Digital Distribution Channels by vhu21013

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									Digital Distribution Channels
December 1, 2006




The Market: A Paradigm Shift in Music Business
           Retail-centric                                Consumer-centric
                                                Music anywhere, any place, any time
                                                                            Mobile:
                                        Traditional                         •   Ringtones
                                          and new                           •   Ringbacks
                                        retail outlets                      •   Streaming Video
                                                                            •   Artwork/images




                                                                                 Home
                                                                                network
                                                Cable/Satellite:
                                                • On-demand           PC:
                                                • Streaming Video     • Downloads
                                                                      • Subscriptions
                                                                      • Streaming Video



  Physical formats available at music        Explosion of diverse products available
                retail                              through many channels
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     Global Digital Music Market Projections (Retail)
     In $ Billions


20
                                                                                         18.9
                                                                                                 % of Digital to Total
18                                                                                              Music Market by 2009
                                                                                22%

                                                                                                PwC -------------- 41%
16
                                                                         15.4                   Enders ---------- 22%
                                                                31%
14                                                                                              Goldman-------- 13%

12                                                       11.8
                                             42%
10

                                   8.3
8                    54%


                                                                                31%
                                                                                         6.3
6
             5.4
                                                                37%      4.8
4                                                                               32%
                                             40%         3.5
                                                                55%                   3.7
                      66%          2.5
2                                            50%                      2.8
             1.5     71%
                                                      1.8
                                 1.2
0         0.7
         2005                   2006                  2007            2008            2009




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     Retail Partners Q1-Q3 2006
                            1          Wal*Mart

                            2          Target

                            3          Best Buy

                            4          Apple iTunes
                            5          AEC One Stop Group

                            6          Trans World Music Corp.

                            7          Circuit City

                            8          Verizon Wireless
                            9          Amazon

                            10         Borders

                            11         Handleman (ex-Walmart)

                            12         Cingular
                            13         Sprint Nextel
                            14         MTS

                            15         T-Mobile
                                                                        • Apple likely to be #2 in 2007
                                                                        • 5 of top 15 accounts are now digital
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                                                                                                                             2
Our Digital Strategy
     4 CORE STRATEGIC OBJECTIVES:


       Products                  Largest Catalog and Highest Quality



       Distribution        Greatest Breadth and Depth of Digital Partners



                            Commitment to Leadership in New Formats,
       Innovation
                              Configurations, and Business Models



       Anti-Piracy             Relentless Drive to Reduce Music Piracy



      Digital assets now part of every album release and marketing plan
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A Huge Number of Digital Music Configurations
now Live


                                                       …and Now
    Then…
                        Increasing                        Online Downloads
                         number &             Online Subscriptions (fixed and portable)
                       complexity of
                                              Mobile Subscriptions (fixed and portable)
                         Products
 Online Downloads                                      Online Video Streaming
                                                            Internet Radio
Online Subscriptions                               Unlimited On Demand Streaming
   Monos, Polys,                                      Monos, Polys, Mastertones
    Mastertones                            Full Track Music Downloads – to Phone and PC
                                            Video Downloads & Streaming – Phone & PC
                                                              Videotones
                                                           Ringback Tones
                       Convergence
                                                            Voice Ringers
                        of Mobile &
                            PC                                 Pictones
                                                               Mobile TV
                                                       Pay per view Streaming
                                                         Embedded Handsets
                                                   Pre-Loaded Flash Memory Cards

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                                                                                              3
 Video Distribution Channels: Computer

Permanent Download
   iTunes
     – Launch partner for short form music videos: Oct. ‘05
     – Launch partner for full length live concerts: Dec ’06


   Google
     – Exclusive music partner in video store since Jan ’06


   Zvue
     – OEM of audio and video digital music players
     – Distributed through Wal-Mart
     – Exclusive music partner in Zvue video store since June ‘06

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 Video Distribution Channels: Computer
Proprietary Ad Supported Streaming
  MusicBox
     – Proprietary video streaming platform live on all label web sites and
       nearly 100 artist sites
     – Traffic of 1.6m unique visitors viewing 15m streams per month
     – Generates advertising revenue
     – Viral marketing and sharing features
     – Cross-selling opportunities




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 Video Distribution Channels: Computer
Ad Supported Streaming
  Pioneering ad supported streaming deals ‘05




  Network expansion ‘06




  Further expansion coming ‘07




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 Video Distribution Channels: Mobile

Mobile
   Permanent Download
     – Launch partner with
     – Pending deals with


   Streaming
     – Subscription offers
     – Live with Sprint, Coming ’07 with


   PPV
     – Longform video channel coming ’07 with


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                                                     5
 Video Distribution Channels: Set Top

Cable
  Music
     – VOD, Free to user




Console
  X-box
     – Streaming, Free to user, Permanent download
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