UPDATED: 9.28.08

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MGN does not use an advertising-based revenue model as its main revenue strategy. Instead it collects its fees as micropayments in the background for making transactions (the PayPal/Credit Card Model). Each monetary transaction accomplished through MGN is a source revenue.

The MyGigNet revenue model is transactional, deriving the majority of its revenues from a small surcharge collected in the background for facilitating purchases made by and from members. Therefore, the creation of more opportunities to complete a transaction coupled with rapid building of the membership base describes MGN's business expansion model. MGN believes that membership fees would hinder community participation, and so does not ascribe to that model. Rather, by rewarding community participation and facilitating a meta-economy across the entire lifetime creative cycle of the artist, MGN gains access to every artist, and their consumer base, everywhere there is Internet capability on any device.

The Profile is free. Anyone and everyone can create a profile. All searches are free. MGN-created or sponsored editorial content is free. When a Musician/Band, Venue, or other Member-created service or item is sold within the site, MGN deducts a transaction fee. This fee is then instantly recorded and reflected in the members' "back office," thus ensuring complete transparency.

The transaction fee price point should probably start higher at first and come down as the site grows. Something like 3%, coming down to 1.5% (after certain benchmarks of membership and vendor participation are achieved), would be more than sufficient to meet MGN expenses and finance profit-sharing (members and equity partners).

Because this fee will be in addition to standard credit card fees for vendors, vendors must be made aware of it during negotiations to determine discount margins for items and services transacted on MGN. Most of this process can be automated for casual vendors (not appropriate for major industry players who want proprietary agreements) who apply via the PPA. They determine their discount rates, and can customize these offerings down to individual items, groups of items, or entire store.

Strictly financially speaking, MGN becomes, in effect, a Community-Serving Bank. The site acts as a gateway among members' bank accounts, much in the same way as PayPal does. The difference is that all products and services offered by vending members are displayed within the MGN shopping module, and the transactions take place there, as opposed to outside websites. This is key because vendors will be offering MGN-only discounts on their items. They will want to earn profit-sharing credits and use the extensive MGN back office for their wares from activity in the shopping module (see below). The back office features complete sales metrics, as well as promotional interfaces identical to bands and venues (see Media & Promotion).

Traditional Advertising

Expensive sponsor ads are featured on the Top Tier search services, which adds credibility, glamour, and engagement to the MGN experience on the front-end. There is enough intrinsic value offered "upfront" for the general public to make MGN a primary destination for any music lover, with plenty of opportunities to spend money on an array of items and services besides MP3 downloads, CDs and DVDs. Posters, collectors' items, swag and other memorabilia-type merchandise is offered via the MGN Store. Such services as an EBay-style interface is available to allow for the auctioning of memorabilia and other collector items, as well as music equipment, vintage and new, as well as music recommendation systems for people looking for new music to listen to.

Therefore, MGN acts as a retail clearing house and affiliate for the sale of anything related to the performance and enjoyment of music--object or service. So this precludes having to resort to crass web advertising of the MySpace/Yahoo kind, which most users resent, or at least consider a "necessary evil." All Web 2.0 portals enjoy this distinction, and it is the revenue model of the future/now.

Shopping/Vending Module

The MGN shopping module incentivizes both buyer and seller. For a vendor member, in exchange for access to hyper-targeted buyers from a huge consumer base, MGN requires MGN-only discounts from the vendor. Discounts for products and services are proprietary to MGN. This is incentive for the buyer to transact on the MGN website automatically expanding a vendor's potential market, and offers other priorities for the vendors than simple broad visibility (such as traditional banners and bugs).

For example, a guitarist in Tucson is displayed the same amplifier from two vendors. In one case, the vendor located in Chicago opted to offer a 10% discount and free shipping; the other vendor offered 10% discount, but is in Tucson, so the buyer could simply pick it up today. The first vendor seeing the other Tucson vendor's offer, sweetens the deal by offering a free set of guitar strings, and a concert tickets for the buyers' favorite band. In this way, vendors can compete via the transparency of the MGN system, and other factors besides price come into play.

