NAUTILUS BUSINESS PLAN

NAUTILUS BUSINESS PLAN AAAS * HHMI * SIMONS (.) EFTA00805620 NAUTILUS NAUTILUS NAUTILUS NAUTILUS EFTA00805621 A UNIQUE OPPORTUNITY FONES CONSULTING JUNE 19, 2017 EFTA00805622 UNIQUE OPPORTUNITY r The unique editorial positioning of Nautilus provides an opportunity to develop a business without direct competitors and tap into a broader audience than the mainstream science magazines. r The ability to capture the interest and dollars from institutional partners has allowed Nautilus to develop unique revenue streams that are not based on traditional CPM or other strict audience measurements. Nautilus is not playing by the "normal" rules of print and digital advertising. This provides an opportunity to drive revenues that far exceed its measurements by traditional terms. r The unique and appealing design of the print product, coupled with the same for the web has created an environment that both consumers and businesses want to be a part of. With the right marketing resources and efforts, there is significant opportunity for circulation growth. EFTA00805623 UNIQUE OPPORTUNITY r A partnership with AAAS provides a strong base of customers that can create very efficient customer acquisition while providing AAAS with a publication that helps to broaden its product offering to new and existing members. r There has been no full-time, dedicated marketing resource since the magazine was launched responsible for growing circulation and driving subscription revenue. As a way to defer costs, a partnership with MIT Press was formed and this proved very disappointing in terms of both their efforts and lack of expertise. EFTA00805624 UNIQUE OPPORTUNITY r There is opportunity for more natural/organic growth in Circulation. With limited retail presence, no direct mail or other visible forms of promotion, there has been limited exposure of the brand. Many consumers are not even aware that the product exists. EFTA00805625 SIGNS OF STRENGTH • Growth in e-commerce — Store orders up 60% over the prior year with no marketing team and no marketing investment. Strong conversion of web traffic to paid subscribers. • Growth in Web Traffic — up 17% over the prior year with no investment in driving traffic • Development of a new revenue stream through Channel Custom Publishing — the creation of 8 paid Channels in 2017 • Increase in Social Media following ... • facebook =1 26,484 likes • twitter = 53,400 followers • Instagram = 7,810 followers EFTA00805626 CHALLENGES • Short term cash and financial constraints resulting in potential damage to reputation within the science editorial community • Product format does not lend itself well to retail sales • All channel custom publishing and sponsorships sold by only one person with key relationships — limited bandwidth up to a point • Limited renewal data on print and digital customers based on limitations of current e-commerce system • Large investment in editorial and design resources needed to feed issues, ongoing web content and channels. Needs to be examined if it can be done more efficiently without sacrificing quality. EFTA00805627 5 YEAR BUSINESS PLAN 2016 IN 2019 Revenue $1,899 $1,720 $2,465 $3,173 $3,995 Expense $2,829 $2,652 $3,151 $3,359 $3,575 Margin ($930) ($933) ($686) ($186) $420 Cum. Margin ($1,862) ($2,549) ($2,734) ($2,314) All $ on (000) Assumes no Grants from 201 8 forward EFTA00805628 CURRENT ACCOUNTS PAYABLE As of June 19, 2017 MMIESAMMEITIMICINIEMMIN $27,041 $9,854 $46,002 $50,768 $317,683 $451,349 Brown University is largest $ amount of $117,003 from Rent Ji EFTA00805629 OUTSTANDING LOANS • TOTAL LOANS ARE $1,093,268 PRIMARILY TO 2 INDIVIDUALS EFTA00805630 SCIENCE MAGAZINES CIRCULATION Publication AIM=!MIii.. NAUTILUS 19,788 * ASTRONOMY 102,752 DISCOVER 393,929 POPULAR SCIENCE 1,084,294 SCIENCE NEWS 84,250 SCEINTIFIC AMERICAN 399,534 TECHNOLOGY REVIEW 171,733 SCIENCE 81,891 paid + 21,378 sponsored & non- paid = 103,269 NATURE Nautilus data — 6,813 Print and 12,975 Digital subs Data for other titles from June 2016 Alliance for Audited Media Science data from Will - BPA EFTA00805631 WEB STORE AND E-COMMERCE EFTA00805632 STORE & E-COMMERCE Key assumptions in Plan • Web traffic growth: +25% in 2018, +20% per year in 2019 and 2020 • Traffic growth YTD 2017 is 16.8% over 2016 - same time period • Investment in traffic