RTN BUSINESS PLAN [Current Date]

[Name] [Title] RTN, Inc. [Address 1] [Address 2] [City, State Zip] Tel: [ ] Fax: [ ] Email: [ ]

CONFIDENTIAL

No offering is made or intended by this document. Any offering of interests in RTN will be made only in compliance with Federal and State securities laws. This document includes confidential and proprietary information of and regarding RTN. This document is provided for informational purposes only. You may not use this document except for informational purposes, and you may not reproduce this document in whole or in part, or divulge any of its contents without the prior written consent of RTN. By accepting this document, you agree to be bound by these restrictions and limitations.

Table of Contents
I. Executive Summary ......................................................................................... 1 II. RTN Overview.................................................................................................. 3 What is RTN? .................................................................................................... 3 The Market Size and Need for RTN .................................................................. 3 What RTN Does and Will Offer ......................................................................... 4 How We Get and Publish Our News ................................................................. 5 III. Competition in the Online Music Market ...................................................... 6 Overview ........................................................................................................... 6 Sectors of the Online Music Market .................................................................. 6
A. Community-Based Sites ..................................................................................................... 6 B. Community-Based News Sites ........................................................................................... 7 C. Community-Based Music Sites .......................................................................................... 8 D. Traditional Music Websites ................................................................................................ 8 E. Official Artist and Fan Sites .............................................................................................. 10 F. Direct Competitors: Community-Based Music News Sites ............................................... 10

RTNs Competitive Advantage ........................................................................ 11 IV. Marketing Plan ............................................................................................. 12 V. Technology/Site Development Plan ............................................................ 14 Initial Site Functionality.................................................................................... 14 Future Site Functionality.................................................................................. 14 VI. Financial Plan .............................................................................................. 15 Revenue Model ............................................................................................... 15 Funding To Date ............................................................................................. 15 Funding Requirements/Use of Funds .............................................................. 15 Financial Projections ....................................................................................... 16 Exit Strategy / Valuation Metrics ..................................................................... 16 VII. Team ............................................................................................................ 18 Management Team ......................................................................................... 18 VIII. Appendix: RTN Financial Projections ...................................................... 19

RTN Business Plan

I. Executive Summary
Business Overview
Launched in late February 200X, RockingTheNews.com (RTN or RTN.com) is the most comprehensive music news website on the Internet. Music is one of the most searched and accessed interests on the Internet. Top music artists like Akon receive over 3 million searches each month. In addition, over 500 music artists each receive over 25,000 searches a month. However, music fans are largely unsatisfied when it comes to the news and information they seek on the artists they love. This is because most music websites (e.g., RollingStone.com, MTV.com, Billboard.com, etc.) cover only the top eight to ten music stories each day - the stories with mass appeal. This type of generic coverage does not satisfy the needs of serious music fans. Music fans generally listen to many different artists and genres of music. By publishing over 100 music stories each day, RTN enables these fans to read news on all their favorite artists. In addition to publishing comprehensive music news on over 1200 music artists, RTN is a social network that allows fans to meet and communicate with other fans about music, and allows them to:

Create personal profiles Interact with other members Provide comments on news stories and music videos Submit news stories and videos Recommend new music artists to add to the community Receive customized news and email alerts on their favorite artists

Success Factors
RTN is uniquely qualified to succeed due to the following reasons:

Entrepreneurial track record: RTNs CEO and team have helped launch numerous successful ventures. Affiliate marketing track record: Online affiliate marketing expertise has been cited as one of MySpaces key success factors. Over the past two years, RTNs founders have run one of the most successful online affiliate marketing programs, having sold products to over 50,000 music customers online. Key milestones completed: RTNs founders have invested $XX to-date to staff the company (we currently have a 4-person full-time team), build the core technology, and launch the site. We have succeeded in gaining initial customer traction with 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 200X.

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Unique Investment Metrics

The RTN investment opportunity is very exciting due to the metrics of the business. To begin, over the past two years, over twenty social networks have been acquired. The value in these networks is their relationships with large numbers of customers, which allow acquirers to effectively sell to this audience. The sales price of these social networks has ranged from $25 to $137 per member. RTN has the ability to enroll members at less than $1 each, thus providing an extraordinary return on marketing expenditures. In fact, during an April 200X test, we were able to sign-up 2,000 members to artist-specific RTN newsletters at a cost of only 43 cents per member. While we are building RTN to last, potential acquirers include many types of companies that seek relationships with music fans such as music media/publishing (e.g., MTV, Rolling Stone), ticketing (e.g., Ticketmaster, LiveNation) and digital music sales firms (e.g., iTunes, The Orchard).