The MGN shopping experience is completely controlled by the buyer. When the buyer is ready to research a purchase, they go to that option, and based on the PPA and other factors specified by the buyer, products are displayed. Such features as being able to see what other buyers bought who shared the same situation, as well as celebrity purchases, can be further incentive to transact on MGN. Add in auction functions, contests, and donations, and a vibrant buyer atmosphere is created.

When vendors (vending members) offer their items in the MGN shopping module, they will immediately be shown in their back office that MGN increases their profit-sharing credit points as they increase their MGN discount rate. As inventory items are added by the vendor, MGN feeds back to the vendor the existing prices existing for the same items across the Internet. The lowest price for that item is the starting point for determining the vendors' MGN discount. Discounts can also be increased by offering "value-added" services (e.g., free guitar repair), or "loss leader" items.

The difference between that discounted price margin and the credit points they earn for discounting, represents the cost to the vendor for participating in the shopping module. This cost is direct promotional expense, and results not in broad advertising, but buyers directly routed to that vendor's items, and the subsequent buyer experience, which is constantly being encouraged, captured and propogated across the MGN universe--from product forums, blogs, relevant PPAs, etc., etc. The buyer experience is actively mined by MGN using point rewards to that buyer (not to mention referral credits), and represents further promotional value for the vendor. MGN's goal with this system to to show vendors that it is more profitable to sell their inventory on MGN than anywhere else online or offline.

This approach incentivizes vendors to find (or create) unique items that no one else offers on the Internet in order to have the greatest profit margin. Low-margin items will be attractive to large online distributors (and as loss leaders to small stores), and highly specialized items, or one-of-a-kind items, will more attractive to small local vendors. This creates a global market for small stores where they wouldn't have had that chance without MGN, and encourages invention. Coupled with MGN's powerful promotional tools and reach, small local stores are the big winners.

BREAKDOWN OF TRANSACTION POINTS

For the purposes of MyGigNet, a transaction venue is anywhere goods or services are exchanged for currency within the MGN banking/accounting system. Each venue is enumerated below with their general types of products and services listed.  

Each of these venues uses the MGN payment and accounting system to transact the sales of these items or services.

MGN will act as a bank with debit cards or membership cards.  The holders of the cards earn rewards only from MGN partner vendors. Vendors offer their products and services at a discount, which pays for the highly targeted advertising and client acquisition done for them within the MGN system.  

For the purposes of this report, we have identified the following overall categories of Transaction Venues:

      - Musicians
      - Live Music Venues
      - Music-Specific Vendors
      - Ancillary Vendors
      - General Public

Within these general categories we have identified over 300 separate products and services that could be transacted through MGN. With MGN picking up a micropayment on each of these transactions, the total revenue from this model is significant.  MGN is, in effect, providing a complete economy within which musicians can execute their careers in full.

In this report, we have not included such aspects as member cash investing and reinvestment, revenue sharing permutations, various member support funds, and other social responsibility programs (roughly covered under the heading of Grant Makers and Grant Seekers).

TRANSACTION VENUES FOR MUSICIANS
(Products & services musicians could spend money on within MGN)

General
      - Agent
      - Career Manager
      - Publicist
      - Photographer / Videographer
            o Processing
            o Graphic Design
            o Editing
            o Packaging
      - Legal Services
      - Communication Devices
            o Phone
            o Cell Phone / PDA
            o PCM-CIA Cards
      - Communication Services
            o Land Line
            o Cell / Mobile Broadband
            o Answering Service
            o Internet
      - Websites
            o Design
            o Hosting
      - Advertising / Promotional Materials
      - Magazine / Newsletter Subscriptions
      - Memberships / Clubs / Associations
      - Workshops / Retreats
      - Books / Manuals
      - Office Supplies
      - Music & Online Subscriptions (I-Tunes, XM, Cable, etc.)
      - Computers / Software / Disk Storage / Printers
      - Audio / Video Recording Equipment
      - Videographer
      - Union Memberships / Dues
      - Clothing / Fashion Accessories
            o Custom Clothing (Costumes)
            o Cleaning / Repair
      - Luggage / Travel Accessories
      - Cosmetics
            o Makeup
            o Cosmetology Services
      - Medical
            o Physical Therapy
            o Emergency Services
            o Insurance
      - Temp Jobs Procurement
      - Equipment Transport Vehicle
            o Maintenance / Repair
            o Insurance
      - Stationery Products / Services
      - Childcare
      - Used & Custom Instruments / Accessories (Private Transactions)
      - Used & Custom Sound Reinforcement / Accessories (Private)

