Cases on Information Technology Series

mVine Ltd. 79Figure 5. The revenue model: Planned phase twoUserdownloadsCD salesringtonesalesData salesstatistical+demographicinformationRadiostationadvertisingrevenuesArtistqualitativefeedbackrevenuemVineImagelibrarypartnership; licencerevenues3 rd -PartylicencefeesPartner/SponsorrevenuesAlthough Web sites, such as CDBaby, offered an environment within which artistscould sell their CDs for a fee, users tended to buy what they knew rather than music fromartists that they had never heard of. With over 1.3 million CDs for sale (November 2004),CDBaby was not a very practical solution for the aspiring but unknown artist. mVine madeit possible for them to reach a much wider audience by selling their CDs to mVine usersfor a small fee.• Licensing of unsigned artists to other labels. Although artists may reach a high levelwithin the mVine voting system, they may not be selected as candidates for furtherdevelopment through a formal contractual arrangement with mVine. In this case, theinterim contract detailed previously allowed for their license to be offered to otherrecord companies either for a split (from the label’s proportion of the agreed 50%) ofprofits after costs or for a simple introduction fee, depending on the details of eachcase.This wide range of revenue streams added to the company’s initial investmentincome to reduce the requirements for startup capital.Phase Two of mVine’s development was planned for the spring of 2005 and wasintended to cover a variety of additional revenue streams.• Sponsorships and partnerships. As part of Phase Two, it was planned to recruitselected partners whose vision and operations matched those of mVine (Web sitessuch as iVillage.com, salon.com, and friendsreunited.com).• A digital radio/TV station. In order to promote mVine artists, whether contracted ornot, to the widest possible audience, Phase Two included plans to produce and advertisefunded Internet-based radio stations and digital television stations. No votingCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without writtenpermission of Idea Group Inc. is prohibited.