This project had the honour of being selected to enter the Entrepreneurial Student Awards 2006. It was created in collaboration with 4 other students from DCU, in 3rd Year, for our module Enterprise Development Project. We had to create an innovative digital product and seek financial assistance to see it through.

Outline:

For our business project we plan to create a computer application capable of integrating actual musical instruments into a computer based digital music editing and tutorial suite.

The application will require hardware components to connect the instruments digitally to the computer. Such musical jacks exist on the market already, and can be adopted for our application. The idea behind a digital connection is to eradicate distortion from the user’s side of the operation.

Shale Hardware Overview

SHALE HARDWARE CONFIGURATION

  • The application will have initial tutorials built into its libraries which include a finite amount of reference songs. The library will include a large amount of varying songs from various genres; this is in order to encourage a larger interest in the product.
  • The user will open the desired song, connect the desired instrument digitally through the digital jack and play along with the selected song while being prompted by a tabular or musical notation display on one side of the screen. Simultaneously on the other side of the screen, a display will output the notes being played by the user into the application.
  • The application should be able to select each track on a song independently, i.e. the user can single out the guitar track, or bass, or drums, or any combination.
  • The application should also allow the user to insert any audio c.d. source and access it, if available, at the on-line resource library.
  • The on-line library would have to be constantly updated in order to accommodate a large variety of users with varying tastes and styles.
  • The application should also contain a variety of effects in order to obtain sound used by the composer.
  • It should also contain a recording and editing function to allow the user to record their progression. This function is intended to increase the functionality of the application, hence increasing the amount of interest in the product.

Why it is a good idea?

Our application creates an online learning environment which enables the opportunity to learn at a greater pace and ease. By using our product the consumer avoids having to pay the constant expense of professional lessons with music teachers. Through our learning scheme the consumer purchases the full application once or downloads the free trial version (this version of our application contains only the tutorial mode with basic libraries). There will also be an annual fee to avail of the constantly updated libraries.

Main key aspects:

  • Ease: The ‘Home Music Suite’ can be accessed anywhere at any time. The user can gain expert knowledge without leaving the house.
  • Cost: The initial price of the application and the included cost of the yearly subscription for the libraries will cost relatively the same amount as a number of professional lessons.
  • Adaptability: The various subsections in the application mean even after the user grows beyond the tutorial sections, the editing/recording suite provides an excellent home recording facility.

Assumptions:

  • People want it:  We have researched the market thoroughly and have found that people attracted to our product because of its ease of use, accessibility and the elimination of the expense of paying for lessons.
  • Finance: As people will only be paying for the application, and the on-line tutorial membership, it provides an inexpensive alternative to the traditional method of paying a teacher week in week out.
  • Premises: As this will be an online company the expense of renting premises is not an issue because the entire business can be set up from home.
  • Expert Consultant: To find experts in this particular field we would hope to avail of the lecturers in collage.

Research:

  • Online Surveys: We have carried out online surveys and gauged the public reaction to the product.
  • Focus Groups: As well as online surveys we carried out meetings with the various music societies within D.C.U. and other collages. This was aimed to be a more hands on approach and provided us with much more detailed feedback.

Target Customers:

  • Musicians: Musicians will be the main target audience for our product. We feel that this application would be an essential tool for any musician as it would eliminate the need to learn complex music notation. The steep learning curve of standard notation means that only a small percentage of musicians can actually read music. Our application would provide standard notation and also provide tablature. Tablature is a basic and simple way of reading music and means that musicians of all level of competency would be able to use and understand our application.
  • We would also be capable of reaching people form all over the world with access to a computer giving us a huge market in which to operate.

Unique Selling Points:

  • The multilayered functionality of the application means that where other similar products may concentrate on one aspect, i.e. sound editing/music tutorial, our application includes all aspects of a musical suite.
  • We aim to achieve an extensive library with full tutorials on various genres and styles for a multitude of instruments.
  • Our libraries are constantly updated, in the occurrence of a requested song not having been updated to the library we will endeavour to add a tutorial immediately upon contact.

5 Reason why it will work:

  • Our product has a unique selling point in that it combines the best attributes of currently available products and combines them with our own ideas.
  • Our product would be updated every few months with new music which could be downloaded from the website. This would mean that we would be able to keep up to speed with new music without passing on the cost to the consumer who would normally have to go out and buy the latest versions other products.
  • The company would be inexpensive to set up. As it is all online we would be able to avoid the expense of renting premises.
  • As the application is available online, people from all over the first world would have access to our product.
  • The product will be inexpensive to the user because it is the only one they will ever need. The product would be upgraded all the time so there would be no reason to buy another model. It would also eliminate the cost of getting lessons from a professional musician, prices of which generally start off at $50 per hr.

