EX-99.1 2 ex99-1.htm

Investor Relations Presentation

December 2010


This presentation contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, about Atrinsic (“ATRN”) and its affiliates. Forward-looking statements are statements that are
not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of ATRN's
management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-
looking statements. The following factors, among others, could cause actual results to differ from those set forth in
the forward-looking statements: general economic conditions; geopolitical events and regulatory changes;
requirements or changes adversely affecting the businesses in which ATRN is engaged; demand for the products
and services that ATRN provides, as well as other relevant risks detailed in ATRN's filings with the Securities and
Exchange Commission. The information set forth herein should be read in light of such risks.  ATRN assumes no
obligation to update the information contained herein.

Adjusted EBITDA presented for all periods is a non-GAAP financial measure. Refer to “Supplemental Disclosure
regarding Non-GAAP Measures,” presented in the Company’s most recent quarterly earnings release, available at
http://www.atrinsic.com/press/press-release/38, and filed with the Securities & Exchange Commission on Form 8-
K, for additional information regarding Adjusted EBITDA and other non-GAAP financial measures presented

Forward Looking Statement


Atrinsic’s Business

We have a recurring revenue, subscription-

     based direct-to-consumer business model  

Recognizable and relevant entertainment

     brand in Kazaa

We offer alternative billing capabilities

Our focus is on digital music in the rapidly

     growing mobile space

Direct-to-Consumer Subscriptions:

Kazaa Entertainment

We are a top ten search agency according to


We offer advertisers an integrated service offering  

across paid search, SEO, display, affiliate marketing,

business intelligence and brand protection services

We work with all facets of advertisers, large and

     small, to acquire customers and expand markets

Interactive Agency/Affiliate Network:

Atrinsic Interactive

We are a best-in-class search agency that

    owns/operates a top-tier affiliate network



To  build and sustain a large and profitable subscriber base and a growing and engaged


Atrinsic Interactive’s Business Mission

To become the largest, independent search marketing agency

To become a top five affiliate network

To leverage our multi-channel marketing expertise and technology to drive advertisers’ results

Direct-to Consumer Subscriptions: Kazaa

Deliver  entertainment content to our customers anywhere, anytime, and on any device in a

     manner our customers choose


Atrinsic Snapshot

  We currently have 217,000 paying subscribers

     (3Q 2010) across our entertainment products

  We have approximately 64,000 Kazaa

      subscribers (3Q 2010)

Ticker:                 ATRN (ATRND until 1/3/10)

Exchange:        Nasdaq Global Market

Average Daily Volume:         38,000 shares

Shares Outstanding:                6.3 million

Recent Market Cap:                 $11 million

Cash (3Q 2010):                         $4.2 million  (additional

                                           $2.7MM in cash tax refunds

                                           after quarter end)

Working Capital:                         $6.0 million

Total Debt:       $0

3Q 2010  Revenue:                 $9.2 million

2010 Revenue (YTD):            $32 million

Auditors:             KPMG LLP      

We are a top ten search agency according to


  We will have approximately 60 employees,

      transitioning to a single location in NY by 1Q


  As a result of restructuring and focus, we

     expect to achieve fixed operating expense cost

     savings of between 30% to 50%

   ARPU of $5.74 across all of our subscription

      products (3Q 2010)

  Due to improvements in churn and higher rates

      of subscriber acquisition, we expect 10%

      month-over-month  growth in  Kazaa subs


Atrinsic Interactive

We are a top ten search agency according to


We offer advertisers an integrated service offering  

across paid search, SEO, display, affiliate marketing,

business intelligence and brand protection services.

We are focused on targeting and maintaining clients  

that participate across the agency services, including

search and affiliate marketing.



The Atrinsic Affiliate Network uses state of the art
business intelligence tools for brand protection and to
identify common publisher violations.

The paid search team utilizes highly intelligent search
tools to drive sales at the lowest cost for advertisers.

Our multi-channel path to conversions enables us to see
the entire conversion funnel across any online marketing
channel. We have the ability to take the proverbial black
box out of the conversion flow.


Atrinsic Affiliate Network

Representing an evolution in affiliate marketing platforms, our platform offers a

     full- service solution while maintaining the highest level of brand protection.

Using our affiliate network, we create mutually beneficial, easy partnerships for

     advertisers and publishers to drive website traffic and customer acquisition.

Our Network is low-risk, yet high-reward.  Our software increases transparency

     between publishers and advertisers, giving both parties access to higher

     quality data.

Through the use of comprehensive reporting, trademark monitoring and

     proprietary  business intelligence tools, our team is able to identify  

     opportunities and flag potential issues before they become brand destructive.