Financial Strategy, Needs and Exit Strategy

While RTNs technological, marketing and operational infrastructure has been developed, we currently require $3 million to execute on our marketing and technology plan over the next 24 months until we hit profitability. RTN will primarily generate revenues from selling advertising space. As technologies evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to become a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel. Topline projections over the next three years are as follows: 200X 626,876 2,348,050 20.7 $165,431 $1,407,958 ($1,242,527) 200X 4,289,580 8,390,187 273.5 $2,461,127 $2,591,978 ($130,851) 200X 9,577,020 18,633,659 781.0 $7,810,354 $2,838,423 $4,971,931

RTN Members Unique Visitors Total Page Views (Millions) Revenues Expenses EBITDA

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II. RTN Overview

What is RTN?
Development of RTN began in August 200X and the site officially launched on February 21, 200X. RTN (located at www.RockingTheNews.com) is the most comprehensive music news community on the Internet. The website covers 1,200 popular bands and music artists and offers more than 100 new music articles each day. In addition to providing news, RTN is a web community. That is, RTN members can actively participate on the site, by doing things such as commenting on news stories and submitting their own stories.

The Market Size and Need for RTN

The music market is clearly vast. According to IFPI, which represents the recording industry worldwide, global music sales were $33.5 billion in 200X, with the U.S. accounting for $12.3 billion of that amount. Importantly, digitally music sales are seeing substantial growth, with IFPI reporting sales of $400 million in 200X, $1.1 billion in 200X and $2 billion in 200X. Online, music is the one of the most frequently searched and accessed interests. For example, according to Wordtracker, the music artist Eminem received over 1.7 million web searches in December 200X, while band Green Day received 534,000 searches. To put these figures in perspective, top celebrities in other entertainment fields receive but a fraction of this search volume. For example, December 200X search volumes for select sports stars and actors were as follows: Kobe Bryant, 122K; Tiger Woods, 88K; Cameron Diaz, 332K; and Tom Cruise, 82K. Conversely, 225 music artists received over 100,000 searches in December 200X, and over 500 music artists received over 25,000 searches. This data is corroborated by Nielsen BuzzMetrics which plots the most popular topics bloggers are posting about. The chart to the right plots September 25, 200X to March 25, 200X and shows how music dominates other entertainment sectors online. When searching for music artists online, fans, which are primarily between the ages of 13 and 35, are looking for news, pictures, lyrics, videos and audio files. In addition, fans enjoy publicly voicing their opinions about music and interacting with other fans. RTN Business Plan 3 Page 3

There is currently no website besides RTN that provides comprehensive music news. Currently, to get the latest news on their favorite artists, fans must visit the official websites or fan websites of each of the artists they like. Even then, it is unlikely that the fan will get all the news that has occurred. To solve this problem, RTN scours the web and uncovers news from thousands of web sites.

What RTN Does and Will Offer

As of May 200X, the site covers the 1,200 most popular music artists (popularity primarily based on the number of web searches over the past 12 months for each artist). RTN currently offers members the ability to:

Read over 500 new music articles each week Read special features such as album reviews, interviews, new album release dates, top quotes of the week and other special reports Watch and rate music videos Listen to select music audio clips Comment on news stories and music videos Submit news stories that they see/hear of elsewhere Suggest new music artists to add to the site View articles by music artist or by genre (current genres include Rock, Pop, Rap, R&B, Country, and Electronic) Create a user profile that includes their favorite music artists, RTN friends, news stories submitted to RTN, and comments made. Members have the ability to find other members based on their favorite artists and via our search functions. Receive customized news and email alerts. Members can customize their My News page to include only artists they specify. Likewise, they can choose to receive email alerts whenever there is a new story on one of their favorite artists.

While establishing itself as the premier music news community, RTN will embark on the more aggressive goal of becoming the premier music community online. To accomplish this, RTN will begin to offer additional content (more videos, audio, pictures, lyrics, etc.) and additional functionality (music compatibility testing (e.g., if you like this, youll like this), voting capabilities, member-to-member messaging, etc.). We have already begun mapping out our content and technology growths plans to achieve this goal upon financing. Importantly, RTN expects to be able to add massive amounts of relevant content (e.g., lyrics, reviews, pictures, video files, audio files, etc.) via member submissions and moderation. This is the same way that YouTube has been able to quickly add millions of videos and Wikipedia has been able to add millions of articles. Importantly, since established music websites (e.g., MTV, RollingStone.com, Billboard.com, etc.) are not community based, they would have to hire thousands of staff members to rival the content that RTN will have.

