
RadioTower is a pioneer of Internet audio. We were one of the first
companies online with a live audio directory. RadioTower has built a steady
user base due to positive word-of-mouth, high listings on all major search
engines, links from 1,000's of other sites to our site, strategic
affiliations, favourable reviews (L.A Times, HotWired, Vancouver Sun etc.),
and numerous awards (Yahoo Picks, Windows Magazine Site of the Day etc.)
WEB SITE DESCRIPTION
RadioTower.Com is a free online directory of radio stations that broadcast
their signal over the Internet. We currently list over 850 radio stations
from around the world. For each listing we supply a direct audio link (user
can listen to station directly from our site), and a link to the station's
own web site. We also list the station name, call letters, genre and
location. Station descriptions are also offered and we will continue to
improve this content by allowing the station, site users and our staff to
update this material.
WEB SITE DESCRIPTION CON'T
RadioTower is easy to use and downloads quickly. Our directory categorizes
stations into 20 different genres (alternative, country, sports, talk
etc.). Users can also keyword search by station
name, call letters, city, state, country and /or descriptive word. Once a
station is selected the user simply clicks and listens. The user is free to
continue to browse our site, surf other websites, work at home or in the
office.
RadioTower site content and features are in continual development. New
stations are constantly being added to our data base. The My-Audio feature
will allow users to preset an unlimited amount of their favorite stations
and have customizable one-click access to an array of targeted audio reports
(news, weather, sports etc.). Localized versions of RadioTower in different
languages will also be made available.
Programming information will be provided for as many stations as possible.
Special events, concerts and regularly scheduled features will be
highlighted. We will also provide multiple ways for our visitors to interact
with the site. (RadioTower Chat, for example). In short, our goal is to make
RadioTower the easiest and most dynamic way to listen to audio on the
Internet. We strive to be, "Your Audio Portal To The World".
REVENUE MODEL
RadioTower is a content aggregator and distributor. We aggregate content
from hundreds of radio stations and offer a platform from which end users
can access the content free of charge. We make revenue from the site through
advertising and e-commerce. The more appealing our site is and the better we
market it, the more users we will get and the greater our site revenues will
be.
Radio stations supply us with content in return for a listing on our site,
which increases their exposure. We are also licensed sales agents for
several business-to-business products and services, which are specifically
targeted towards Internet radio broadcasters. This will allow us to build
strong relationships with individual stations and create a RadioTower
Network whereby all players (stations, RadioTower, users) reap the benefits.
Radio ------------------------>
io ------------------------------> End
Stations <----------------------- Tower
<------------------------------ Users
PRODUCTION
Site users must have a multi-media computer with a free downloadable copy of
RealPlayer
installed (60 million in use). Audio quality depends on speed of Internet
connection, computer speed and quality of a particular station's host
server. A 28k modem and 486 computer offers reasonable results.
PRODUCTION CON'T
The RadioTower Site is developed and maintained in-house and then uploaded
to Vancouver B.C. based Netnation Communications (www.Netnation.com) for
serving. Station data is researched on the Internet, then added to the
database on a monthly basis. Each station is notified of its inclusion and
asked if any changes are required. Many stations also contact us requesting
a listing or complementing us on our service.
PRODUCTS AND SERVICES
ADVERTISING
RadioTower is able to deliver a highly targeted audience to potential
advertisers. Users can be targeted according to the genre of radio they
choose to listen to. Our customization service, My-Audio, will require the
user to submit demographic information allowing us to track user
prefereneces. RadioTower is able to deliver a highly targeted audience to
potential advertisers. Our site is a natural for audio ads which have a much
higher click-through rate (3 to 5 times) than regular banner ads.
Advertisers want to know about the audience they are reaching. RadioTower
strives to know their users. Site customization, interactivity and dynamic
content are key factors in gathering consumer information and building a
repeat audience. Advertising revenues are of course directly tied to number
of site visitors. RadioTower plans an extensive
marketing campaign to drive traffic to our site.
E-COMMERCE
RadioTower has several e-commerce affiliations and licensing agreements in
place and pending. We have a signed agreement with a major back-end provider
of C.D's, video's, books and magazine subscriptions. This agreement will
also give us the ability to offer consumers direct downloads of music from
the Internet. RadioTower will market the site as our own branded store. Our
partner will handle all inventories, order fulfillment, collections,
disbursements etc. They will also supply us with content that will allow
customers to find out more about a C.D or band they are interested in before
purchasing.
