Time to Invest
Minimum Investment: $100
Time to Invest
Generated $3.3 million in revenue in 2017, up 7.3% year-over-year
More than 87,000 learners have taken at least one of their self-paced learning classes
Programs at UCLA Extension and Carnegie Mellon University have used the platform and the company has a licensing agreement with Lynda.com (owned by LinkedIn) to distribute its content
Academic accreditation from the Western Association of Schools and Colleges
Security Type: Crowd Note
Round Size: Min: $25,000 Max: $107,000
Valuation Cap: $7.04 million
Conversion Provisions: In connection with equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into non-voting preferred units (Conversion Units) at a price based on a $7.04 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.
You are investing in Crowd Notes in this Offering. Perks are meant to be a thank you from the company for investing. The perks below are NOT inclusive of lower dollar amount perks.
$1,000: One three-month subscription (access to one course) on ArtistWorks’ platform
$2,500: One six-month subscription (one course)
$5,000: One 12-month subscription (one course)
$10,000: Two 12-month subscriptions (one course each)
$25,000: Five 12-month subscriptions (one course each)
Roughly 50% of Americans between the age of 18 and 29 played music in 2018,i with over 100,000 music educators and 60 million active music makers in the U.S.ii However, not everybody who wishes to learn a musical instrument has been able to access lessons and the time commitment needed for conventional lessons, and a lack of confidence in their skills has prevented many people enrolling in classes.iii
Founded in 2008, ArtistWorks is an online learning platform for everyone from first-time beginners to aspiring musicians. Since its inception, ArtistWorks has taught over 100,000 players in 85 different countries through its platform.
ArtistWorks aims to disrupt the online music education industry by offering a patented Video Exchange Learning style, which enables students to interact directly with music professionals at their own pace. In the last year, the company has also rolled out several new features including accredited music certificate programs and licensing partnerships with large companies and Universities. ArtistWorks introduced a Certificate Program in October 2018 and plans to eventually offer it to online high schools and public high schools. The company is also planning to launch an accredited High School Music Certificate Program in 2019 that will include the equivalent of several semesters of learning material for students.
ArtistWorks’ patented Video Exchange Learning is an interactive online music learning platform that gives students access to a library of recorded music lessons and a video exchange platform where they can interact directly with their course instructors. The Video Exchange library offers over 900 hours of recorded instructional videos from course instructors. These videos can be accessed at any time and on any device by students. While learning, students can pause, play in slow motion, and loop the videos to practice at their own pace. There are several different levels of video instruction, ranging from fundamentals to advanced. Video Exchange Learning is available for 35 self-paced courses that include a variety of instruments such as the electric guitar, classical piano, and bluegrass mandolin.
Paul breaks down his indestructible playing techniques in an approachable way.
Tony takes you step-by-step through 5-string banjo fundamentals to advanced techniques.
Mike teaches bluegrass mandolin lessons & many other genres reflecting his celebrated music career.
One key feature of the Video Exchange Learning platform is the ability to interact with music instructors around the world to gain valuable feedback. Course instructors are all music professionals and include multiple Grammy-winning artists. Students can record themselves playing their instrument and send the video to their course instructor at any time. Within a few days, students will receive a personal video response from their instructor. All video submissions and instructor responses are paired together and added to the Video Exchange Library, where other students on the platform can watch and learn from the interaction. Currently, the Video Exchange library contains more than 60,000 videos of instructors interacting with students.
Launched in October 2018, the Music Certificate Program is a comprehensive online music program for students of all levels. The programs are offered in step-by-step music lessons over the course of 12 weeks. In addition to learning how to play an instrument, students will be taught music theory, improvisation, ear training, and skills to help decrease anxiety during on-stage performances. Students will learn through watching instructor videos, gaining access to weekly study materials, and practicing the material they’ve learned. The total study time is expected to be around an hour and a half each week. During weeks 4, 8, and 12 of the course, students take an online quiz and must submit videos of themselves playing for an evaluation and final grade from a course instructor.
Upon successful completion, ArtistWorks sends students a certificate of completion and a badge on Credly.com, allowing students to share their music accreditations online. Certificate programs are offered in four different skill levels from beginner to advanced. The first 100 students to successfully complete a level of the Certificate Program will receive a personally signed certificate from the instructor.
ArtistWorks has been granted academic accreditation from the Western Association of Schools and Colleges (WASC), one of six regional accrediting bodies recognized by the U.S. Department of Education. This qualifies ArtistWorks to be a supplemental education provider of online music instruction to students in grades 9-12 in the U.S. ArtistWorks plans to meet the national and state requirements necessary to enable students to gain school credit for completing the program.
ArtistWorks also offers several of its courses through licensing agreements with Lynda.com (owned by LinkedIn) and Recorded Books (RB Digital). The company’s licensing agreement with Lynda.com provides LinkedIn Learning’s 17 million membersiv with access to seven of ArtistWork’s courses. ArtistWorks also has a deal with Alfred Publishing to license some of its musical publications.
In additional to individual students, customers of ArtistWorks include University programs at Carnegie Mellon, UCLA Extension, Central Queensland University (Australia), and Sapir College (Israel), as well as five independent charter schools.