Origin of the idea:

Most of the members of our group have come into close contact with similar products and found the additional features of both a desktop suite and tutorial suite in the one application lacking in existing products. We felt that if both features could be integrated in one widely adaptable application it would possess an enormous advantage over competitors.

Product:

“Shale” is an integrated audio recording, mixing, editing and mastering software application with a built in tutorial mode which utilizes on-line accessible libraries. The aim of the recording suite is to utilize powerful creation tools to provide flexibility and control for your digital desktop studio.

There are two main features of the application, the first being a powerful desktop studio. This consists of a digital multitrack recording, mixing and editing suite featuring an array of techniques applied to utilize the systems capabilities.

The planned features are as follows:

  • Adjust the volume, pan and effects controls as playback, and record changes in real time through editable envelops. Rescale envelope points to make changes to specific tracks or points.
  • Manipulate recordings with digital signal processing tools and audio restoration tools.
  • Utilize a surround encoder to transform multitrack session into a 5.1 surround sound experience.
  • Broad flexibility with mixing tracks through the use of duplicate signals applied through an effect to be mixed in conjunction with the original track with the added ability to edit each independently.
  • Apply effects to the master channel and view without mixing down, applying the effect to each track in multitrack session.
  • Edit specific section in track through punch editing.
  • Take advantage of an unlimited number of tracks in the multitrack.
  • Record multiple live inputs simultaneously.
  • Use flexible looping tools to create a dynamic full formed sound.
  • The application should have intuitive user interface with easy to use displays through optimal organization of workspace panels.
  • The application comes complete with a vast supply of musical samples, royalty free loops in many styles.
  • Flexible, efficient processing through a broad format support.
  • Record and edit audio files with fast, accurate tools tightly integrated to multitrack.
  • We also plan to feature a variety of audio restoration tools to correct; old vinyl, microphone pops, hisses, hums, clipped audio tracks, etc. using click and pop eliminators and noise reductions.
  • Adjust pitch with pitch correction; manual and automatic.
  • Time and pitch feature to adjust tempo without shifting the pitch and vice versa.

The second powerful aspect of our application is the   unique tutorial mode with on-line libraries. This feature allows the user to upload a song from the libraries or from the template examples included with the program, and learn through the tutorial the selected song.

The tutorial mode will be accessible through a tab on the user interface or by specification through the view selection. The display will feature two split screens, one to display the tabulation or music notation and the other to display notes played by the user. The idea behind this being, to provide a user-friendly environment with excellent interaction.

The user will select the song of their choice, the instrument and adjust the speed of the playback allowing the user to control the pace at which they learn. The user can read the notation on one screen and play along, noting the incorrect timing or notes on the input screen. The aim of this feature is to identify mistakes, improving the rate at which the user learns. You will then be able to playback what you played to notice any discrepancies.

The tutorial suite will also contain the effects provided in the desktop studio enabling the user to add on effects to their instruments to resemble that of the desired song. Another important feature, the on-line libraries, will be of an enormous advantage for the user. The libraries will be constantly updated on the web to provide a wide spectrum of resource learning material. The user can download a song and specify which instrument they wish to learn, then upload it to the tutorial suite and begin practicing. The objective of the on-line libraries is to provide the user with an extensive range of resource material to utilize the capabilities of the application.

Also as a unique feature to the desktop studios the on-line libraries will act as a strong competitive force to rival products. The integration of our wide spectrum of facilities should provide a beneficial edge over leading competitors.

“Shale’s” close integration and utilization of the internet as a platform to serve customer’s will not only provide an advantage with regards competition and asset cost, it will allow for further development and expansion. This may be achieved through monitoring customer comments about the application through on-line forums and loading upgrades from the web-site. As ‘Shale’ matures so to will the expanding libraries, and through the use of tutorial forums close contact with a range of consumers will high light any faults with the program with regards user friendliness, etc. and improve customer relations. Through this form of openness we predict this will increase the rate of new customers registering and develop customer/Shale relationships.

Production:

  • Finance :

In order to develop our program to the specifications necessary to compete with leading developers in the field, we plan to develop the idea and sell it, obtaining royalty income from the manufacturing/selling rights. To do this successfully we have identified some of the leading manufactures and targeted them as possible investment partners. We have also identified products, to be used in conjunction with “shale”, we feel we could promote in order to create our initial development costs. As hardware, jacks/ports, will be necessary to create a clear digital sound, we have researched the leading producers of such hardware. We feel we could obtain sponsorship from these companies as our program could be used to promote their product to be used in conjunction with ours. This would provide their company with an advantageous edge over their competing producers.

