Financial Analysis – Rose City Studios

Rose City Studios- Making Music Happen

This is the portion of the business known as Rose City Music Monthly (or something of that nature).

Portland is a town with a lush music scene, though not many people know where local artists and bands are going to be playing.  Whether it’s a local band playing at the Roseland or Hawthorne Theatre, or a solo artist playing at a small jazz bar in Portland, the majority of Portland’s population couldn’t tell you the name of most of these smaller bands, artists, and bars for that matter.  Not only does Portland have a vibrant music scene, also it is flourishing with artists, graphic designers, photographers, web developers, photo journalists, and virtually everything media or internet related can be found right in town.

While the Rose City Studios Magazine will focus a lot of the interviewing and magazine content/literature on touring bands coming to town or bands that have already been to town, primary drivers for subscribing will be venue coupons, local band CDs for free, apparel for free from RCS or bands, information about “what is happening” music in Portland.  Any and all styles of music not only welcome but NEEDED.  Portland is diverse, and people in this city LOVE following something that promotes greatness for their city.  (i.e. Timbers, Blazers, the band Everclear).

This business venture will also feature artist management for selected bands/artists, disk duplication, album building, photography, (eventually) recording and local events.

Rose City Music Monthly Magazine

This is an estimated breakdown of the costs to publish the magazine (does not include quotes from local companies).
•    Pre-press: Up-front=$2500, per 1000=$0
•    Paper: Up-front=$2500, per 1000=$300
•    Ink: Up-front=$200, per 1000=$25
•    Printing: Up-front=$3500, per 1000=$60
•    Binding: Up-front=$400, per 1000=$35
•    Mailing: Up-front=$0, per 1000=$35

In total, the up-front PRODUCTION cost from above is $9100, with $455 per 1000 copies on top of that.  For 2000 copies, the cost is roughly $10000, which equates to $5 per copy (a little difficult to turn a profit on). But for 10000 copies, the cost is roughly $13500 ($1.35 per copy), and for 20000 copies it is $18000 ($0.90 per copy).  This does not include costs to pay journalists or photographers.  Writer Greg from the Self-Publishing community provided these estimates.

If we can get 20,000 subscribers at $99.95 that equates to $1,999,000.  A highly unrealistic assumption considering Portland is roughly over 540,000 people as of the 2010 census .  As of 2000, there are an estimated 529,121 people residing in the city, organized into 223,737 households and 118,356 families.

So for example, say we get 1% of Portland households to subscribe to our magazine.  That’s 2,237 (roughly) households.  At $99.95 for an annual subscription, times this many estimated users, you would have a total sales of $223,588.  If it costs us roughly $10,000 a month to publish 2000 magazines this equates to $120,000.  Though we are under the targeted total for magazines we are going to send out, these simple estimates portray the power this magazine can potentially have.  The projections for ad space below will show how this can be turned profitable as well.

Venues and some larger local bands will pay to be advertised/marketed through the magazine for a quoted cost based on what they are trying to do.  Maybe coupons will be free for all venues to add (as a rapport builder for venues- so that they will be more inclined to purchase an advertisement in the magazine or on the website).  This will bring in a substantial incremental revenue on top of our magazine.

With a magazine of roughly 60 pages these are the profit forecasts for the magazine.

On a high side it can be estimated that we will have 10 double page venue ads (20 pages) per magazine at $450, equaling $4,500 per month.  For the full year $54,000.  (NOTE: high estimation).  To be realistic, and to account for errors, let’s estimate we get $20,000 total for the year (very low, but better to aim low in a profit forecast in my opinion).
This does not include individual ads, or features, or even coupons that we may or may not charge for.  Because of this we will say that we are going to profit $30,000 from venue promotion in our magazine and website.

Bands, we will estimate a lower cost than venue and say $12,000 for the full year.  That’s $1000 worth of ad space sales to bands in the magazine.

There will also be local bands that will not pay for ads.  These bands will be the “heavy hitters” the local bands that drive our readers.  While some may want to pay to promote some larger shows, or events may pay to promote their events (thinking something like “Music as Medicine” or “Jazz Festival”).

Eventually we will try and host events for touring acts and larger bands in philanthropy events on the waterfront or other types of events like NxNW- a hopefully soon to be hit off the already huge SxSW.

Totaling everything up for a full year to make 2000 magazines a month it will cost us $120,000.
At a 1% Portland household subscribing rate, we will make $223,588 of subscriptions only.
$35,000 sales for forecasted annual Venue ad space (low estimate).
$12,000 sales for forecasted annual Band/Artist ad space.
Equates to $270,588, just from the magazine subscription– does not factor in the other aspects of the business.

From these costs we can determine that from our $120,000 investment we will make $270,588.  Profiting $150,588 will give us plenty of room to pay for marketing, legal, salary, and other business expenses.  These have been estimated.  Going into too much detail would be pointless, if you would like to see the full business plan, just email me and I can send you some more information!

*Note: some things I have left out; the magazine will be used to drive profits from creating apparel with a RCS logo and name.  Profits will be driven from disk duplication, album building, photography, signing artists under the Rose City Studios label.  This portion just focuses on Rose City Music Monthly- Coming to a local bar or new stand SOON!


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