We hope that in the future, Kazaa will be one of our largest advertisers on the



On October 13, 2010, we amended  our existing Kazaa marketing agreements with Brilliant Digital in exchange

     for 4,161,430 shares of our common stock.  We also entered into an agreement to acquire all of the assets of

     Brilliant Digital that relate to the Kazaa digital music subscription business for an additional 7,125,665 shares.

In connection with our acquisition of the Kazaa assets, in November, 2010, we announced that we are

    undertaking a restructuring of our existing operations, and of the Kazaa business that Brilliant Digital is engaged

    in, to reduce certain operational expenditures and to improve efficiencies in product development and sales

    and customer acquisition outcomes for the Kazaa digital music service.  As a result of the restructuring, we

    expect to be able to achieve fixed operating cost savings of between 30%-50%.

Acquisition of Kazaa

We are acquiring all of the assets associated with the Kazaa business, including the Kazaa trademark and

     associated intellectual property (kazaa.com, etc.), as well as a content management system, a content delivery

     platform and customer service platform, and licenses with rights’ holders. We are also assuming certain limited

     working capital liabilities.  

We expect that our special meeting, where stockholder will vote to approve the Kazaa acquisition will be in the

     first quarter of 2011.  


The Kazaa digital music service is our principal premium direct-to-

     consumer subscription product.  

Subscription Products

  We currently have 217,000 paying subscribers across all of our products.

  Because we are proficient in multiple billing platforms, we are able

  to create subscriber acquisition efficiencies.

  Ringtone.com, billed to a user’s mobile device, allows consumers to

     download premium ringtones.

  Our casual game subscription services have a broad selection of

      popular digital games, including top-rated games Zuma™, Diner

      Dash®, and World Series of Poker® Pro Challenge.


Kazaa Screenshots


Kazaa Screenshots


Kazaa Digital Music Service

Potential to become one of the premier music subscription services

     by revenue and subscribers

Unlimited access to millions of CD quality tracks

Pay one monthly fee to download unlimited music files and play that

     music on up to five computers/devices

Download unlimited ringtones to a mobile phone

Subscribers are billed through a credit card, landline or mobile device

Royalties are paid to the rights’ holders for licenses to the music utilized

    by this digital service

Access to streaming, unlimited downloads

With expansion, we have an opportunity to extend into other

    entertainment related products and services

We are also developing  a multi-tiered pricing strategy  based on variable

     features and access   


2009 Worldwide Digital Music Sales of $4.2 billion


Worldwide Digital Music Revenue &

Penetration (in billions)

Large and growing market for digital music.  Digital music represents

     about 27% of total market and is growing at double digits (IFPI).

In the U.S., digital music adoption is even greater, accounting for

    40% of music sales (IFPI).

Digital Music Market

Subscriptions and mobile business models are key growth sectors

     within the market.  These sectors correspond to the focus of Kazaa.

Overall U.S. music sales hit 1.5 billion units in 2009 – the second

     year above 1.5 billion (Nielsen SoundScan).

In 2009 there were 1.2 billion digital track downloads in the U.S.

    (Nielsen SoundScan).

Mobile Internet usage is expected to eclipse desktop Internet  usage

     within three years (Morgan Stanley Research).

Music subscriptions grew rapidly in 2009 and accounted for more

     than 5% of all digital sales (IFPI).



Revenue from digital channels

Revenue from traditional channels


Mobile Internet Penetration

Mobile devices are rapidly beginning to dominate the Internet.  It is expected that the Internet will be mostly

     accessed via mobile devices by 2014 (Morgan Stanley Research).

Mobile Devices to Dominate the Internet

The convergence of Internet usage and mobile devices is expected to expand the market for on demand

     streaming music.






















How Will the Internet be Accessed?




The Final (Efficient) Frontier

There is no one correct answer, rather there is a frontier of efficient marketing spending – described as the

     highest life time value LTV that can be achieved for a given subscriber acquisition cost (SAC)

Solving an Optimization Problem:  What should we pay for a subscriber?

By improving the product, modifying pricing, billing efficiently, reducing churn and increasing utilization, we

     can maximize LTV, given a level of SAC

By validating leads, monitoring our marketing channels, engaging in SEO and better SEM practices, and

     utilizing alternative marketing approaches, we can minimize SAC, given a level of LTV





LTV Optimization

You are here

You are here


We are focused on cost-effectively acquiring customers through multiple

    online distribution channels: Affiliate marketing, search, social media,

    display, email/SMS and organic/SEO.  