growth through Paid Search and site/content Optimization starting in mid-year2017 • Hire outside digital marketing group — begin in July 2017 • Site optimization • Paid search Web subscription promotion ads • Email Marketing • Social Media Marketing • Improved conversion and renewal rates through stronger email marketing • Modest Increase built in for Average $ Per Order — $38.74 to $42.00 • Utilization of credit card automatic renewal to significantly improve conversion & renewal rates • Conversion of Store Visitors to improve from 10.02% to15.0% in 2020 EFTA00805633 FINANCIAL PROJECTIONS E-COMMERCE 2016 2017 2018 2019 E-Commerce Revenue $320,190 $502,884 $838,656 $1,056,707 Growth c/0 +57.0% +66.7% +26.0% Marketing Expense $45,426 $120,000 $256,914 $268,645 Margin $274,764 $382,884 $581,742 $788,062 Growth assumptions are conservative here — significant upside dB 2020 $1,358,623 +28.9% $276,664 $1,081,959 EFTA00805634 SALES BY PRODUCT 2016 Sales Data Ave. Price Print Edition 3,577 $45.20 for 1 year subscription Prime Digital Edition Lifetime Prime 2,890 $17.15 245 $99.00 Although all purchases were online, more customers are choosing the higher priced PRINT edition over the Digital edition. This is a unique product and the quality of the print edition combined with the type of content leads customers to want to hold it in their hands and enjoy the experience. EFTA00805635 - BACK ISSUES PROVIDE ADDITIONAL REVENUE SOURCE THROUGH STORE SALES NAUTILUS NAUTILUS NAUTILUS C) \tit' • Print issues have a long shelf life and customers are willing to pay high prices for individual back issues at $12 per copy. • In 2016, sold over 600 back issues at $12.00 - $19.00 each EFTA00805636 WEB & E-COMMERCE OPPORTUNITIES • Traffic growth has been primarily organic so opportunity to focus resources and expertise to increase organic as well as PPC traffic • Currently the business does not have any one person dedicated to marketing and growing subscriptions. Hire mid-level marketing person in 201 8 • The investment in marketing promotions to date has been minimal. The plan does not include any direct mail or printed material promotion which should at least be tested • Experiencing strong natural growth in visitors to store and improved conversion to orders EFTA00805637 WEB & E-COMMERCE OPPORTUNITIES • No integrated marketing plan to capture email addresses from web visitors, nurture and convert to paid subscribers • Leveraging an external digital marketing group would help drive revenue growth while managing in-house marketing team expense • Increase and leverage social media following in a greater way with boosted posts and begin marketing test program • Opportunity to drive incremental sales through Remarketing and Shopping Cart Abandon programs EFTA00805638 WEB & E-COMMERCE OPPORTUNITIES ilAAAS • Access to the AAAS customer file will provide a significant advantage for effectively: • AAAS active members • AAAS expires • AAAS email list of prospects — Registrations, ETOC, Careers, Other • Access to AAAS website to offer subscription ads • Opportunity to add Nautilus after sale of AAAS as bounce back or add-on promotion after purchase • Potential to test direct mail offer for Nautilus to AAAS audience • Subscription inserts for Nautilus in copies of Science acquiring customers cost- • Email promotion done in 2015 to AAAS lists generated over 2,000 new paid customers for Nautilus Prime @ discounted $12 price point • New AAAS email promotion being sent out soon to 3rd party list with new Nautilus offer. EFTA00805639 OTHER MARKETING OPPORTUNITIES • With a full time Marketing Manager on staff in 2018, there are numerous opportunities to create partnerships and to promote subscription offers for Nautilus. • Gift promotions could be promoted much more aggressively to existing Nautilus print and digital subscribers as well as the AAAS audience. Nautilus makes a great holiday gift for that friend or family member that is a lover of science. • Science museums, science competitions and science-related conferences all could be explored for subscription opportunities. EFTA00805640 WEB & E-COMMERCE STATS YTD 60% growth in Orders in 2017 2017 YTD - 6/18 2016 YTD - 6/18 Variance Website Users 3,345,451 2,863,670 + 16.82% Ave Monthly Users 608,264 520,667 Visitors to Store 54,912 44,378 +23.7% Conversion of