ArtistWorks plans to use a portion of the proceeds from this raise to build and promote their existing online music lessons by adding features such as video tagging, practice calendars, and a freemium based subscription. The company also anticipates using a portion of the proceeds to build out their Certificate Program and Accredited High School Certificate Program. The remaining funds will go towards marketing expenses, employee expenses, and wages. The Company may alter the use of proceeds and reallocate funds based on realized expenses within the categories given. General economic conditions may also alter the trajectory of the company’s planned product roadmap, which may also affect the use of proceeds.
ArtistWorks introduced its Music Certificate Program in October 2018 for the Blues Guitar. The company plans to roll out additional programs in the coming months for more instruments (ukulele, bluegrass guitar, violin, jazz saxophone, and mandolin). ArtistWorks is also planning to launch an accredited High School Music Certificate Program in 2019 that will include four to eight different levels of music learning. Each level will be the equivalent of two semesters of learning material for students. ArtistWorks anticipates meeting all state and national education requirements to enable students to receive school credit for completing the program.
Upon the successful introduction of the Certificate Program and High School Certificate Program, ArtistWorks is planning on grouping each segment of its business together under one new name – the ArtistWorks School of Music. One of the primary goals of the School of Music will be to offer a more structured learning experience for all of ArtistWorks students.
ArtistWorks utilizes three different pricing models for its services:
The ArtistWorks Video Exchange program is a monthly subscription (paid for upfront) that gives users access to all instructional videos and levels in a course. Prices for monthly subscriptions are as follows:
ArtistWorks charges $250 for Certificate Programs. The company also intends to charge $250 per student for its accredited High School Learning Certificate programs expected to launch next year.
ArtistWorks receives licensing fees from schools for providing their students with access to ArtistWork’s online courses. Pricing is per semester and varies based on the number of students in each course. The company also receives a revenue share from LinkedIn and Recorded Books (RB Digital) for distributing their content.
Since inception, more than 87,000 learners have taken at least one of ArtistWorks’ self-paced learning classes. ArtistWorks Video Exchange Learning platform has more than 12,000 active subscriptions from learners across 85 countries. Between 2010 and 2017, the average number of active subscriptions per month has grown from 1,736 to 12,573. The company had a slight drop in average monthly subscriptions in 2014 after it increased prices. As of July 2018, active subscriptions totaled 12,146, down slightly from a seasonal high of 12,923 in December 2017. This is due to the expiration of holiday discounted sales in November and December. The ArtistWorks Video Exchange Learning platform has also accumulated more than 61,000 video recordings.
Year to date through August 2018, ArtistWorks has generated $2.21 million in revenue, up 1.80% from the same period last year. In 2017, the company generated $3.3 million in revenue, a 7.3% year-over-year increase. In 2017, subscription payments represented 95% of the company’s revenue, with third-party income (i.e. payments from licensing agreements) accounting for most of the rest. In 2016, ArtistWorks generated $3.075 million in revenue, a 17% year-over-year increase. Subscription revenue represented 96% of the revenue, with third-party income largely responsible for the remaining 4%.
Year to date through August 2018, ArtistWorks has incurred $2.49 million in total expenses, primarily from cost of goods sold (COGS), which totaled $1.07 million, and payroll expenses that totaled $308,000. The majority of COGS are payments made to musicians for their share of the subscription fees. In 2017, the company incurred $3.8 million in total expenses, a 9% year-over-year increase. The largest expense items in 2017 were COGS ($1.69 million, or 44% of total expenses) and payroll expenses at ($682,000 or 18%). In 2016, ArtistWorks incurred $3.5 million in total expenses. The largest expense items in 2016 were COGS ($1.5 million) and payroll expenses ($582,000).
Year to date through August 2018, ArtistWorks has incurred a net loss of $282,000. In 2017, ArtistWorks incurred a net loss of $505,000, a 22% year-over-year decrease. In 2016, ArtistWorks incurred a net loss of $413,000. As of September 2018, the company had $111,900 in cash assets.
The global eLearning market was valued at more than $165 billion as of 2015 and is projected to grow at a compound annual growth rate (CAGR) of 5% through 2023 to reach a market value of more than $240 billion. In the U.S, the eLearning market was valued at over $27 billion as of 2016.v Several factors have contributed to the growth in the eLearning market, such as new available technologies, more appealing interfaces, and media-driven learning experiences. One notable component driving the growth in eLearning is social learning (a.k.a collaborative learning). For example, as younger millennials enter the workforce, social learning is expected to continue to grow in adoption across recruiting, training, and developing talent. Businesses have begun to increasingly adapt social learning methods as research has shown the connection between social learning and direct improvements on performance.vi
In 2016, the self-paced eLearning market generated $46.6 billion, versus $46.9 billion a year prior. The North American region accounted for roughly 50% of the overall self-paced eLearning market.vii
One segment of the eLearning market is music education. The benefits of learning an instrument are well documented, especially for children. Research has shown that teaching children how to play an instrument can lead to increased neural processing, higher attendance at school, and an increased graduation rate.viii According to Statista, roughly half of Americans between the ages of 18-29 play an instrument.ix
However, the older people get, the less likely they are to play an instrument,x even though many would like to. Reasons why people don’t learn an instrument include: not enough time, a lack of confidence in their skills, and being unaware of new music learning opportunities.xi Fortunately, new alternative learning methods (online, local classes, etc.) are emerging, enabling people to learn how to play an instrument from the comfort of their home, at their own pace.