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How We Get and Publish Our News

Currently, news stories that appear on RTN are gathered from numerous online sources. RTNs staff writers find these stories by using RSS and News feeds that cover thousands of websites. In addition, RTN community members have the ability to submit stories they find elsewhere. Typical stories include factual information plus the insight of the author. RTN editors ensure that all stories are properly classified by artist and genre, and that duplicate articles are filtered out. Over the past three months, RTN has developed a solid infrastructure, which we consider a core competitive advantage, that that allows us to provide comprehensive music news. This infrastructure includes: Setting up hundreds of RSS feeds based on comprehensive research regarding sites from which to receive feeds Training our editorial team regarding identifying a story and weeding out duplicates Assigning music artists among our five-person editorial team to better manage work flow and avoid duplicate articles

We are working on a system to ensure that member-submitted articles are automatically routed to the appropriate member of RTNs editorial team to improve our efficiencies further. RTNs Goal to Break News First The majority (approximately 90%) of RTNs articles are currently developed by our in-house editorial team, while the balance is submitted by members. In addition, virtually all of our articles are based on information gleaned from other websites. As such, we are generally not the first to publish news; however we are the first and only site to publish all the news in one easilyaccessible place. The one current exception is news which is published on bands official MySpace pages; RTN generally publishes articles on this news 24 to 48 hours before it is reported by other news or music sites (due to our efficiencies in finding news). RTN realizes that it will gain a key competitive advantage, and will generate significant market buzz, if it is able to report on music news stories before other media sources. To accomplish this, we have begun contacting publicity departments at record labels to gain direct access to music news. We expect these contacts to enable us to gain immediate and sometimes exclusive access to news which will help further establish RTN as the canonical source for music news. We also plan to more aggressively solicit member submissions of new, buzzworthy news events and will consider offering rewards for unique substantiated news (much the way paparazzi are compensated).

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III. Competition in the Online Music Market

This section of the business plan provides an overview of the competitive landscape, discusses both indirect and direct competitors and then details RTNs competitive advantages.

Overview
Because consumer demand for music on the Internet is so great, there are a vast number of music websites. In summary, we consider most sectors of the online music market (which are discussed below) to be indirect competitors and potentially partners, rather than direct competitors, because none of them focus on music news. The reason we believe that no one focuses on music news is that it is very difficult to do. Because news is very important to music fans, most music websites offer news. However, they primarily get their news from organizations such as CNN, Reuters, the Associated Press and BBC. These large organizations only write about the music stories that have mass appeal, which traditionally amounts to 8-10 music news stories per day. However, since music fans are often zealots when it comes to their favorite artists, they are not merely interested in cover stories. For instance, a U2 fan cares about any U2 news, particularly news that a non-U2 fan might consider insignificant. In fact, because RTN is the sole one-stop shop for getting comprehensive music news, there might be an opportunity to license our content to other music websites.

Sectors of the Online Music Market

RTN specifically competes in the community-based music news market. While players in this market represent direct competitors, RTN faces indirect competitors in the following markets: A. B. C. D. E. Community-Based Sites Community-Based News Sites Community-Based Music Sites Traditional Music Websites Official Artist and Fan Sites

Each of these markets is described below.

A. Community-Based Sites
Community-based sites, also known as social networking sites, are websites in which members can create profiles, leave comments throughout the site, and communicate with other members among other features. A June 200X report by Piper Jaffray entitled Silk Road: Social Networking is Here to Stay effectively sums up the power and longevity of social networking:

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We believe social networking sites have become a permanent part of the fabric of web applications and are rapidly becoming one of the most popular activities online, potentially impacting how other popular services such as email, IM, and maybe even search are accessed. As a clear indication of the growth rate and scale of social networking, consider this: MySpace monthly page views have now surpassed MSN or AOL in the U.S. and are nearly 75% of the size of Yahoo!. Social networking has filled a gap that was left by all the existing portals and web services and it is fulfilling a very important and basic function for millions of users: allowing them to express themselves and connect with their friends, with the two functions tightly integrated. The leading sites such as MySpace (News Corp), Facebook, and others are amassing significant power in the new landscape of the Internet and the existing Internet companies are likely to have to work with these newcomers as they may yield material control on the flow of traffic to other applications. Social networking sites such as MySpace.com, Facebook.com, Tagged.com, and TagWorld.com have educated consumers regarding the value of these sites and how to use them. Their success has spurred genre-specific social networks such as community-based/social networking news sites and music sites, which are discussed below. RTN doesnt view established social networking sites as competitors since these sites have a general focus. That is, members talk about all aspects of life, from dating to music to movies, etc. Conversely, RTN is solely focused on music.