Store 10.02% 7.74% +29.5% Orders Total Store Orders 5,503 3,435 +60.2% Orders/Web Users .164% .120% +36.66% Ave. $Rev Per Order $38.74 $38.09 + $.65 Revenue $ $213,168 $130,832 +62.9% Orders Include New and Renew Orders Traffic data from Goolge Analytics, store data from Big Commerce EFTA00805641 WEB & E-COMMERCE STATS 2016 actual 2017 Actual + Projected 2018 Projected 2019 Projected 2020 Projected Unique Users 6,161,666 7,299,168 9,123,957 10,948,749 13,138,498 Ave Monthly Uniques 513,472 608,264 760,330 912,396 1,094,875 % Growth +18.46% +25% +20% +20% Visitors to Store 96,287 129,561 149,760 179,712 215,654 Conversion % 8.86% 10.02% 14.0% 14.0% 15.0% Total # of Orders 8,534 12,982 20,966 25,160 32,348 Orders as % of .1385% .177% .229% .229% .2462% Uniques Ave $/ Order $37.52 $38.74 $40.00 $42.00 $42.00 Total $ Revenue $320,190 $502,884 $838,656 $1,056,707 $1,358,623 EFTA00805642 WEB CONVERSION METRICS AAAS Science Jan-June 2017 Other Pub in Category Current events/ politics Jan-May 2015 data Jan-Aug 2015 data 2017 Average Monthly 5,440,924 608,264 3,729,045 927,528 Uniques Conversion to Orders .075% .1645% .0575% .255% Ave Monthly Orders 4,117 1,001 2,144 2,371 ,./ J ) EFTA00805643 WEB AND E-COMMERCE CAPABILITIES NEEDED • Can $ be saved by hosting with AAAS? • Need new commerce platform to allow for automatic renewal of subscriptions • Need platform to capture email addresses in database and develop drip/nurture email campaigns to move prospects to paid buyers • Need capability to execute Remarketing to website visitors • Need capability to serve web ads and send emails as follow up to shopping cart abandons • Site needs thorough review for search optimization EFTA00805644 Current Email Newsletters SELECT NEWSLETTERS AND SUBMIT CONTACT DETAILS... •New chapters Thursdays Nautilus publishes a new chapter of feature stories on its monthly theme, every Thursday. Sign up to this list to stay up to date on the latest and greatest. •Editor's picks Sundays Read about the Nautilus stories and blogs we've been thinking about over the past week. Currently 35,000 emails sent 2X a week through Mail Chimp. With over 600,000 monthly uniques to the site, we should be able to grow the newsletter circulation. EFTA00805645 NEWSLETTER OPPORTUNITY • Opportunity to add topic specific newsletters that would allow us to tailor advertising and support certain channel content by building a following around a specific topic. EFTA00805646 Social Media for Nautilus Likes 126,484 Followers 53,400 Followers 7,810 EFTA00805647 OTHER COMMERCE OPPORTUNITIES • Can we generate additional revenues from licensing content? • Can we charge for specific webinars or podcasts? EFTA00805648 NAUTILUS WEB USERS FROM AROUND THE WORLD Top 5 are English speaking 1. UNITED STATES - 56.0% 2. UNITED KINGDOM - 6.36% 3. CANADA - 5.90% 4. INDIA - 3.13% 5. AUSTRALIA - 2.92% 6. GERMANY - 1.91% 7. BRAZIL - 1.12% EFTA00805649 NAUTILUS WEB ACCESS BY DEVICE DESKTOP 49.96% MOBILE 41.09% TABLET 8.96% EFTA00805650 NAUTILUS ADVERTISING & CUSTOM PUBLISHING V ADVERTISING SPONSORSHIPS ✓ADVERTISING IN EMAIL NEWSLETTERS ✓CHANNELS CUSTOM PUBLISHING EFTA00805651 ADVERTISING SPONSORSHIPS Sponsor Content 2016 Howard Hughes Spark of Science Olin College of Engineering 2016 Aging Content Glen Foundation Total $93,000 $25,000 $110,000 $228,300 EFTA00805652 ADVERTISING SPONSORSHIP REVENUE ASSUMPTIONS 2017 2018 - $5K per month 2019 - $10K per month 2020 - $15K per month John, Add comment here .0=3:1=MEIMEm. $50,000 $60,000 $120,000 $180,000 (;) EFTA00805653 EMAIL NEWSLETTER ADS 2016 017 2018 2019 2020 Lisa Mattress $6,000 $1 2,000 $350/email X 2 emails per week What is current size of email newsletter list? Opportunity to drive more email subscribers. $36,400 $36,400 $36,400 EFTA00805654 Channels TUNE IN TO NAUTILUS DEEP DIVE PORTALS SCIENCE PHILANTHROPY ALLIANCE CANCER FOCUS Creating a Census of Human Cells by Aviv Negev .44 Why the Ethical Rules of Human-Subjects Research Need a Fresh Look by Matthew Salami QUANTA ABSTRACTIONS How Superfluid Dark Matter Mimics an Old Idea About Gravity by Jennifer ()beadle EFTA00805655 NAUTILUS CHANNELS • Channels give institutions the opportunity to create a custom publishing product on the Nautilus platform. • Including an online "magazine within a magazine", print supplements, and potentially independent print