Counter Online Piracy Licensing and Digital Files Distribution

Tell My Friends Pte Ltd (herein referred to as TMF)'s mission is to tackle the real-world problem of music piracy. According to industry reports, 240 billion Euros are lost to music piracy in 2010. With the proliferation of networks, digital devices and ease of data transmission, the music industry has tried to address the piracy problem with technology, i.e., using encryption technology to restrict the playability of digital music files on specific devices, or limiting legal access to music via authorised networks using cloud computing. These approaches will cost the industry 9 billion dollars from now till 2015. On top of these, the industry also tried to resort to political pressure in the US to pass the Stop Online Piracy Act (SOPA) and other similar legislations, to the disapproval of the Internet community, resulting in a worldwide protest in Jan 2012.

WHO WE ARE

Tell My Friends Pte Ltd (TMF) is a social network based, counter online piracy platform. It is a patent-pending business method (Singapore Patent Application No:201202560-7). Tell My Friends Pte Ltd also has a wholly-owned subsidiary, Music Galaxy Records (MGR) that specializes in intellectual property investment with a market focus on music.

BUSINESS MODEL

The business model for TMF offers consumers of digital products such as music, apps, games, ebooks and videos a value proposition over pirated or illegitimately obtained digital products. Consumers today opt to search for means to download free copies of digital products, even though legal websites offer paid downloads at a very low price. Most consumers would ask, “Why pay for something when I can get it for free?”. Hence, TMF identified online piracy as a behavioural problem rather than a technological or enforcement problem of intellectual property related to digital products.

Underlying Magic

TMF is a rewards-based social network marketing programme. To illustrate, suppose Consumer A bought a song for $2 from TMF. TMF generates a uniquely coded link or URL for Consumer A to share on his social network like Facebook. Any of his friends who share the same taste in music would be interested on his posting and click to find out more. When his friend Consumer B makes a purchase of that song via Consumer A's link, TMF generates another uniquely coded link or URL for Consumer B to share on his network. Now, when Consumer B buys the song for $2, Consumer A receives a commission. Consumer B will also receive a similar commision when Consumer C buys from Consumer B's link, and Consumer A will receive a further commission. The table below shows the potential commission that a consumer could earn from the purchase and sharing of one $2 song.

Explainer Video for TMF can be found here:

http://www.youtube.com/watch?v=A81RWbTs_-c

Market Barriers

We have filed a patent , " A method for Personal Licensing for Digital Files" with IPOS dated 5th April 2012 . Singapore Patenet Application No: 201202560-7. The method is an anti-piracy business method.

PROJECTIONS

The commissions for each tier ranges from $0.01 to $$0.25 (See (a)). Assuming every user has 5 referrals (See (b)) that click and buy, the number of downloads at each tier works out to between 5 to 9.7 million (See (c)). The commissions that a user can stand to earn (See (d)) can add up to more than $120,000 (see (d)). The user would earn back his initial spending of $2.50 as early as the second tier with $4.75. This would be a very strong impetus for any consumer to pay for a song.

TMF's subsidiary, MGR, sells intellectual property investment packages to commission songs. Currently investors pay about $15,000 to commission a song which they will own the sound recording rights. MGR uses the investment to put together a project team – producer, music arranger, musicians, singers – and resources like studio rental, sound mixing and mastering – to produce a quality sound recording, which will be then sold through TMF's patent-pending system. Projected returns on returns on investment in the form of royalty income is shown in (f) and (g).

Since the inception of MGR on 11th April 2012, 3 investment packages have been sold (see enclosed MGR contracts), with a total paid-up sum of S$40,000. Also, TMF has secured distribution licensing of more than 30 music tracks from independent artistes (see enclosed TMF contracts).

TMF has already established working relationships with Composers and Authors Society of Singapore (COMPASS) as well as major music publishers belonging to Music Publishers Singapore, who collectively control a large proportion of music copyrights. We also are in the process of negotiating distribution licensing of music from Warner Music and Universal Music, 2 of the Big Four in the music business.

TMF's pricing is based on the following principles: the largest share of retail price belongs to the owners of the created content, the next largest share goes to the consumers who responsibly download the files, with the remaining revenue share going to TMF for the administration of the system. This works out to a 50:30:20 sharing of revenue, i.e., 50% of the retail price goes to royalties paid to rights holders, 30% goes into the Commission budget for consumers, distribution over 10 tiers, and 20% to TMF for administering the payment to various stakeholders. Thus, for every $1 value of downloads, TMF has a gross profit margin of $0.20. The digital products market include music, ebooks, games, apps and videos valued in excess of 10 billion US dollars. Singapore's online transactions alone for last year was 1.1 billion Singapore dollars. With the Singapore patent-pending status, TMF has 1 year of international monopoly of the system to build and grow globally.

CURRENT INVESTORS AND FINANCIAL POSITION

TMF currently has 2 Directors – Mr Ben Looi and Mr Lok Pei Wah. Mr Ben Looi is the major stakeholder and investor in the business, having committed time, effort and personal finances of at least $50,000 to build the business. All bank accounts are with OCBC for TMF and MGR. TMF and MGR do not have any debtors, and have made timely payment to vendors such as Tito Isaac & Co LLP, Marks and Clerk Singapore LLP, as well as other parties involved in the production of 2 sound recording projects for investors.

The business has rapidly grown beyond the seed stage, and is now ready for full development. As such, a larger working capital is needed to finance the growth. 

Specifically, $25,000 is needed as an advance payment to COMPASS for annual communication rights. COMPASS charges a 6.25% on royalties accrued for the right to stream music over the Internet. This is a sum that is already worked into the retail price of each music download, hence it will be paid for by each sale. Another S$25,000 is envisaged to be used for server upgrade should the download volume go up. Currently our server plan supports a bandwidth and traffic of up to 10TB per month. 

The remaining amount will go into the investment of up to 5 sound recordings which will be owned by MGR exclusively. This would effectively increase TMF's gross profit for these song recordings to 60% per download. The projections of returns from these songs are illustrated in the table above, and has the potential to reach 9 million or more PER SONG.

MANAGEMENT TEAM

Mr Ben Looi is the Founder and CEO of Tell My Friends Pte Ltd and Music Galaxy Records. He has served in the SAF as an infantry officer for 13 years prior to venturing into entrepreneurship. The team at TMF/MGR comprises of Ms Pearly Looi, the Marketing Director; Mr Chris Lok Peh Wah, the Operations Director, and Ms Chen Wei Qian, the Production Manager for MGR. Ms Chen has been working in the music industry for at least 10 years, having worked with producers, song writers and artistes in the Chinese music industry both locally and in Taiwan. She has 2 albums to her name, and also does productions.

Ben Looi

Founder /CEO

Tell My Friends Pte Ltd

(Reg No: 201129274M)

Music Galaxy Records

(Reg No: 53212700E)