  • Location :

As our product is on-line based there is no real need for premises. It enables the product to sell globally as we can afford to concentrate our efforts on developing our website and marketing ourselves globally through expansion. This will significantly reduce our initial investment cost as we will be free to develop our business without the expense of premises.

  • Key Personnel :

There are several positions which we would need to fill with good level professionals. Firstly we would need a webmaster to manage the forum e.g. answer all queries, provide us with feedback. He would also play an essential role in building customer relations through engaging the forums and developing customer loyalty with the business.

There would also have to be personnel in place to develop and update the libraries. In order to achieve this successfully we would require competent musicians with technical experience with a range of instruments.

A network administrator is also required for the company to set up the server and maintain the libraries. He would also be required to provide adequate security for purchasing over the internet.

We would also feel it necessary to have an account on board. We feel that an account could provide several services to the business. These would include managing transactions, identifying assets and acting as a consultant towards the feasibility of expansion in monetary terms.

Finally a sales rep would need to be employed to forecast likely market expansion.

Personnel are the most essential factor in developing our idea. They account for all of our raw materials. This then minimums our initial costs down to just including wages and whatever software development equipment we may need.

  • Service Requirements :

– Who/What? : In order for our business to succeed our key personnel must be adequately trained and sufficient knowledgeable with regards the product field. In order to achieve this there must be sufficient level of training ascertained by employees to ensure a high quality end product. They must possess the necessary skills required to implement the desired end product and to work efficiently in a team environment. They must also possess a high level of organizational and inter-personal skills as well as the ability to work independently on their initiative.

- When? : We would aim to have our product ready for general release within two years. This time period will allow for testing, to ensure a high quality product, and also to allow for any unforeseen events. It is also essential to have clearly defined deadlines in order to release the product before it become redundant in the marketplace.

- Where? : As the product is web-based we have no need for a location because the product can be realized from home. As the product is on the web it gives us the broadest possible marketplace to sell to. Our target audience is also one which would frequent the internet.

- How? : Through the utilization of the skills of our personnel and also through the investment of our sponsors we would forecast that the goal of having a sellable product within two can be achieved.


Marketing:

We identified a niche in the gaming shops in Ireland, in that they did not stock any music editing suites, due to a lack of sales in the past. We discussed the existing music and sound software with the lecturer of sound production in New Media Technology College, Harcourt St, Dublin. He gave me us concise understanding of the current state of software and of upcoming ideas in this field.

What is unique about your product/service?

What is unique about the product and internet service?

The software package will allow the customer to learn how to play a guitar, drums or keyboard through the instruments connection to the computer. The program will recognize the notes and drum sound by their frequency. Rhythm will be recognized by the program also, through the comparing of the input notes to the expected beat.

This is unique in that there is only one reputable company in this field, and it only helps with the teaching of keyboard only. This product offers only a tutorial suite and is solely aimed at beginners; our program will include a wide variety of features such as the ability to record, edit and display you playing.

The product can be sold worldwide and we are sure that most of the sales will be online. The products will also be downloadable with a free trial version of the software, offering limited functionality, also available.

The product will gain income from the sale of online tutorial notes, tracks and tutorials for particular popular songs. However there are percentage royalties for us to pay on the songs that are modern and copyrighted.

How do we know there is a demand for our product/service?

We compiled a survey and emailed this to the students in our college, we felt that the students represented a good spectrum of our target market, in that most were familiar with the Internet and were interested in and felt comfortable with new technology. The feedback we received was very encouraging as most indicated that they would be interested and in some cases prefer to learn from a tutorial program allowing them to advance at their own desired pace without the pressure of scrutiny under a tutor.

We also spoke to sales managers of high street electronic and software stores about similar currently available applications, the general consensus was that few offered the variety of features that we intended for ours.

What competitive edge will we have over competing products/services?

Ours is instrument teaching software. There are no outstanding competitors, apart from the MIDI sequencers and music editors which are at the moment very popular with customers. Our market research has shown that customers are finding these computer music creators very impersonal, and believe it is more enjoyable to learn an instrument to create music in the real world. With the added advantage of being able to sell tutorial, tracks and notes across the internet.

Extra functionality, greater functionality, this is a music teacher AND editing suite.

At what price will we sell our product and how will this compare with our competitors?

€100 online by credit card, cheque, or postal order

€120 in computer software shops

The Prices of the existing products have created a niche opening, as they have priced themselves out of the mass market.

