1. BREAKTHROUGH TRENDS IN THE NEW MUSIC BUSINESS CONDUCTOR Jay Frank Founder/CEO DigSin PLAYERS Bryan Calhoun VP New Media & External Affairs, Soundexchange Russ Crupnick SVP & Senior Industry Analyst, NPD Josh Friedlander VP Strategic Data Analysis, RIAA Gregory Mead Co-Founder, Musicmetric Chris Muratore VP Merchant Services and Emerging Growth, Nielsen Entertainment Alex White Co-Founder/CEO, Next Big Sound

2. ALBUMS EARN LESS SONGS EARN MORE Adele “Rolling In The Deep” sold over 11 Million units in 2011, the most of any single song in the Soundscan era New distribution geared towards revenues of singles (YouTube/Vevo, Subscription, Licensing, etc.)

4. Singles Take Longer To Break CARLY RAE JEPSEN – Released September ‘11, Peak June ’12 GOTYE – Released July ‘11, Peak May ‘12 FUN – Released September ‘11, Peak March ’12 ONE DIRECTION – Released August ‘11, Peak April ’12 FOSTER THE PEOPLE – Released February ‘10, Peak August ‘11

5. Industry Shift – Half of Revenues Digital in 2011 Source: RIAA

8. 2011 TRANSACTION & PERFORMANCE TOTALS Overall Music Consumption is at an All-Time High! Nielsen will capture more than 30 BILLION Streams & Transactions in 2012

9. Music Streaming & Download Activity Through the first 5+ months of 2012, Nielsen has capture more than 14.1Billion audio and video streams and 622 million digital track downloads. (Note: video streams is missing a large portion of YouTube activity) When looking at the 14.1Billion total streams Nielsen has captured so far in 2012, more than 11.2 Billion are audio streams through services like Spotify, Slacker, Rhapsody, Cricket, Rdio and MOG. Since November of 2011, weekly streaming activity has gone from 400 million per week to 660 million per week in the most current week. After an 8% growth year in 2011, digital track sales in 2012 are up 6% so far in 2012. -Projected track sales for year end 2012 is 1,350,000,000 – record year. - Streaming activity will increase by more than 33% in 2012. Millions

10. Digital Track Sales By Year Digital track sales reached another record high in 2011 w/ nearly 1.27 Billion sales. YTD 2012 digital track sales are on record pace again and projecting to be around 1.37 Billion. Note: 2012 is year to date sales through June 10 th.

11. CD Album Sales By Year CD album sales peaked in 2001 with 712 million CD albums sold and in 2012 still account for the majority of albums sold: 61%. Note: 2012 is year to date sales through June 10th.

12. Digital Album Sales By Year Digital album sales continue to grow each year and YTD 2012 account for 38% of all album sold. Note: 2012 is year to date sales through June 10 th. - Up 14% YTD over 2011.

13. Music Consumption Song & Album Facts  There were 8 million different songs downloaded at least once in 2011.  Note: 94% (7.5 million songs) were downloaded less than 100 times each and 30% were downloaded only 1 or 2 times.  Other interesting digital song facts:  Top 200 downloaded songs = 20% of digital song sales (263m)  Top 3,300 downloaded songs = 50% of digital song sales (635m)  Top 10,000 downloaded songs = 65% of digital song sales (830m)  There were 77,000 new album releases in 2011 that sold at least one unit that produced 113.2 million album sales.  Less than 1% of all new album releases (350 titles) accounted for 70% of all new album release sales.  94% of all new releases in 2011 sold less than 1,000 units each (72,000) and 80% sold less than 100 units.

17. Music File Sharing - Today 1 million active music torrents 200 million individuals tracked 2 billion music ‘file trades’ in 2012 (so far) 10% of American BitTorrent users use an anonymous VPN USA makes up 22% of music file sharing 60% of downloads made by top 40% of users Gregory.mead@musicmetric.com

18. Music file sharing - Trends This year Gregory.mead@musicmetric.com

19. Music file sharing - Trends Gregory.mead@musicmetric.com

20. Music File Sharing - Conclusion What does torrent data show? Downloads in the USA are reducing Availability is not correlated to downloads Downloads are correlated to sales Using file sharing data, sales can be predicted Gregory.mead@musicmetric.com

21. Organizational Efficiency (* pre audit)

22. 70% of Americans aged 12 or older now have a broadband connection. Up from 13% in 2002. 44% of Americans have smartphones. Up from 14% in 2010 17% of Americans listened to online radio in their cars by connecting their mobile phones, up from 6% in 2010 Revenue per user

23. 23 For “Connected Kids” iPad gets attention, but Touch gets usage, especially as kids become “tweens”

24. Music apps as important to connected tweens as social networking, but… 24

25. Music apps as important to connected tweens as social networking, but… 25 84% of music app users only have free apps

26. Saving the next generation… 26 Establish value proposition Create commerce platforms Integrated experience Rethink social media Licensing deals As kids… CDs account for half of the entertainment content they own…games, movies, books