B. Community-Based News Sites

Community-based news sites are sites in which members decide whats newsworthy and whats not. For instance, on Digg.com, the most prominent community-based news site, members Digg stories that they feel are most newsworthy. The stories that the community feels are most important rise to Diggs homepage, while less important stories get little attention. Diggs one million+ members can submit stories, digg stories, and comment on stories. Digg focuses on general news with a slant towards technology, gaming and unique/sensational news. While Digg does have a Music area within its Entertainment section, this receives little focus. In fact, at the time of the writing of this plan, Diggs music home page only includes one article submitted within the past 48 hours. Furthermore, Digg doesnt pare down the music category into sub-categories such as Rock and individual music artists. Conversely, these sub-categories are the entire focus of RTN. Other sites that are similar to Digg include Newsvine.com, Spotback.com and Gabbr.com. Of most relevance is the Digg-like site for music, Noisetap.com, which was launched by Ticketmaster in January 200X. Like Digg, Noisetap.com allows members to submit and vote for music stories. Noisetap.com is organized by music genre and not by music artist. This most likely will not satisfy the needs of many music fans since they dont have the ability to find news on the specific artists they care most about. Likewise, without a full-time staff actively researching and publishing news stories at the artist-level, Noisetap.com will never be able to offer the comprehensive news that RTN does.

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While RTN is currently similar to community-based news sites in that members can submit stories and comment on the news they find most interesting, no established player in the market provides a comprehensive focus on music. In addition, RTN sees these sites as marketing partners as we have and will continue to submit our stories on them to increase our readership.

C. Community-Based Music Sites

There are many community-based music websites, although none focuses on music news such as RTN. Conversely, these sites generally give members the ability to create and listen to song play lists. The community acts to help individual members find new music and new friends based on similarities in their music tastes. Prominent sites in this genre include Last.fm, Finetune, 1 Pandora, RadioBlogClub, MyStrands, iLike and iJigg. Last.fm is the most prominent community-based music site and is a good model with which to compare RTN. Likewise, we will benchmark our performance against Last.fm as we reach of goal of becoming the premier music news community and focus on becoming the premier music community. According to Alexa, Last.fm is the 359 most visited site on the Internet. While Last.fm focuses on allowing members to create customized Internet stations based on their music tastes, the site has much additional content and social networking features. For instance, for each artist, Last.fm includes pictures, a bio, concert dates, discography, fans on Last.fm, and similar artists. Fans are also able to create journals and communicate with other fans. Key features that Last.fm doesnt currently focus on include news and video.
th

D. Traditional Music Websites

Traditional music websites such as MTV.com, RollingStone.com, Billboard.com, NME.com, AOL Music, and Yahoo! Music tend to have many features such as news, reviews, pictures, videos and audio. While these sites are generally very well done and extremely popular, they are underserving visitors in two core areas: music news and community. These sites lack of music news stems from the difficulty in creating this news, specifically that it requires filtering through thousands of articles and websites to find relevant stories. Likewise, as discussed, these firms might wish to license our news content in the future. Regarding community, none of the top music sites are thriving communities. Rather, either these sites offer no community features or they recently began offering select features (e.g., submitting reviews or commenting on articles). Even when available, the community features on these sites are afterthoughts and are not engrained within the core fabric of the sites. While they havent been able to transform their current sites into communities, top music websites clearly understand the power of online music communities and have an appetite for them. For example, in January 200X, MTV invested in social networking website TagWorld. MTV also acquired RateMyProfessors.com and Quizilla.com (teen social network) in January 200X and October 2006 respectively.

Note that iLike.com received $13.3 million in funding from Ticketmaster in 12/06.

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As mentioned previously, our vision is to build and incorporate additional technologies, and use our army of members to publish vast amounts of music content on RTN, in order to fully satisfy music fans and leapfrog traditional music sites in terms of their music content.