E-commerce will be targeted at particular audiences. For example, sports
radio listeners will be offered sporting goods while business station
listeners can subscribe to the Wall Street Journal. RadioTower will also
strive to make our online shopping experience an interactive one. Consumers
will be encouraged to review products and offer their personal "Top 10"
lists. Best sellers will be mixed with fan favourites. Actively involved
users will visit more often and buy more products, increasing our revenues.
BUSINESS SERVICES
The Internet is evolving from a mainly text/graphic medium to a rich
mult-media environment full of audio and video. A huge market opportunity
exists for the production, hosting, marketing and adding value to this
content. As an audio portal we are well positioned to offer these services,
increasing both our content offerings and revenue potential. Much of the
fulfillment of these services will be contracted out to partners already in
place. This allows us to concentrate on our core objectives while generating
revenues from multiple sources.
The first of these services, Audio-Station, is in place. This service is
geared for radio stations who want to put their signal online 24 hours a
day, 7 days a week. The hosting of this service is contracted out and we
plan to add e-commerce and advertising capabilities to this service (also
contracted out). Two other services Audio-Show and Audio-Ads are being
prepared for roll-out, with additional services coming down the line.
INDUSTRY OVERVIEW
SIZE OF INDUSTRY
According to Real Networks there are 60+ million registered users of the
free software needed to access RadioTower. 15.5 million of these users are
considered to be regular listeners. Both numbers are growing quickly as the
software is being bundled with other major software releases such as AOL
4.0, Netscape and Lotus Notes. Rapid growth in the number of Internet users
from 100 million in 1998 to 200 million in 2000 (stats from Cyber Atlas)
will double the potential market for Internet audio users.
According to Arbitron statistics detailed at a panel discussion on Internet
radio at the RealNetworks Conference and Exhibition in San Francisco,
between August 1998 and January 1999, the number of Americans who listen to
Internet radio more than doubled, from 6% to 13% of the U.S. Internet
population. Statistics from Forrest Research Inc. indicate online
advertising will grow to $15 billion in 2003. E-commerce will grow from $8
billion in 1998 to $327 billion in 2003.
KEY MARKET SEGMENTS
Users of Internet audio can be generally grouped into two segments: at work
and at home. At home listeners might be in radio limited areas, want to
listen to stations from places they lived before, want to tune in stations
from far off locations, or listen to a radio genre not available in their
area. At work users can benefit from the better reception and variety that
Internet audio offers, as well as the fact that most office and white-collar
workers have ready access to computers and the Internet.
KEY MARKET SEGMENTS CON'T
Suppliers of Internet audio can be divided into three segments: existing or
net-only stations that broadcast live 24/, live events and archived
material. Live events include concerts, company releases, sporting events,
conferences and interactive programs. Archived material includes songs,
programs, clips, ads and educational material.
KEY INDUSTRY TRENDS
The Internet has only been a commercial entity since 1995 and since then has
seen massive growth in its ability and popularity. Increasing bandwidth
along with more powerful software and hardware will continue to drive the
technology forward.
Users will enjoy better sound quality, more content and advanced interactive
features. The technology will become easier to use as basic player functions
are built into the browser or operating systems. Instead of being mainly
early-adopters the market will become more mainstream.
Eventually, Internet audio will replace traditional radio. Wireless
technology and shrinking the receiver from a PC to a hand-held appliance
will allow it to go mobile. Benefits of Internet delivery such as lower
cost, improved customizability and a richer media environment will ensure
the success of Internet audio.
INDUSTRY OUTLOOK
The market outlook for all areas of the Internet audio industry is extremely
positive. Internet users will increasingly listen to audio they can't
receive from traditional sources while web sites will clamor for the added
power of audio.
Traditional radio has become very homogenized. With the high costs of
licenses and the expense and limits of transmitters, radio can't target
small niche markets. Internet audio with its global reach and its low
barrier for content delivery offers huge expansion of opportunities for
micro-niche programs.
With increases in the number of content sources and general Internet growth,
the potential base for listeners will quadruple in the next three years.
Demand for Internet audio should increase proportionally; thus an Internet
audio firm can expect large increases in users and revenues provided it can
fulfill customer needs.
