I started Magnatune in 2003 in order to try to find a business model that could keep alive musical genres that I loved which were disappearing. There were genres such as Classical, New Age, Heavy Metal and Electronica that were increasingly hard to find and while musicians were still making the music, the revenue just wasn’t there. Furthermore, as a 30-something year old, I found it really hard to find excellent music, and kept listening to stuff I’d bought in my 20s.
The evilness of the music industry was getting quite a bit of press: maybe there was a solution these problems?
When I found out that fully 2/3rds of the US music industry is in music licensing ($8 billion annually), I thought that there might be a business model that could sustain this interesting music. The idea was to create Magnatune, which was both a consumer focussed business selling downloads, as well as having a b2b focus selling music licenses, which is where I thought the real money was (it turns out that selling music to consumers earns good money too).
Magnatune was able to get quite a lot of press with these ideas, and especially the “We are not Evil” tagline. Newsweek included us in their “top 10 music sites” lead article (CDBABY was the only other independent featured). Today Google shows over 300,000 sites linking to Magnatune, which is what generates our daily traffic.
The music selection behind Magnatune harkens back to the day when labels meant something in terms of taste and style, when one person called the shots on what was on the label, and it showed. We get about 300 submissions per month, and I personally pick about 10 of those per month: it has to blow my mind and be something I’d personally buy. I’m a musician myself, so I’m very picky about musicianship. While licensing is a big part of the business, we don’t sign “production music”: all the music on Magnatune has to be able to stand on its own, and be something you’d want to listen to as an album, on your home hifi.
The “We are not evil” tag line doesn’t just apply to how we treat our buyers (no DRM, full audio quality, creative commons licenses) but also how we treat our musicians (paying them regularly in whatever means they want, total transparency of all sales and accounting, 50/50 revenue split) and our buyers (fair agreements w/o hidden charges, no “how much can you afford” style negotiating).
We’re a small company, with 5 employees, and we survive and pay our expenses fully from our sales, which means that every time we make a $1000 sale, the musician receives $500. How much a musician makes depends entirely on how their sales and licensing turn out. Nobody gets rich from their Magnatune royalties, but every six months our musicians get paid, with the typical amount varying between a few hundred dollars and a few thousand dollars. We’re non-exclusive, and we see ourselves as supplementing musician’s income, hopefully making you enough to keep you making music, getting a bit better each year.
– John Buckman, Founder/Owner of Magnatune