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E. Official Artist and Fan Sites

RTN competes with official music artist websites and fan websites. These sites often include news about the specific artist as well as pictures, videos and other relevant information. On one hand, official music artist and fan websites are direct competitors to RTN. This is because some of these sites offer comprehensive news on the specific artist they cover. In addition, many offer forums, discussion boards or other ways to communicate with other fans. However, two factors separate RTN from these types of sites: 1) breadth and 2) sophistication. 1. Breadth: Most music fans love more than one artist. As such, in order to get the news they want, they would have to visit/join multiple fan or artist websites rather than getting all of their news from RTN. 2. Sophistication: While some official music artist websites are technologically sophisticated, offering forums, networking and other worthwhile features, the majority of artist and fan websites have limited usability, functionality and networking ability. In fact, this deficiency has lead to the success of MusicToday, which provides front and back-end technology to power artist websites. Specifically, MusicToday offers web design and hosting, develops sophisticated online stores, builds online fan clubs and offers web ticketing among other services to select top music artists such as Dave Matthews Band, Christina Aguilera, Kenny Chesney, Britney Spears and Usher. While offering sophisticated tools for select music artist websites, MusicToday offers little to no music news nor advanced social networking functions. For instance, the official Dave Matthews Band website offers less than one news story per month.

F. Direct Competitors: Community-Based Music News Sites

RTNs direct competitors are other music news websites that have social or community features that allow users to join the site, submit articles, comment on articles, create public profiles and/or communicate with other members. RTN has identified one significant player who offers this service, AbsolutePunk.net. AbsolutePunk.net has done a good job of building a user base (the site claims 125,000+ registered members and nearly 500,000 un-registered members). In addition, the user base is very active -- the average story on their site receives approximately 20 comments. AbsolutePunk.net offers music news, reviews, pictures and interviews among other features. On the negative side, AbsolutePunk.nets articles are generally posted by one staff writer (as opposed to RTNs five writers), most articles are simply one sentence posts rather than full articles, and no attempt seems to have been made to cover all news stories. In addition, the site only covers the punk music genre. Although punk is broadly defined on the site, the site doesnt cater to genres such as R&B, rap and country among others, failing to satisfy the broader market. AbsolutePunk.net is owned by Indieclick, a Los Angeles-based media company. According to the AbsolutePunk.net website, the site:

Has developed a loyal (72% return rate) reader base 10

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Has the following site statistics as of February 24, 200X: o 5,182,147 Posts o 163,535 Threads o 126,448 Members o 1,711 Artist Profiles o 20,774 Multimedia Files o Approx 76,000 visits per day. o Approx 276,000 pageviews per day.

RTNs Competitive Advantage

In addition to being the first to fill the untapped market void for comprehensive music news, RTNs competitive advantage in the market primarily includes the following:

Online Marketing Sophistication Content Development Experience and Expertise

Online Marketing Sophistication

RTNs team, primarily team members NAME and NAME, has operated an affiliate marketing business focusing on music for the past four years. Affiliate marketing is defined as a system of revenue sharing between one site (the affiliate) which features an ad or content designed to drive traffic to another site (the merchant). The affiliate receives a fee based on traffic to the merchant which converts to sales. Our affiliate business has focused on connecting music fans, primarily aged 13 to 30, with music offers. Over the past two years, we have successful sold affiliated offers to over 50,000 customers. We have become a significant online advertiser, receiving Googles over 1 million leads award, and are recognized as a major player among the top affiliate networks. It is important to note that affiliate marketing success has been credited with part of MySpace's success. This is because effective affiliate marketers understand how to drive and convert on Internet traffic. RTN will employ its affiliate marketing techniques to drive traffic to RTN.com and enroll members. We will utilize technologies and proprietary techniques that allow us to monitor multiple metrics such as the cost per visitor, cost per member sign-up, etc., so that we can set and maintain profitable metrics.

Content Development Experience and Expertise

Another venture that RTN team members, primarily NAME and NAME, launched was the development of over 300 niche websites. To create the content for these websites, we employed a virtual work force of over 90 researchers in India and 30 writers and editors in the US. This experience taught us how to manage a large workforce, train writers to improve content quality and motivate a large group of people. These skill sets will be critical in allowing RTN to grow the content of the site, as developed by both staff and members, while maintaining quality standards.

