Case study - Magnatune - Overview
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Who?
This 'open music' record label was established in 2003 by John Buckman. They're the most successful cc-using record label, and use the 'we are not evil' tagline. They're yet to produce a Britney or Christina (a good thing for many people), nor have they threatened iTunes' hegemony of the digital downloads market, but they have a lot of records for a lot of artists (1). Most of these records are either in the niche genres New Age or Classical, but there's plenty more besides. Magnatune releases an album per month, has an office in sf, and employs 3/4 full-time staff (2).
John's a pioneering entrepreneur and self-starter (3), who was CEO of email marketing firm Lyris, before selling up a few years ago. This wealth has in part funded Magnatune, Bookmooch - any other projects - and his advisory work for both CC and Open Rights Group. This revolutionary approach is in part down to John's love for his lute. Being a musician, he sympathises deeply with artists complaining about their treatment by record companies (4). Typically, record companies are dissed for controlling artist's creative ouput and processes, as well their public profile more generally.
Open IP projects
Magantune is the leading pioneer of 'open music' (5), which means:
- Users can listen (stream) their internet radio stations, download our free music, and share tracks (up to 3 times)
- Derivative works (for example: remixes, cover songs, sampling) are explicitly allowed. Some of our artists publish the "source code" to their music so you can rework and improve it. This includes scores, lyrics, MIDI files, samples and track-by-track audio files. If you make a great new version of our music, we'd love to know so that we can promote it!
- Non-commercial use of our music and its "source code" is free. However, if you make money ("commercial use") with our music, you'll have to "share the wealth" and give us and our artists a share.
Besides this, customers can choose the price they pay for an album, between $5 - $18 (6).
Bigs up the notion that dishonest people will always break the system, but that should make it good for the good people, rather than spoiling their fun for the bad folks.
And its available in high quality, multiple formats (WAV / FLAC / OGG / 128k MP3 / MP3 VBR / AAC (iTunes) - without any mention of stinking old DRM
What is the business model?
http://magnatune.com/info/model
Our target audience
- People who listen to music in the background while they do other work (i.e. office workers [or any traditional "radio" market]).
- Fans of music that gets little radio airplay or major record distribution, but has a fairly large audience.
What we provide for free
- Radio stations of our very high-quality artists, tailored to each listener's specific tastes.
- We make it easy to listen to our music, and what we play is on-genre and extremely high quality.
- A simple interface to save your favorite artists and songs; come back to them, build a collection.
- A wide variety of music that can be freely previewed and put on a 'temp track" on a work-in-progress. If the music is then proven to work for your use, you can then pay to license it for advertising, films, business, etc.
"The music that we release for free usually has some sort of limitation on it: a DJ announcing the song, a lower bitrate, or it's a smaller portion of the whole song. This allows widespread distribution (i.e. file trading, Internet radio) of your music while insuring that you're paid for any commercial use." http://magnatune.com/info/terms
What we sell
- Downloadable albums at a low price: $5 to $18: buyer determines the exact price. (Uses CDBaby as digital download distributor)
- Sub-licensed music for commercial purposes (i.e.: trade shows, advertising and web sites), priced from $150 to $5000, depending on length and type of use. This is our fastest-growing and most profitable business area.
- Merchandise: posters, clothing, mugs with artist's likeness. We're not currently offering this, but we may in the future.
How the artist makes money
- 50% of the sale price of each album goes directly to the artist.
- 50% of any commercial sub-licensing (ads, web sites, trade shows, films, etc) goes directly to the artist.
- 50% of merchandise profits goes directly to the artist.
- Wider distribution of the artist's music means more gigs and more fans.
Further questions
- I thought he recently made some changes i.e. wasn't gonna allow downloading and moving to a new subscription model?
- Making profits or still operating at a loss?
- Please confirm you don't do any advertising?
- What sort of promotional commitment, if any, do you make to artists (e.g. how, if at all, do you promote artist's videos (youtube?))?
- Is their any space for negotiation on your unusual terms? I'd imagine some artists would object
- Is their a contradiction between the by-nc-sa licence and your site limiting copies to 3 friends?
- How many demoes per month? How many releases per month?
References
(1) Can we do a graph showing figures since year dot? (2) Doing what: legal / press / a&R? (3) What was the school-yard business project he told me about back in January? (4) Courtney Love? (5) http://magnatune.com/info/openmusic (6) Can we include some data here?
As at 2/11/7, 259 artists; 588 albums; 8302 songs (http://magnatune.com/info/stats/)
Relevant links
- Jamendo
- Beatpick
- Maybe John's got some suggestions?
- Bookmooch
AOB
John's site is also a model of open practice. Most of the info for this case study was documented on the website, so available to anyone interested to learn from and build upon his approach. This even extends to the terms of their distribution agreements!
Magnatune should be my favourite record label, but taste dictates otherwise. I'm still waiting for the hip hop (including funk / soul / jazz / reggae) version! Which is also socialnetworked up to the eyeballs to encourage remix.