MARKETING STRATEGY
According to our onsite survey our customer demographics are: 75% male, 25%
female; 84% are between the ages 18 to 49; their median annual income is
$50,000+; 70% are from North America, 20% are from Europe. Our users are
technically literate, early adopters who are most likely to purchase
products and services on the Internet. As such, our users are attractive to
advertisers. We will initially focus our marketing on expanding this
audience demographic.
TARGET MARKETS
There are 30,000 radio stations in the world. 8,000 of these stations have
web sites and 2,200 of these webcast their audio signal. Three years ago
only 56 stations were web-casting their signal. Over 3,000 will be
web-casting by the end of 1999. All these stations will be targets for our
value-added business services.
ANALYSIS OF COMPETITIVE POSITION
RadioTower is a pioneer of Internet audio. We were one of the first
companies online with a live audio directory. Many applications that we
envisioned years ago have now successfully entered the marketplace.
RadioTower is playing catch-up with our large competitors in terms of
financing, resources and audience. Our main competitive advantages are
in-depth knowledge of the Internet industry and Internet audio, the ability
to define new trends, the conceptualization and implementation of new
products and services, all to satisfy the consumers wants and needs.
In the network oriented Internet business environment, competitors can be
potential allies. The market is large enough to support several directories.
We are differentiated from each of our competitors in several ways. Our
large competitors limit listings to sites they host or that use their own
audio technology. RadioTower's policy is to link to all audio providers
regardless of technology or proprietary interests. We also provide more
in-depth information to guide users to relevant audio.
PRICING STRATEGY
The RadioTower web site is free. Advertising rates on our web site will be
industry standard. On average this is $30 US CPM (cost per 1,000
impressions). We will offer discounts to sponsors and long term advertisers.
E-commerce prices are set by the affiliate. Our commission averages about
15% of gross sales.
PRICING STRATEGY CON'T
Our initial pricing strategy is based on an advertising model and leveraging
our audience through e-commerce opportunities. We will offer a compelling
site and service for free to attract users to our site. Advertisers will
want to target our particular audience. As our marketing campaign kicks into
high gear we will attract more visitors, thus increasing our advertising
rates and revenues. Also, increased audience leads to more e-commerce sales.
Once a general audience has been captured, specific revenue generators can
be targeted at particular niches.
PROMOTION STRATEGY
RadioTower has built a steady user base through positive word-of-mouth, high
listings on all the major search engines, links from 1,000's of other sites
to our site, favorable reviews including the LA Times and HotWired and
numerous awards such as Yahoo Picks and Windows Magazine Site of the Day.
In order to increase site traffic we plan an extensive sales and marketing
campaign to promote the RadioTower Web site. This campaign will include
banner and audio advertising on the Internet, print ads in relevant
magazines, newspapers and trade journals, and spot ads on radio stations.
Press releases, email campaigns and link exchanges will remain key marketing
components. Advantageous sponsorships and affiliations will be vigorously
pursued.
We have an audience that is attractive to advertisers and we will make them
further aware of this through onsite information and direct contact. We also
have a contract with an ad placement agency who contact advertisers on our
behalf.
DISTRIBUTION STRATEGY
The Internet offers quick, easy distribution of products and services.
Visitors can access our website free from any Internet-enabled computer. The
number of access points will continue to grow dramatically. Affiliate
products are ordered through the host site. All products and services can be
paid for online with major credit cards, via secure order forms. Customer
service and support is readily available via email.
MANAGEMENT AND STAFFING
Paul Valkama is the Founder, and President of RadioTower.Com. He has been
envisioning Inter-active solutions for over 12 years working with a variety
of clients. Mr. Valkama has created a variety of web sites and has a
broad-range understanding of all aspects of the Internet including Design,
Graphics, Scripting, Serving, Testing, Marketing, etc. His educational
background includes a BA in Communications from Simon Fraser University
(SFU) and a Diploma in Information Technology from Capilano College.
MANAGEMENT AND STAFFING CON'T
Henry A. Valkama received his degree in Business Administration from Simon
Fraser University (SFU) in 1986. He has been involved in the creation and
management of several small business enterprises and is experienced in all
aspects of business operation. He uses computers and the Internet
extensively.
RadioTower.Com makes use of an extensive network of partners and affiliates
and is actively hiring our core crew. We are interviewing for the following
positions: Senior Web Programmer, Junior Web Programmer, Graphic Artist,
Webmaster, Multimedia Designer, Web Writer, Marketing Representative, Sales
Representative and Administration Assistant. Additional staff and management
will be hired as need and finances warrant. Staff will be offered an
Employee Stock Option Plan in order to attract and keep qualified, motivated
personnel.