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IV. Marketing Plan

RTNs marketing plan includes the following:

Online Advertising: RTN will initiate pay-per-click advertising campaigns on Google and
Yahoo! in order to inexpensively drive traffic to the site. Specifically, RTN believes it can drive qualified traffic to the site for 20 cents per visitor and achieve a 20% member conversion rate, thus generating members at a cost of $1.00 per member. Keys to RTNs success in achieving this metric include: Driving targeted traffic inexpensively to RTN by: o o o o Conducting thorough keyword research and advertising on appropriate keywords and keyword groups Creating advertising text that maximizes click through rates Creating landing pages that maximize conversions while maintaining the highest Google AdWords quality score possible Closely monitoring conversions to quickly stop and/or modify unprofitable campaigns

Utilizing a two-step enrollment process. People often hesitate to join a new website due to lack of time, skepticism, etc. To overcome this, we will initiate a two-step process as follows: o Newsletter sign-up: RTN has developed a system for automatically sending daily emails to individuals who sign up for artist-specific newsletters. That is, when an individual signs up for the newsletter of their favorite artist, they automatically receive an email each day when there is news on that artist. Getting individuals to enter their email address to join the newsletter is much easier than getting them to join a site where they have to create a username, select a password, etc. As such, step one will be to get visitors to sign up for artist-specific newsletters. Once on the newsletter distribution list, members will constantly receive messages (embedded in their daily newsletter) regarding the benefits of participating more on RTN.

Active RTN Membership: the constant reminders regarding RTNs value proposition in the daily newsletters will influence members to participate more actively on the site (e.g., customize their profile, visit the site more often, etc.).

Invite-A-Friend: RTN is in the process of creating an aggressive invite-a-friend/member

referral program. In doing so, we are following the lead of social movie community, Flixster, which grew to 5 million members within 10 months. It did this by encouraging members, during their initial registration process, to upload and send an invitation to multiple contacts in their email address books. The technology to develop this process is fairly complex and we expect to be completed with and to rollout this program in June 200X.

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Direct Email Marketing: RTN will directly contact bloggers and prominent music fans we
find online to tell them about RTN, encourage them to join, and encourage them to write about RTN on their blogs and online journals.

Creating/Distributing Buzzworthy/Viral Content: RTN plans to have several

buzzworthy/viral articles (i.e., content that people would want to email to their friends since it is funny, interesting, etc.) on the site each day. With a single click, visitors will be able to send these articles to social bookmarking sites such as Digg.com or Fark.com, where these articles could receive widespread attention. In addition to our traditional news stories, RTN will also periodically create special reports/features in order to satisfy our members and visitors and to try to get widespread exposure. An example of the power of such buzzworthy content, RTN has already succeeded in having two stories accepted by Fark and Digg, which have brought in over 50,000 unique visitors.

Super Fans/Street Team Development: RTN also plans to recruit super fans. Super
fans are individuals who are passionate about a certain music artist/band and actively contribute articles and/or comments on RTN. We will recruit these fans, reward them with status (e.g., adding a gold RTN headphones image to their profile page) and encourage them to more aggressively promote the site by:

Submitting more news to RTN Commenting on more articles on RTN Growing the RTN community around their favorite artist(s) by actively recruiting new members to join the site (such as actively posting RTN-related comments on their MySpace pages, on other music forums, etc.)

Public Relations: Upon financing, RTN will hire a public relations firm to help us get mentions
in media sources ranging from magazines, newspapers, radio, television and blogs. To date, we have developed and issued press releases via Billboard Publicity Wire which have been syndicated throughout the web. An effective PR firm will enable RTN to quickly reach a wide audience.

Widgets: RTN will create artist-specific and genre-specific music news widgets. For example,
our U2 widget would include all of the recent U2 articles published on RTN. The widget can easily be placed on MySpace pages, blogs, etc. Each story title in the widget links to the full article on RTN. RTN has great expectations for our widget. To begin, no such widget currently exists as there is no one place to get comprehensive news for specific music artists. Secondly, each time someone places a RTN widget on their blog or social networking page, it will effectively market RTN to a wide audience at zero cost to us.

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V. Technology/Site Development Plan

This section provides a brief roadmap of the initial and future functionality of RTN.

Initial Site Functionality

The initial RTN website will include the following features:

Member Functionality o o o o Ability to submit and comment on news stories Ability to suggest new music artists to add to the site Ability to create user profiles Ability to receive customized news and email alerts

Site Content o o Articles categorized by artist and core genre (e.g., Rock, Rap, Pop, etc.) Music artist sections which includes News, Bio and Fans

Future Site Functionality

RTN will use news and basic functionality as the platform though which we will build a thriving music community. After initial launch, the RTN technology team will work on incorporating additional features such as:

Member Functionality o o Ability to message other members via the site (e.g., members will have an Inbox on the site) Event calendars: members will receive online calendars. With the click of a button, the member will be able to add tour dates of their favorite artists/bands to their calendar.