magazine spin-offs. • Content can be commissioned by Nautilus, or curated by Nautilus EFTA00805656 NAUTILUS CHANNELS KEY ASSUMPTIONS • Ability to scale channels from the current 8 channels to 22 over the next 3 years • John Steele as primary/sole seller of Channels • Organizations value the environment and audience that Nautilus has created beyond any strict measurements of impressions and # of web visitors. • Continued ability to leverage the print edition as added-value to sponsorships and channel custom publishing • Ability to leverage the Science Philanthropy Alliance and to lesser degree AAAS Affiliate Network EFTA00805657 NAUTILUS CHANNELS REVENUE - 2016 SPONSOR CONTENT 2016 REVENUE Howard Hughes Think Like a Scientist $100,000 John Templeton Foundation COSMOS $184,217 John Templeton Foundation COSMOS 20 458 Total 2016 $304,585 G4,1/ ICA EFTA00805658 NAUTILUS CHANNELS REVENUE - 2017 SPONSOR V CONTENT 2017 REVENUE Howard Hughes Howard Hughes Glen Foundation Glen Foundation Glen Foundation Amer. Society Clinical Oncology John Hartford & AFAR Max Plank Sloan Foundation Woman in Science Engineering Kavli Foundation Other Prospects — Neuro Science Total 2017 Think Like a Scientist $100,000 Spark of Science 2017 $93,300 Aging $50,000 — 3mos 2017 Aging 2017 $100,000 Printing $25,000 Cancer Channel $60,000 Aging Channel $60,000 In discussions $50,000 6 mos in 2017 In discussions $50,000 6 mos in 2017 In discussions $66,666 4 mos in 2017 In discussions $33,333 — 4 mos in 2017 In discussions $62,000 — 6 mos in 2017 $750,299 EFTA00805659 %Id NAUTILUS ADVERTISING & CHANNELS KEY OPPORTUNITIES Err MEM. Quanta Abstractions MIT Press Nantucket project Science, Ethics and Religion Oceans Chemistry Invention Economics Exploratorium Complexity Carnegie Science Simons MIT Press Nantucket Project Templeton Dalio Foundation, WHOI American Chemical Society Lemelson Foundation RAND Exploratorium Santa Fe Institute Carnegie Science Blog reprints Curated Excerpts Curated Original Original/Curated Original/Curated Original Original/Curated Curated Original/Curated Curated EFTA00805660 CHANNEL REVENUE PROJECTIONS 2018-2020 2017 $75%2099 2018 14 channels $1,400,000 @ $100k 2019 — 18 channels $1,800,000 @ $100k 2020 — 22 channels $2,200,000 @ $100k EFTA00805661 EDIT RESOURCES FOR CHANNELS =EMI IIMEMEMMEZM # Channel Editorial Interns 1 2 2 2 # Channel Editors - freelance 2 3 5 # Channels 8 14 18 22 # Channels Per Edit Resource 2.66 2.8 3.0 3.14 Channel Edit Costs $75,000 $196,500 $244,575 $292,804 EFTA00805662 'v....," NAUTILUS ADVERTISING & CUSTOM PUBLISHING SUMMARY 2017 2018 2019 2020 Advertising & $234,300 $62,000 $96,400 $156,400 $216,400 Sponsorships Channel Custom $304,585 $750,299 $1,400,000 $1,800,000 $2,200,000 Publishing Total $538,885 $812,299 $1,496,400 $1,956,400 $2,416,400 ./0 Growth +50.7% +84.2./0 +30.7./o +23Z% .., EFTA00805663 ADVERTISING & CHANNELS CHALLENGES AND OPPORTUNITIES • Currently all advertising sponsorships and channel sales are driven by John Steele • How can we apply additional high-level resources to support the revenue growth plans? • $100,000+ sales to Foundations and Institutions takes experienced and committed high-level resource. How can AAAS help in this area? • Will the credibility and stature of A.A.A.S. help with Channel sales? EFTA00805664 NAUTILUS EDUCATION SUBSCRIPTIONS • With 36,000 high schools in the USA, Nautilus is identifying the Institutions that want to support science and subsidize the cost to put Nautilus (print copy and digital access) into schools in a specific area. • Moore Foundation has recently expressed interest in helping to fund the program. • National Science Teachers Association has recently agreed to endorse and promote the project EFTA00805665 / High School Teachers tweeting on most important publications for their school. David Theriault @davidtedu Replying to fa secretrune I asked around. For HS teachers, in order 1. The New York Times 2. (guardian Major UK newspaper 3. The Atlantic Monthly 4. ANautilusMaq 0 EFTA00805666 ) NAUTILUS EDUCATION SUBSCRIPTIONS 2017 2018 2019 2020 # of Schools 625 1,250 2,000 3,500 Price per School $40 $40 $40 $40 Revenue Estimate $25,000 $50,000 $80,000 $140,000 EFTA00805667 ,J NAUTILUS GRANTS SUMMARY Templeton Foundation $1,025,000 $300,000 $0 $0 $0 EFTA00805668 NAUTILUS DONATIONS Support Science