Ableton $499
Acid Music $299
Acid Wav Audio $99
BIAS Peak $599
Cakewalk $799
Cool Edit pro $299
Creamware $198
Cubase VST- STEINBERG  $1129
Digital Performer $499
Fruity Loops $99
GoldWave Digital Audio Editor
Magix £49
Logic Audio £19.95
Mixman Studio $109.95
Multitrack Studio $139
Orion $199 upgrades $99 $49
Quartz Audio Master $20- $30
Sample Wrench $149
Saw Studio $2,500
Sound Forge $299
Sound Probe $61
Sound Studio Pro $99
TrackTracker $40
TsunamiPro $30-$60

Where do we intend to sell product?

Software itself will be primarily sold online; this opens up a huge market both nationally and globally, allowing anyone with an internet connection access to the software, libraries and discussion forums. Upon our first roll-out we also intend to release our application on disc and sell this through software, electronics and musical instrument retailers, this will enable us to get our product into the public domain, increasing its profile before reverting to selling uniquely on-line.

What do we know about the market we propose to sell into?

As we know online music is slowly becoming a way of life, with millions of songs downloaded daily, it is forecasted that by 2010 online music industry will be worth over 80 billion euro. With our library service following similar lines as any online music provider we intend to use this familiarity and sense of ease to bring people to the school of thought that they can also learn how to play their music through the internet.

With broadband now being distributed nationally to most areas, and the Irish government intending that there will be almost 800,000 new broadband connections per year from 2005 onwards, more and more people will be turning to online resources fro their music needs.

The online market is an exponentially increasing market in terms of amount of customers and potential customers.

What

We wish to sell the services to big social organizations, such as exclusive usage rights to music teaching schools who pay for an overall campus membership to encourage their students to develop musical skills.

We have found through thorough market research that the most popular age group that would wish to use and buy our products is between 15 and 30 years of age, is generally very technically minded and would be very proficient at using computers and the internet, would have a strong interest in wanting to learn an instrument and would likely have some belief that getting instrument lessons may not be effective enough for them.

Realistically, only a small fraction of the population of any country would fit all the above, but Western countries such as USA, Canada, Britain, Ireland and other EU countries would have a relatively higher percentage. The EU as a whole is undertaking great steps towards providing a greater percentage of the public with computer and internet knowledge, and in all western countries the price of computers and internet connection is ever decreasing, thus the continuous growth potential for this product will be always great. The fact that our software is to be multi-lingual, would suit this environment, we have a great focus on the English speaking western countries at the moment as English is spoken with great proficiency in Germany, Holland, Belgium etc.

How are products to be distributed in the market?

Primarily, the products will be sold online, and this will become very obvious a few years from now. Initially there will be a great need to sell the software through CD format of the software in a box with instructions and information in booklets, Sold on shelf in Computer Software Stores like ‘Compustore’ throughout the world.

This will help us to develop the niche for the exiting and lucrative years to come.

We know the trend is such that this will in the future act as a good way of advertising the product, and letting the consumer know at this point that it is a software that is basically made for the internet, online customers and has an extensive online resources, and that the product itself can be purchased online and that it.

It is undeniable that for such a product to be visible in the public consciousness, it has to be seen in the real world, in the computer shops. We believe that perhaps this will change greatly in a few years time. As it is very obvious that peoples lives are revolving closely around the internet ( google, mail,  bebo, distance learning etc. .. ) and thus their spending habits are following the same pattern( skype, gambling sites, i-tunes etc. . .)

How do we propose to let people know about your product/service?

Online

-Google advertising is very cost efficient- only pay for when someone gets connected to your site

- Website, Free Trial, Small version given.

- Competitions to win the software to increase awareness.

- Innovative and effective marketing websites such as www.studentcents.ie

Real World

-Colleges

-Adverts in Magazines, Music /Youth /Tech magazines

- Sale of Software on shelf to sizeable extent until product becomes Reputable

- Promotions at large music 3rd level institutions,

Is there a market for Sponsorship??

Our research has shown us that there is evidence to support that we can get financial sponsorship off: a instrument making company provided that we make a contractual agreement that we often refer their instruments, to our customers

Create an agreement with a cabling company in which we will advise our customers to use their connecting cable for the instruments.