Music Instrument Stores
      - Musical Instrument Sales (Used & New)
      - Musical Instrument Repair/Service
      - Musical Instrument Parts
      - Musical Instrument Rentals
            o Schools
            o Professional
            o Special Events / Occasions
      - Sound Reinforcement Equipment
      - Sheet Music
      - Music Performance Accessories
      - Educational Materials (Books/CDs/DVDs)
      - Music Lessons
      - Music Teacher Space Rental

Sound Companies
      - Sound Reinforcement Equipment
      - Sound Technician Services
      - Acoustic Evaluations
      - Staging Equipment Sales/Rentals
      - Books / Manuals

Music School Students
      - Tuition
      - Books / Course Materials
      - Mentoring / Coaching
      - Internships
      - Certifications
      - Housing
      - Office Supplies
      - Stationery Products / Services
      - Transportation
      - Food & Sundries
      - Health Services
      - Childcare

Performance / Rehearsal Spaces
      - Space Rental
            o Rehearsal
            o Audition
            o Recording
            o Social Events
            o Storage
      - Equipment Rental
            o Sound Reinforcement
            o Musical Instruments
      - Technician / Engineer Services
      - Management / Security
      - Childcare

Recording / Production Studios
      - Studio Recording Services
      - Mobile Recording Services
      - Engineering Services
            o Recording
            o Mixing
            o Editing
            o Mastering
      - Collaboration
            o Talent Hires
            o Mixing/Mastering Downloads
            o Song Charting
            o Arrangements
      - CD / DVD Manufacture
      - Artwork / Graphics

Road Touring
      - Vehicle Purchase (Semi-Trucks, Buses, Vans, Cars, Trailers)
      - Vehicle Rentals (Semi-Trucks, Buses, Vans, Cars, Trailers)
      - Vehicle Maintenance & Repair
      - Towing / Emergency Services
      - Drivers
      - Fuel
      - Airline Services
            o Air Fare
            o Shipping Services
            o Shuttle / Taxi
            o Car / Van Rental
      - Hotel / Motel Services
      - Laundry / Dry Cleaning
      - Parking Expenses
      - Food / Sundries
            o Restaurants
            o Groceries
            o Incidentals
            o Clothing
      - Health Services
            o Massage / Exercise Coaches
            o Nutritionist
            o Emergency Room
            o Medical Practitioner Services
            o Prescriptions
      - Insurance
            o Vehicles
            o Instruments & Equipment
            o Loss of work
            o Health
      - Road Manager / Roadies / Stage, Sound, Light Technicians
      - Training
            o Technicians
            o Roadies
      - Emergency Equipment Replacement / Repair Services
      - Publicist
      - Sidemen Talent Pay
      - Childcare

Symphonies / Big Bands / Choirs
      - Director / Manager
      - Conductor
      - Arranger
      - Scores / Sheet Music
      - Accessories
      - Staging
      - Lighting
      - Sound
      - Insurance
      - Transportation
      - Union Memberships
      - Books / Manuals
      - Office Supplies
      - Stationery Products / Services
      - Childcare

TRANSACTION VENUES FOR VENUES
(Products & services live music venues could spend money on within MGN)