Journalism DONATE TO NAUTILUS > 2016 2017 2018 2019 Carnegie $10,000 $0 $0 $0 $0 Other $7,395 $80,000 $80,000 $80,000 $80,000 Total $17,395 $80,000 $80,000 $80,000 $80,000 Email and web solicitations for Donations to Support Science Journalism have generated $40,919 to- date through June 21, 2017. EFTA00805669 "S \-J NAUTILUS Stand Umfor SCielleC Dear Nautilus Reader, Here at Nautilus, we stand for science literacy and narratives. We trust our readers. Rather than reducing and dumbing down, we expand, connect, and educate. Today, this is more important than ever. But we need your help to continue producing some of today's best science writing. PL•a<r <luuab• And, this weekend only, every donation of $50 or more will get a complimentary one-year subscription to our print magazine, with no added shipping costs—even for international addresses! Best, John Steele, Publisher EFTA00805670 RETAIL SALES • MIT was handling all retail sales through chains, bookstores and specialty stores • Limited sales data is available • Small size and current cover formula do not lend the magazine to strong retail sales. • In addition, the crossover nature of the editorial makes it difficult for retailers to correctly place the magazine in the correct category — sciences/philosophy/thought leader/... EFTA00805671 LIMITED RETAIL DATA SMALL DISTRIBUTORS, BOOK STORES • Whole food and Barnes & Noble are two of the better know retail outlets that have carried Nautilus with mixed results in terms of % sale. • A significant increase in retail copies (+3,500) is planned for the Sept/Oct 2017 and Nov/Dec issues in Barnes & Noble. The business plan assume that the retail draw goes back to lower levels starting in 2018. • Given the declining efficiency and ongoing challenges of the retail magazine business, it is a positive for Nautilus to not be dependent on this channel for future growth and revenue. EFTA00805672 EDITORIAL EXPENSE U # Full-Time Staff Intern — non Channel Freelance Edit/Art/Misc Staff w/ Benefits & Taxes Total Edit Costs w/out Channels 2016 2017 2018 10- 1 1 8 9 9 9 1 1 1 1 $792,086 $462,600 $561,900 $574,035 $587,305 $786,086 $811,759 $975,300 $1,019,188 $1,065,052 $1,578,173 $1,274,359 $1,537,200 $1,593,223 $1,652,357 EFTA00805673 PRODUCTION COST OF PRINT COPIES 2017 2018 2019 Total Copies 62,959 92,888 * 110,050 139,800 173,800 Ave. Copies /Issue 10,493 14,315 18,342 23,300 28,967 Total Cost $165,262 $204,555 $236,608 $293,580 $364,980 Ave. Cost/Copy $2.62 $2.20 $2.15 $2.10 $2.10 * Includes 7,000 copies of COSMOS EFTA00805674 CONCLUSIONS AND RECOMMENDATIONS • Significant upside on growing subscriptions and e-commerce beyond what is in the plan • Continued success and growth in the channel concept is critical but doable. As the circulation and audience grows, it will become an even more attractive platform for organizations to deliver their message. • Editorial expenses need to be managed in line with revenues • Applying the full and committed resources of AAAS is an important factor and should allow Nautilus to grow revenues and margin beyond what is in the plan. • Content syndication or licensing could provide an additional revenue stream over time and the opportunity for a television or web streaming show is certainly a possibility. EFTA00805675 CONCLUSIONS & RECOMMENDATIONS A key element is reviewing this property is the fact that Nautilus is more than just a magazine. It really is a unique combination of the Print and digital offerings that are not static. The discussion continues well after the Print edition is published and well after customers get their weekly digital updates and new perspectives on the topic at hand. The editorial positioning is unique and has the potential in today's world to have a much larger following as it spans across areas that are of interest to millions. The unique design and appealing environment are key attributes of the brand and reinforce the fact that this is something extraordinary. With thousands of publications and media options out there competing for people's time and attention, Nautilus stands out as something truly special. There is not only a solid place for this brand and content but it can thrive and be held up as a case study for how to create a successful publishing business in todays fast-changing media environment. Ed Fones EFTA00805676