Profitability

Projections

Year 1                                                             Year2
€                                                                       €
Sales  :                                                1,430,000                                                 2,782,000
–If 30% is royalties  then     1,202,000                                                 2,344,000
Gross Profit  :                                       929,600                                                  1,831,100
(using royalties Figures)

FIRST YEAR OF BUSINESS:

Shop sales                                       € 100,000
SHOULD BE BIGGEST IN FIRST YEAR TO GET NAME OUT, NOT EVERYONE USES INTERNET, SHOULD BE A FOCUS ON SELLING IN SHOPS FOR A YEAR
Sponsorship                                     € 70,000   — from promoted digital port manufacturer
Program Downloaded Per Year       € 500,000
Yearly Subscriptions                        € 500,000          * Royalties affect this
Monthly Subscriptions                      € 60,000           * Royalties affect this
Single Track/tutorial                         € 200,000          * Royalties affect this

Expenditures year 1:

Royalties (30%) approx only when songs recorded
Wages X 10 people           –allowing for further team expansion.  € 250,000
CDs from SONOPRESS     € 2000 @ €1.25= 2500
Travel                                  € 1200
WEc (web) Rent                  € 120
Security                               €  795
Advertising                          € 1200

Post € 800

Additional expenses              € 16185

Total expenditure year1:     €  272,400

YEAR TWO OF BUSINESS:

Program Downloaded Per Year           €1,200,000
Yearly Subscriptions                            €1,200,000 (-360,000) equal to 840,000
Monthly Subscriptions                         € 60,000     (-18,000) equal to 42,000
Shop Sales                                          € 72,000
Single Track/tutorial                          € 200,000    (-60,000) equal to 140,000
VERY IMPORTANT ALSO THAT WE CAN SELL THEM SINGLY

COST OF SALES—YEAR 2

Royalties (30%) approx only when songs recorded
Wages X 20 People              € 500,000
CDs from SONOPRESS      € 4000 @ €1.25= 5000
Travel                                   € 1200
Wec (web) Rent                   € 500   perhaps the cost has increased
Security                                € 1000
Advertising                           € 1200
Post                                       € 400
Additional expenditures       € 3,600
Total expenditure yr2           € 512,900

Finance: Requirements & Funding

The following is our finance requirements and funding objectives.

Fixed Assets Requirements:

Our assets are for 2 years after which profits will greatly increase this.

  • 4000 DVD Box Sets

  • Website

Start – Up Costs:

This is based on a 2 year span. It will take us 1 year to have this running. If a company wished to undertake this project, the cost would greatly diminish in that the project would be brought online earlier. Profits after 3 months will service the entire debt.

Profits after Year 2 shall repay the entire debt.

Yr1 (20 employees)                        Yr2 (20 employees)                             total

Payroll:           250,000                                   500,000                                          750,000

4000, factory manufactured

DVD Box Set                                                 7,500

Delivery to Ireland nationwide

Postal Service                                                 800

Website

Rental                                                             620

Security                                                          1,795

Total                                                               2,415

Travel Expenses                                            2,400

Advertising                                                    2,400

Stationery, Food

Additional Costs                                            19,785

Royalties (2 year approximation)                 666,000

Total expenditure over initial 2 years:         1,451,300

Indicate how it is proposed to raise the necessary capital:

Capital can only be gained when the product is available online and in-stores. After year 1 this capital shall be generated, Year 2 ending.

A:        Amount to be invested by principals:

The guitar ports used are numerous. We aim to gain sponsorship with one company. For each program we sell, we aim for €5.

Total Units Sold @ €5                                   72000

B:        Amount to be provided by borrowings and grant:

€195130. This shall cover all costs for 2 years. If a company were to take over, this would be greatly reduced.

C:        Cash from profitable trading:

Trading shall only occur after Year 1. This is the expected income after Year 2.

  • €100 Program downloaded 1000 times per month for the year.

€1200000

  • €100 Yearly subscription; 10 songs per month; Bronze Membership

€200 Yearly subscription; 20 songs per month;  Silver Membership

€300 Yearly subscription; 30 songs per month; Gold Membership

€400 Yearly subscription; 40 songs per month; Platinum Membership

Assume that all members opt for Bronze Membership, €100, 500 members joining per month

€600000

  • €10 Month subscription; 10 songs per month; Bronze Month

€20 Month subscription; 20 songs per month;  Silver Month

€30 Month subscription; 30 songs per month; Gold Month

€40 Month subscription; 40 songs per month; Platinum Month

Assume customers choose a monthly package; 50 customers a month on each package

€60000

  • €120 program selling in shops; 50 per month

€72000

Total:              €1932000

€1.932 million

If a company were to take over this project, within 6 months preparations would be complete. Estimated profits after Year 1 would be:

€966000

After exhaustive research, we have estimated the royalties at 30%. We can only assume this figure as each different song would have to be negotiated separately with its producer. Some companies require a one off payment at the start, while others require a percentage of the income accrued per song.

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