http://www.wired.com/news/digiwood/0,1412,60732,00.html
Music Label Cashes in by Sharing
By Chris Ulbrich
02:00 AM Oct. 08, 2003 PT
As the major record companies scramble to put a lid on peer-to-peer
file-sharing networks like Morpheus and Kazaa, an upstart California
record label is trying to revolutionize the industry by taking the
opposite approach: making file sharing the heart of its business.
Berkeley-based Magnatune calls its approach "open music," a blend of
shareware, open source and grass-roots activism.
The idea is to let users try music before they buy, and when they do, to
give half of every sale to the artist.
Magnatune's motto: "We are not evil."
Every track in Magnatune's 50-artist catalog is available via Shoutcast
radio stations and streaming MP3 feeds. Listeners can download, swap and
re-mix songs as much as they like.
Where industry-backed music-download services like pressplay and
FullAudio's MusicNow employ proprietary software and restrictive terms
of use, Magnatune distributes song files under a "some rights reserved"
license from Creative Commons. Users are free to make derivative works
for noncommercial use.
Magnatune brings in revenue from licensing deals and sales of
high-quality music files, both MP3s and CD-quality WAV files. Half of
all the proceeds go to the artists.
Buyers can choose to pay anywhere from $5 to $18 an album. Licensing
also works on a sliding scale. One song by soprano Beth Quist for your
wedding video runs $5; the same song for the opening credits of a $5
million feature film with worldwide distribution costs $2,600.
The Magnatune website launched in May. Following blurbs on Slashdot and
Fark.com in September, traffic zoomed from 1,000 visitors a day to a
peak of 25,000. The website now brings in $15,000 to $20,000 a month, 80
percent of it from downloads, the remaining 20 percent from licensing
deals.
John Buckman, founder and CEO of software company Lyris Technologies and
Magnatune's sole employee, said he developed the Magnatune concept after
watching musician friends suffer under traditional record contracts.
"They sell several thousand albums, have massive catalogs and own none
of it. Ten years into it, they have no right to any of their albums," he
said.
Under Magnatune's contract, artists retain all rights to their music.
They can produce and sell CDs themselves, or sign with another label.
Medieval and Middle Eastern artist Tim Rayborn, for example, released
his latest album, Ashek, on Magnatune, and also is bringing out the
album as a traditional CD on his own Kalamindar label this week. He said
Magnatune's 50-50 revenue share more than compensated for its limited
promotional budget.
"Very few labels invest in the artist anyway," he said. "Smaller labels
don't have the money to promote artists, and the larger ones only want
to invest in the ones they're pretty sure are going to make them a lot
of money."
Buckman said that the top half of Magnatune's artists are making $3,000
to $4,000 a year -- not much, but more than many artists get from
traditional record deals, which require artists to repay the labels'
expenses before seeing a dime of royalties. After out-of-pocket
production costs, even bands with big advances can find themselves
coming out only a few thousand dollars ahead.
"The history of the established record industry is a history where
everybody but the artist typically got rich, from executives to
attorneys to accountants. The artist was last in line in the food
chain," said Bruce Haring, author of Beyond the Charts: MP3 and the
Digital Music Revolution.
"The way the record industry is changing makes tools like (Magnatune)
invaluable for musicians," Haring said. "They can create their own
cottage industries, sell 10,000 units, make a living and set themselves
up to license their material on their terms."
Haring pointed out, however, that the Magnatune model works better for
some artists than others.
"If your aim is to be the next Britney Spears, you're better served in
most cases by a label with major resources because it takes a lot of
money to get on radio and MTV," he said.
Barry Ritholtz, market strategist for middle-market investment bank
Maxim Group, sees Magnatune as a bridge to the next generation of
Internet-based music labels.
"I think of Magnatune as the new flavor of independent label --
artist-friendly, Web-savvy and shareware-oriented," he said.
Ritholtz added, however, that Magnatune needs to attract a critical mass
of artists and successfully promote the musicians to the public.
"Their success will depend on how rapidly musicians adapt to the
Magnatune model, which puts a lot of the burden of promotion on them,"
he said.
As with traditional indie labels, Magnatune's catalog reflects its
founder's eclectic tastes. Electronica rubs shoulders with New Age,
world music and a smattering of metal and rock. In the classical
section, Buckman, an amateur lute player, has signed a roster of artists
heavy on Renaissance and baroque choral music.
Magnatune receives submissions from 200 artists a week and signs about
15 a month. Buckman considers this choosiness a selling point -- an
assurance that someone is separating the wheat from the chaff.
He is also betting that Magnatune's rebellious attitude will resonate
with an audience alienated by the big labels' tactics.
"What I'm fighting against is, No. 1, the systematic destruction of
musicians' lives," he said. "When people go to a website, they have to
understand why they want to be involved in it. And they have to
understand that immediately. If you go to MP3.com, your main initial
reaction is, 'Ew.' On the bottom is that big Vivendi logo, and nothing
there feels like you're helping the world.
"People go to Magnatune because they want to stand up to the evil music
industry and say, 'I don't like what you are about, and I refuse to
participate, and I'm going to vote with my dollars by sponsoring this
rebel.'"
So far, the audience has been willing to put its money down. Though
listeners can buy albums for as little as $5, Buckman said the average
customer shells out $9.82, 22 percent more than the $8 suggested price.
Customers' comments suggest that Magnatune has tapped a vein of
resentment against the big labels and the Recording Industry Association
of America, which represents them.
"The RIAA has so alienated me as a consumer that I won't buy music from
any company they represent. I simply won't pay $18 for a CD anymore,
especially when the proceeds are being used to sue 12-year-olds,
grandmothers and other folks who are generally law-abiding citizens,"
said Norfolk, Virginia, network administrator Jack Bolsen.
Ethan Marcotte, a Cambridge, Massachusetts, Web developer, echoed that
sentiment. "The Creative Commons license is a great clincher," he said.
"I like knowing that I can toss a few tracks onto a mix CD without
wondering when the RIAA is going to kick in my door."
© Copyright 2003, Lycos, Inc.
Stoney
"Designated Rascal and Rapscallion
and
SCAMPERMEISTER!"
When in doubt, SCAMPER about!
When things are fair, SCAMPER everywhere!
When things are rough, can't SCAMPER enough!
/end humour alert
alt.atheism military veteran #11
{so much for the 'no atheists in foxholes' rubbish}
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