A Disciplined Approach to Marketing

Multi Channel, Disciplined Approach. Focused on ROI

We also have a  network of our own media, consisting of music, games

    and  lifestyle web sites and proprietary content to attract consumers.

We are disciplined marketers.  We are constantly optimizing marketing

    spend with respect to number of subscribers, revenue and costs.

We employ a comprehensive data strategy to validate and enhance our data

    using a highly advanced data validation platform to improves targeting  and



Merchandizing and Content

Kazaa is a fully licensed digital music subscription service.  We pay rights’ holders royalties on tracks

    downloaded or streamed.  Our subscribers have access to millions of tracks.

In conjunction with our product roadmap, we are continually enhancing and improving Kazaa to offer users

     improved functionality and better search capabilities.

As subscribers browse, search and listen to music, Kazaa provides users with detailed  information on

     tracks or albums, along with popular rankings and music charts and other rankings.   

We are implementing a comprehensive communications strategy, including employing email and SMS to

     communicate with our users in a relevant way to improve retention and to encourage utilization.  

Kazaa presents its content in a variety of customized and personalized formats, including allowing users to flag

    and access favorite tracks, build and edit playlists and also to see recently played tracks.

Utilizing proprietary preference and rankings technology, Kazaa offers radio features, which are automatically

     generated playlists generated around individual tracks, and provides intelligent recommendations  based on

     listener habits and user preferences.

Our merchandizing strategy is geared towards improving customer retention and increasing LTVs.

We are employing  social media to advertise to other Facebook users what a Kazaa user is listening to and are

     developing off site streaming .


Product Roadmap

Other short term product development includes optimizing Kazaa for

     mobile viewing and usage, providing a download player with side loading

     and greater merchandizing capability.  

On an ongoing basis, we continue to enhance and improve the user

     experience  through preference engine improvements and search

     capabilities and GUI modifications.

Our product strategy is focused on increasing retention and LTVs and reducing churn

As a result of these ongoing improvements, we already see increased

    utilization and access.

Medium term product development initiatives include mobile applications to

    enable subscribers to stream and download music on the iPhone and iPad

    and on mobile devices with Android, Blackberry and Windows Mobile 7

    operating systems.  


Proficiency in Multiple Billing Platforms

Billing & Pricing

We create customer acquisition efficiencies relative to traditional

     direct marketers, who may only offer a single billing modality –

     credit cards. Thus, we are able to expand our potential customer

     base, attracting consumers who prefer not to use a credit card.

We own 36% of The Billing Resource, LLC (“TBR”), one of only a

handful of local exchange carrier fixed-line billing aggregators in

the United States.

In addition to agreements with multiple aggregators who have

access to U.S. carriers – both wireless and landline – for billing,

we also have an agreement in place with AT&T Wireless to distribute

and bill for our services directly to subscribers on its network.


Pricing Strategy

In conjunction with the rollout of our Kazaa mobile product and

     mobile apps, we are constantly testing and incorporating alternative

     price points to maximize retention and LTV   

Kazaa now offers a mobile phone-billed $9.99 per month product and

     is developing multi-tiered pricing to deliver different value

     propositions for all market segments.


Billing Alternatives

We have approximately 217,000 subscribers and today

     subscriptions represents approximately 50% of our  

     revenues.  Approximately 35% of subscribers billed on

     mobile, 41% billed on telephone land lines and  24% billed

     by credit card.




3Q 2010 Billing Breakdown





Operating Leverage

High variable cost structure and relatively low fixed costs, allows us to respond to market

Significant variable cost component in our business model improves operating leverage (increasing  predictability

     and transparency). Cost of media, or subscriber acquisition expense, as a percentage of revenue, is expected to

     fall over time.



Expenses YTD 2010




Long Tails

Long subscriber tails are a benefit of our recurring revenue business model

Initial “investment” in new subscribers results in short term loss, but then the recurring revenue

    stream turns profitable and then continues to pay back.











Month 1

Month 2

Month 3

Month 4

Month 5

Cumulative Subscriber Gross Profit


See For Yourself

Check it out yourself and monitor our

     progress. And download unlimited

     tracks for a low monthly fee.

Go to Kazaa.com and subscribe to our digital music service

Did I mention we are a top-ten

     search agency according to



Quarterly Financial Highlights

  (in millions)

For the Quarter

1Q '10

2Q '10

3Q '10

Total Net Revenue








Cost of Sales







Gross Profit







Operating Expenses














At Quarter End

1Q '10

2Q '10

3Q '10

Cash and cash equivalents









Working Capital







Total Debt