Data Source: Statista
TrueFire: Founded in 1991, TrueFire is an online music learning platform specializing in guitar lessons. TrueFire offers video courses, private lessons, and “Jam Tracks,” where students can play along to multi-track videos at their own pace. The courses offered differ based on skill level and guitar style; some example styles include Blues, Classical, Funk, and Hard Rock/Metal. Video courses are purchased individually and come with numerous lessons. There are more than 33,000 interactive video lessons on the TrueFire platform.xii The company also offers standalone and ongoing private lessons for students via video. Students can record themselves playing their instrument and submit it to their instructor for private feedback.
Udemy: Founded in 2010, Udemy is a global online marketplace for learning and instruction. Udemy offers more than 80,000 online coursesxiii in a variety of subjects such as marketing, photography, business, and music. Anyone is able to sign-up to become an instructor or student. Under the music category, Udemy students can choose from courses on music fundamentals, techniques, production, and how to play instruments. There are a variety of instrument courses from which to choose, including guitar, piano, violin, drums, and ukulele. The courses can be composed of video lessons, audio recordings, and articles. Pricing is based on individual courses, with students paying a one-time fee for each course purchased.
Peghead Nation: Founded in 2014, Peghead Nation is an online learning platform offering music instruction, gear, and news for guitar, mandolin, banjo, fiddle, bass, and ukulele players.xiv The company offers video instructions created by musicians to music students of all levels. In addition to offering courses for all levels of music students, Peghead Nation also offers different courses for each instrument to learn different styles of playing. Course material includes instructional videos, tutorials, chord and lyric sheets, and tuning advice. Access to Peghead Nation courses cost $20 per month (or $200 a year) for a student’s first course, and then $10 per month (or $100 per year) for each additional course. Students can also pay $100 per month to access all of Peghead Nation’s courses.xv
Sonic Junction: Founded in 2011, Sonic Junction is an online provider of video music lessons for guitar, harp, and piano. Lessons are taught by professional musicians and posted to the Sonic Junction platform, where students can watch the instructional videos. Underneath each lesson is a messaging board for students to post comments and videos of themselves playing to receive feedback from the course instructor. Sonic Junction offers lessons for all skill levels and students who sign-up to the platform gain access to all lessons and artists. Video lessons cost $199 per year with an annual membership, or $20 per month with a monthly membership.xvi In addition to offering video instructional courses, students can also sign-up up for private Skype lessons with instructors for around $100 per hour.xvii
JamPlay: Founded in 2007, JamPlay is an online provider of guitar lessons. Lessons are taught by professional musicians on instructional videos uploaded to the JamPlay platform. The lessons differ by skill level, style of music, song type, and teacher. There are over 6,000 lessons uploaded to the JamPlay platform.xviii If students have questions while taking one of JamPlay’s lessons, they can access the JamPlay Live Q&A chat. The live Q&A chat is open for 8 hours a day and hosted by professional musicians that can respond to student questions in real time. In addition to instructional video lessons, students can also participate in weekly live guitar workshops hosted by professional musicians. The live lessons enable viewers to interact with the video instructor and play along during the session. A membership at JamPlay gives users access to all lessons on the JamPlay platform, live Q&A, and live guitar workshops. Membership on the JamPlay platform costs $159.95 per year.xix
David co-founded ArtistWorks in 2008 and has been serving as Chairman ever since. Prior to co-founding ArtistWorks, he worked for 11 years at AOL in strategy and software. While at AOL, David led a small team of programmers in the development of the user interface for the first version of AOL. David was later promoted to VP of Strategy and Technology in the Technology Division at AOL where he continued to oversee the development of all subsequent versions of AOL, through AOL 6.0. He holds a bachelor’s degree in Computer Science from the University of Maryland College Park.
Patricia co-founded ArtistWorks in 2008 and originally served as President until 2014, when she became CEO. Prior to co-founding ArtistWorks, she worked as a Harvest Consultant at Rubicon Winery (now known as Inglenook and owned by Frances Ford Coppola). Before Rubicon Winery, Patricia served as Assistant Vice President of Private Clients at Merrill Lynch, where she worked for more than eight years. At Merrill Lynch, she was responsible for managing and selecting investments for private clients and retirement funds for companies. Patricia holds a bachelor’s degree in Finance, Economics, and Music from Pennsylvania State University.
John joined ArtistWorks in 2008 as a cameraman and audio engineer. As ArtistWorks Vice President, John is responsible for business development, artist recruitment, and overseeing project management and production. In addition to working at ArtistWorks, he is also a professional musician. John holds a Bachelor of Applied Science in Digital Arts: Sounds and Video from Ex’pression College for Digital Arts.
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