MakeMusic, Inc. Annual Shareholders Meeting...Jazz band, solo, marching band, church choir Looks for challenging pieces to learn and play Doing all she can to prepare for college Clubs,

MakeMusic, Inc.

Annual Shareholders Meeting

August 25, 2010

Forward Looking Statements

During the course of our presentation, various remarks about

future expectations, plans and prospects for the company will

be made that constitute forward-looking statements for

purposes of the Safe Harbor provisions under the Private

Securities Litigation Reform Act of 1995.

Additional information concerning important factors that could

cause actual results to materially differ from those in the

forward-looking statements is contained in the company's

filings with the Securities and Exchange Commission.

Agenda

Operational Highlights

YTD 2010 Financial Highlights

Notation update

SmartMusic back-to-school priorities

Development of SmartMusic 2010

Sales Update

Marketing initiatives

SmartMusic 2011 - demonstration

Q&A

Operational Highlights

On-time Finale 2011 release in early June

– 4th consecutive year

SmartMusic 2011 and Gradebook launched in early August

– Utilized leading interface design consultants

– Goal was to make the product more intuitive, engaging and

rewarding resulting in faster adoption

Announced SmartMusic price increase – effective 7/15

Sales and Marketing initiatives

– Expanded sales force and increased territories from 4 to 6

– E-commerce enhancements

– Enhanced clinician program

– Social media

28% increase in SmartMusic subscriptions since July 2009

– Added over 9,000 net new subscriptions in the first 6 months of

2010 compared to 4,475 in 2009

Operational Highlights

SmartMusic customer support contacts declined 3% in

2009 despite 26% in subscriptions. Trend continuing

Improved SmartMusic retention rate – 79% for the first 6

months of 2010 compared to 71% for total 2009

SmartMusic received the Best Tools for Schools Award

Finale received the Dealers’ Choice Award for Software

Line of the Year

Expanded SmartMusic repertoire

2300+ Large ensemble titles

24 Method books

6500+ Solo titles

200+ “Fun” titles

20,000+ Skill development exercises

2010 YTD Financial Results

2010 YTD Financial Highlights through 6/30 ($ in 000’s)

Total YTD revenue:

Operating expenses increased 4.9% to $6,874

Net Loss improved from $236 in 2009 to $165 in 2010

Added 9,313 net new SmartMusic subscriptions

Total was 143,095 on 6/30/10

Cash Balance $7,986

$1,890 higher than 2009

2010 2009 Increase %

Notation $5,030 $5,009 $21 0%

SmartMusic 2,747 2,306 441 19%

Total Revenue $7,777 $7,315 $462 6.3%

Finale Notation Sales

$ In Millions

$-

$2

$4

$6

$8

$10

$12

2003 2004 2005 2006 2007 2008 2009 2010

6 months

SmartMusic Subscriptions

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

July

143,121

SmartMusic Site Agreements

0

50

100

150

200

250

300

350

400

July

373

Notation Products Update

Improve Notation Customer Experience

Objective: Make Finale easiest to use and learn

notation software

Finale 2011 was released in June 2010

and provides the Power, Flexibility and Freedom to

create any music you can imagine

• Features

New staff layout capabilities

Improved lyrics

Full Aria Player and updated Garritan Sounds (instruments)

Percussion playback

Over 800 music education worksheets

New music fonts

Improve Notation Customer Experience

New Quick Reference Guide

– Provides easy-to-use visual resource for using Finale

Introducing Finale Training workshops

Other product releases:

NotePad and Finale Reader July

Finale Viewer September

PrintMusic September

SmartMusic Back-to-School Initiatives

SmartMusic and Gradebook Development Focus

SmartMusic and Gradebook 2011 released in August

Objective: make the product more intuitive, engaging and

rewarding by significantly improving the user interface

– Streamlined screens, controls and personalized home pages

– Easy to use performance screen

– New repertoire

• Recorder & Percussion Method Books

• New “fun” titles

• Expanded offering of large ensemble and solo titles

– Title selection includes cover art and customizable play lists

– Bell assessment

Education Direct Sales

Sales territories expanded from 4 to 6

Strong pipeline for back-to-school

Focus on priority customer profiles in top 24 states

- Wealth index of $70K plus

- 17,000 schools match the priority profiles

Expanded use of part-time clinicians

- Geographically located to support top states

- Known and respected educators users

- High credibility and cost effective

Marketing - Create excitement, demand, purchase

and full adoption

Developed and tested revised value proposition and

messaging for each of three key customer segments:

teachers, parents, students

Integrating new messaging into application and all

communication components

Mining user data base to identify teacher progress in full

adoption and provide user tips at each important stage

Leveraging release of new music titles to create broader use

and acceptance

SmartMusic 2011

User Centered Design Process

• Completed more than 30 user observations of students, teachers and enthusiasts

• Developed “personas” representing the target audience

• 4 student personas

• 2 teacher personas

• 2 enthusiast personas

• Goal is to design product for primary personas

• Optimize for common case, accommodate for special case

• Key learnings: Future development will be focused on largest opportunities for subscription growth.

• Usability is an ongoing activity

©2009 Cooper : SmartMusic Research : 29 Sep 2009 :

.

Arden Thomas, 6th Grader at Dover Jr. High

http://www.flickr.com/photos/mickeynick/491907709/

Learning to play the trombone

Loves marching around the house blaring his horn

His friends are learning trumpet, sax, clarinet, drums

Has trouble remembering slide positions, note names

Wants to play what the big kids play

Has been going to his older sisters’ concerts for years

Really excited about joining the marching band

His attention is split fifty different ways

Lives with Mom, spends some weekends at Dad’s

Soccer, Cub Scouts, X-Box, chores, homework

Arden’s goals:

› Get his homework done so he can have

some fun

› Play songs the high school kids do

› Look good in front of his friends

©2009 Cooper :

SmartMusic Research :

29 Sep 2009 : .

Evelyn Paguyo, 10th Grader at East Lake H.S.

http://www.flickr.com/photos/diabetesisfun/2398219302

Band is her social club

Shares a music stand with her best friend

Loves the trips to football games

Can text message in class without getting caught

She knows she should practice…

…but something else always gets in the way

She’ll fake the hard parts so she doesn’t stick out

She doesn’t have a lot of support at home

Parents are caring but busy

Family isn’t musical--they stress academics over band

Evelyn’s goals:

› Get good grades and stay out

of trouble

› Be in the in-crowd

› Spend time with friends

©2009 Cooper :

SmartMusic Research :

29 Sep 2009 : .

Heather Fox, 11th Grader at Dover Senior High

http://www.flickr.com/photos/39860392@N05/3670049080/

Really into her music

1st chair trumpet

Jazz band, solo, marching band, church choir

Looks for challenging pieces to learn and play

Doing all she can to prepare for

college

Clubs, music, after-school activities, volunteering

Studies hard and does well

Likes being good at something

Rush and adulation of performance

Feeling of accomplishment

Heather’s goals:

› Play a big solo in the spring concert

› Get straight-A’s

› Stay musically active after

high school

©2009 Cooper :

SmartMusic Research :

29 Sep 2009 : .

Linda Masterson, Dover Junior High Band Director

http://www.flickr.com/photos/judybaxter/2074056548

Has been at her school for 20 years

Program is well respected and supported

She is known and admired throughout her region

Helped establish the curriculum that produces

great results

She has too many kids to give them all

attention

200+ 6th & 7th grade students

Beginners, solo & ensembles, rehearsals, evaluations

Can try new approaches when she sees

the value

Not an “early adopter”

Doesn’t have time to “figure it out”

Linda’s goals:

› Instill the love of music in her kids

› Give her kids a solid foundation

› Ensure her program continues to excel

when she retires

SmartMusic 2010 and Impact

Music on screen

Solo titles

Preview window

Exercises - Scales

Exercises – Jazz patterns

Exercises - Rhythms

Exercises – Play by ear

Method books

Solo repertoire

Jazz improvisation

Concert repertoire

SMP – Music on screen

SMP – Solo with following

SMP - Ensemble

SMP – Solo

MP3 player

Comparisons: SmartMusic 2010 vs 2011

Home Screen

On This Computer > My Music

My Library

Large Ensemble Play Window

Practice tools

Fingering charts

Solo Repertoire

Live SmartMusic 2011 Demo

Questions