FACILITIES
Thee company's Operation Center is located in Vancouver, BC, Canada. The
size of the premises is 1,500 square feet. The annual lease rate is USD
$9.50/square foot. Corporate Headquarters are in Red Bank, New Jersey, USA.
RISKS
The Internet audio industry is new so business models remain unproved.
Significant revenue depends on growth in all facets: audience, e-commerce
acceptance, advertisers and general demand for audio. However the market is
growing fast. If the predicted growth in the industry occurs, many
profitable companies will appear.
OTHER RISKS
RadioTower.Com is a small company and doesn't currently have the resources
of its competitors. We need to put in place financing, staffing and
partnerships to be in a situation to grow. While working on these aspects,
we do not need to have the reach of our competitors to be profitable.
INTELLECTUAL PROPERTY
The RadioTower site is copyrighted upon uploading. radiotower.com is a
registered domain name of RadioTower.Com. We will seek trademark protection
for RadioTower as it refers to any Internet service. We will also seek
trademark protection for the slogans "The Internet Radio Receiver", which we
have used online since June 96 and "Transmitting YOUR message to the world!"
which we have used since June 97.
REGULATORY ISSUES
Many legal issues about the Internet have yet to be resolved. The most
critical for us is the direct linking of audio content. We merely provide
links to audio sites on the Internet and do not portray the audio content as
our own. We provide a direct link to a site and notify the station via
email. To date, all replies from any content provider have been positive and
many others request a listing.
As we develop, we will seek more formal alliances with content producers.
Our desire is to work with as many audio sources as possible, adding value
to their content. We will adhere to all local, national and international
laws.
FINANCIAL SUMMARY
Our revenues are expected to reach $1,500,000 for the coming fiscal year. We
project strong growth in revenues due to extensive marketing and improved
site content resulting in a steady increase of site traffic to 2,000,000
users per month by the end of the fiscal year. This will proportionally
increase advertising and e-commerce revenues.
Marketing expenses ($1,500,000) equal revenues. One dollar in marketing
equates to one dollar in revenue. Total expenses ($2,950,000) are twice
revenues. This is common in the Internet industry. In the early stages of
company development, expenses will run ahead of revenues as we concentrate
on the rapid increase of site visitors and revenue. These are the key
variables in determining Internet stock values. Bottom line profitability is
three to five years down the road.
SUMMARY OF PROJECTED CASH BUDGET - 99/00
Based on USD $2,000,000 Equity Contribution
CASH RECEIPTS: 1Q 2Q 3Q
4Q Total
Advertising 70,000 140,000 210,000
280,000 700,000
E-commerce 30,000 60,000 90,000
120,000 300,000
Business Services 50,000 100,000 150,000
200,000 500,000
Total Sales 150,000 300,000 450,000
600,000 1,500,000
Cash Equity Contribution 300,000 1,700,000
2,000,000
TOTAL RECEIPTS 450,000 2,000,000 450,000 600,000
3,500,000
SUMMARY OF PROJECTED CASH BUDGET - 99/00 CON'T
Based on USD $2,000,000 Equity Contribution
CASH DISBURSEMENTS:
Rent 4,000 4,000
4,000 4,000 16,000
Computer Equipment 16,000 12,000 12,000
10,000 50,000
Software & Materials 33,000 12,000 18,000
12,000 75,000
Salaries - General 72,000 108,000 140,000
180,000 500,000
- Management 12,000 13,000 50,000
50,000 125,000
Marketing & Promotion 150,000 300,000 450,000
600,000 1,500,000
Office Expenses 25,000 15,000 15,000
20,000 75,000
General & Administration 35,000 30,000 30,000
30,000 125,000
Research & Development 10,000 25,000 25,000
40,000 100,000
Contingencies (15%) 53,000 81,000 111,000
139,000 384,000
TOTAL Disbursements 410,000 600,000 855,000
1,085,000 $2,950,000
CASH BALANCE 40,000 1,440,000 1,035,000
550,000 $ 550,000
DISCLAIMER
Certain statements in this Business Plan constitute ''forward-looking''
statements within the meaning of Section 21E of the U.S. Securities Exchange
Act of 1934. Such forward-looking statements involve risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements
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