Site Content o o o o o o Articles also categorized by sub-genre (e.g., Alternative Rock, West Coast Rap, etc.) Music artist sections to also include videos, audio files, photo galleries, reviews and event calendars to which members can upload files and vote on top content. Forums and member blogs Music compatibility testing (suggestions on song/artists members might like) Trivia quizzes Music playlists 14

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VI. Financial Plan

Revenue Model
During the first six months, RTN will not generate any revenues as it will not sell advertising space nor offer products for sale. This decision has been made to spur the growth of the RTN community. By initially positioning RTN more as a non-profit, for-the-people-by-the-people venture, members will be more prone to promote the site and invite their friends than if the site looks too commercial. Starting in September 200X, RTN will primarily generate revenues from selling advertising space. As technologies evolve that allow us to seamlessly integrate music sampling and purchasing on our site, sales of downloadable music are also expected to be a significant revenue source. To a lesser extent, we may sell other music-related items such as ringtones, concert tickets, and apparel.

Funding To Date
To date, RTNs founders have invested $XX in RTN, with which we have accomplished the following:

Built the sites core technology Hired and trained our core staff (we currently maintain a 4-person full-time team) Populated the website with content (over 10,000 articles and 1,200 artist bios) Generated brand awareness among music fans, including driving 50,000 unique visitors in March, 100,000 unique visitors in April, and 200,000 unique visitors in May 200X.

Funding Requirements/Use of Funds

RTN is currently seeking $3 million to provide funding for the next 24 months. At this point, the site will be profitable and can grow organically, or additional capital may be sought to more aggressively expand our member base. The capital will be used as follows: Execution of Marketing plan: in order for RTN to grow its visitor and member base, we need to invest dollars in online advertising and public relations. With regards to online advertising, we are confident that we can enroll members at a cost of $1 per member, which is a fraction of the value of the members to an acquirer (minimum $25 per member), thus providing a significant return on our marketing investments. Execution of Technology plan: in order to build a thriving community, RTN needs to offer its visitors a stickier website and enhanced features. We currently maintain a vast wish list of features, such as members uploading and rating pictures and videos, trivia quizzes, and member-to-member messaging, that will significantly improve the sites functionality and value proposition.

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Staffing: In order to reach our goals, we will have to hire additional technical and operations personnel.

Financial Projections
Below is an overview of RTNs Financial Projections for the next three years. Please see the Appendix for the full financial projections and key assumptions. 200X 626,876 2,348,050 20.7 $165,431 $1,407,958 ($1,242,527) 200X 4,289,580 8,390,187 273.5 $2,461,127 $2,591,978 ($130,851) 200X 9,577,020 18,633,659 781.0 $7,810,354 $2,838,423 $4,971,931

RTN Members Unique Visitors Total Page Views (Millions) Revenues Expenses EBITDA

Exit Strategy / Valuation Metrics

RTNs most likely exit strategy is to be acquired by a traditional music website or property (e.g., Viacom/MTV, Ticketmaster, Rolling Stone), an entertainment/media conglomerate (e.g., Yahoo!, IAC/InterActiveCorp, NBC), or a large social networking site (e.g., News Corp/MySpace). This strategy is supported by the significant M&A activity in the social networking market, which includes the following transactions over the past 36 months: Company Del.icio.us eCrush Inc. Focus social bookmarking teen social network sports social networking social networking photo uploading and sharing community video creating, uploading and sharing community Date 12/05 01/07 Acquis. Price $30-$35 million Undisclosed Acquirer Yahoo! Hearst Magazines Digital Media Sports Illustrated Cisco Systems Inc. Yahoo!

FanNation Five Across Inc. Flickr

01/07 02/07 03/05

$20+ million Undisclosed $15-35 million (rumored)

Grouper

08/06

$65 million

Sony Pictures

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Jumpcut

KiwiBox.com

video creating, uploading and sharing community teen social network blog community tool social networking teen social network community focused on rating college professors social news site social network for high school students TV fan site blogging network video community

09/06

$15 million (rumored)

Yahoo!

02/07

Undisclosed

MyBlogLog MySpace Quizilla.com RateMyProfessors.com

01/07 07/05 10/06 01/07

$10 million (rumored) $580 million Undisclosed Undisclosed

Magnitude Information Systems, Inc. Yahoo! News Corp. Viacom/MTV Networks Viacom/MTV Networks

Reddit Sconex.com

10/06 03/06

Undisclosed $6.1 million

Conde Nast/ Wired Digital Alloy Inc.

TelevisionWithoutPity.com Weblogs Inc. YouTube

03/07 10/05 10/06

Undisclosed $25 million (rumored) $1.65 billion

Bravo AOL Google Inc.