Live Music Clubs / Festivals / Concert Halls
      - Bands / Musicians Services
      - DJ Services
      - Talent Hospitality
            o Hotel / Motel Services
            o Food & Beverage (Catering)
            o Green Room
      - Talent Transportation Services
            o Airline
            o Taxi / Shuttle
      - Booking / Agent Services
      - Ticket Administration
      - Emcee Fees
      - Music Licensing Management
            o Live Performance
            o Recorded Performance
      - Recorded Music Rentals / Subscriptions
            o Jukeboxes
            o Other Music Services (Karaoke, XM, Cable)
      - Sound Reinforcement Equipment
      - Staging Construction / Maintenance
      - Staging Equipment Rentals / Leases
      - Technician Services (Sound, Lights, Staging)
      - Video Equipment / Installation
      - Video / Audio Recording Equipment
      - Security Services / Electronic Systems
      - Promotional Services
            o Swag
            o Publicist
            o Webmaster
      - MGN Consulting / Management Services
            o Quality Control Services
            o Clientele Surveying
            o Ratings Enhancement Service
      - MGN Music Venue Locating & Creating Services
            o Design & Planning Services
            o Construction Contractors
            o Provisioning
            o Government Liaison (Permits, Licenses, etc.)
            o Staff Training
            o Computer Network / Software
                  - Inventory
                  - Accounting / Banking
                  - Cash Registers
      - Books / Manuals
      - Employee / Roadie Training
      - Office Supplies
      - Stationery Products / Services
      - MGN Proprietary Live Music Club Software (NOTE: This is to be distinguished from MGN online services for venues. This software includes non-music-related modules, such as restaurant and bar management, and wage / salary / tax accounting in an integrated package).

Casual Events (other than above)
      - Party Planner
      - Promotional Materials
      - Catering Services
      - Photographer

Churches (other than above)
      - Choir Director
      - Sheet Music Services
      - Website / Webmaster

TRANSACTION VENUES FOR MUSIC-SPECIFIC VENDORS
(Note: These are products and services that can be purchased through MGN)

Music Stores
      - Celebrity Workshops / Demonstrations
      - Music Teachers
      - Wholesale Discounter Transactions
      - Repair Technicians
      - Advertising
      - Website / Inventory Transactions
      - Auction Transactions Production
      - Books / Manuals
      - Office Supplies
      - Stationery Products / Services

Sound Companies
      - Equipment Rentals / Sales
      - Technician Services
      - Mobile Sound Services
      - Advertising
      - Temporary Personnel
      - Professional Consulting
      - Celebrity Workshops Production
      - Books / Manuals
      - Employee Training
      - Office Supplies
      - Stationery Products / Services

Educational Institutions
      - Celebrity Teachers / Professors
      - Musicians for Demonstrations & Discussions
      - Educational Materials
      - Sound Reinforcement
      - Musical Instruments
      - Musical Instrument Repair & Maintenance
      - Staging Rentals Production
      - Books / Manuals
      - Office Supplies
      - Stationery Products / Services

Agents / Publicists
      - Travel
      - Communications Devices / Services
      - Stationery Products / Services
      - Photographer / Videographer
      - Magazines / Newsletter Subscriptions
      - Associations / Clubs Memberships

TRANSACTION VENUES FOR MUSIC-SPECIFIC VENDORS
(Note: These are products and services that can be purchased through MGN)

TV & Film Studios
      - Songs
      - Recording Licensing
      - Arrangers / Composers / Conductors
Broadcast TV & Radio
      - Talent
      - Songs
      - Licensing
Recording Studios
      - Musicians (overdubs, patch tracks)
      - Technicians / Engineers
      - Designers / Builders
      - Equipment
      - Computers / Software
      - Mobile Equipment
            o Vehicle
            o Vehicle Modifications
Advertising Firms
      - Jingles
      - Licensing
      - Bands / Musicians
      - Lyricists
Music Services (Muzak, XM, Cable)
Grant Organizations
Grant Seekers
Alternative Medical Clinics
      - Music Therapists

TRANSACTION VENUES FOR GENERAL PUBLIC

Music Listeners
      - MP3 Downloads
      - CDs / DVDs
      - Video
      - Audio / Video Equipment (Home, Car, RV, Personal Devices)
      - Concert Tickets
      - Music Subscriptions (Itunes, XM, Cable, etc.)
      - Magazines / Newsletters
      - Memberships / Clubs / Associations
      - Travel to Music Destinations (Festivals , Cruises, Other Venues)
            o Housing
            o Food
            o Fuel
            o Fares
      - Accoutrements
            o Ringtones
            o Vision / Hearing Aids
            o Computer Software

Fans (other than above)
      - Swag (Posters, Clothing, Accessories)
      - Autographs
      - Collector Items
      - Street Team (volunteer hours)

Event Planners (see Venues lists)