Regarding valuation, below are the estimated valuations of social networking companies on a per member basis upon exit: Del.icio.us: $50 - $100 per member MySpace: $25 per member Xing (business social network): $137 per member at IPO in 10/06 Flickr: $56 - $130 per member Grouper: $130 per member

Based on this data, not only are social networking sites a promising investment, but sites that can acquire members for less than $25 each (a conservative valuation estimate based on the figures above), should earn a solid return on investment. As discussed above, RTNs goal is to acquire members for no more than $1 each. In addition, per the membership projections above, RTNs valuation at the end of 20XX, at a $25 valuation per member, is expected to be $239 million. A more conservative, using a 24.4 time EBITDA multiple (the average multiple of tech M&A deals in 200X according to The M&A Advisor), yields a $121 million valuation in 20XX.

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VII. Team
RTNs founding team includes entrepreneurs and managers with a track record of success and a history of successfully working together.

Management Team
THIS SECTION INCLUDED THE NAMES AND BIOS OF THE MANAGEMENT TEAM AND HIGHLIGHTED THEIR RELEVANT EXPERIENCES. THIS SECTION HAS BEEN REMOVED FOR CONFIDENTIALITY REASONS.

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VIII. Appendix: RTN Financial Projections

Key Assumptions
Note: Month 1 begins March 1, 200X

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3-Year Income Statement

200X Revenues Total Page Views (MILLIONS) Revenues Operating Expenses Staffing Outsourced Technology Office Space Advertising Other Marketing/Public Relations Web Hosting Other Total Operating Expenses EBITDA Depreciation EBIT Income Taxes @ (40%) Income Taxes Paid Income Tax Credit Net Income 20.7 $165,431

200X 273.5 $2,461,127

200X 781.0 $7,810,354

$891,058 $115,000 $26,400 $254,000 $72,000 $11,500 $38,000 $1,407,958 ($1,242,527) $1,600 ($1,244,127) ($497,651) $0 ($497,651) ($1,244,127)

$1,328,078 $60,000 $90,000 $900,000 $120,000 $33,900 $60,000 $2,591,978 ($130,851) $4,200 ($135,051) ($54,020) $0 ($551,671) ($135,051)

$1,522,923 $60,000 $90,000 $900,000 $150,000 $55,500 $60,000 $2,838,423 $4,971,931 $5,800 $4,966,131 $1,986,452 $1,434,781 $0 $3,531,350

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3-Year Balance Sheet

As of December 31 200X Assets: Cash Accounts Receivable (30 days) Inventory Current Assets Other Assets
Equipment (Computer systems, office equipment, etc.)

200X

200X

$1,845,206 $13,597 $0 $1,858,803 $16,000 ($1,600) $14,400 $1,873,203

$1,614,336 $202,284 $0 $1,816,620 $26,000 ($5,800) $20,200 $1,836,820

$4,726,360 $641,947 $0 $5,368,307 $32,000 ($11,600) $20,400 $5,388,707

Accumulated Depreciation Total Long-Term Assets Total Assets

Liabilities: Accounts Payable (30 days) Total Current Liabilities Long Term Debt Equity: Paid In Capital Retained Earnings Total Equity Total Equity + Liabilities

$117,330 $117,330 $0

$215,998 $215,998 $0

$236,535 $236,535 $0

$3,000,000 ($1,244,127) $1,755,873 $1,873,203

$3,000,000 ($1,379,178) $1,620,822 $1,836,820

$3,000,000 $2,152,172 $5,152,172 $5,388,707

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3-Year Cash Flow Statement

As of December 31 200X Cash flows from Operating Activities Net Income/Loss Depreciation Minus Increase in Accounts Receivable Plus Change in Current Liabilities Net Cash Flow from Operating Cash Flows from Investing Activities Purchases of Property & Equipment Net Cash Flow from Investing Cash Flows from Financing Activities Cash Received from Investors Net Cash Flow from Financing Net Cash Flow Net Cumulative Cash Flow 200X 200X

($1,244,127) $1,600 ($13,597) $117,330 ($1,138,794)

($135,051) $4,200 ($188,687) $98,668 ($220,870)

$3,531,350 $5,800 ($439,663) $20,537 $3,118,024

($16,000) ($16,000)

($10,000) ($10,000)

($6,000) ($6,000)

$3,000,000 $3,000,000 $1,845,206 $1,845,206

$0 $0 ($230,870) $1,614,336

$0 $0 $3,112,024 $4,726,360

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200X Monthly Projections

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200X Monthly Projections

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200X Monthly Projections

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