Magnatune, an Open Music Experiment

Magnatune is an Internet music record label. It was born out of personal experiences from my wife releasing her CD on a British record label and some observations I'd gathered about the music industry. Magnatune is different from traditional labels in the following ways:

Magnatune was born out of personal experiences from my wife releasing her CD on a British record label and some observations I'd gathered about the music industry.

When my wife was signed to a British record label, we were really excited. In the end, she sold 1,000 CDs, lost all rights to her music for ten years (even though the CD has been out of print for many years) and earned a total of $45 in royalties.

The record label that signed her wasn't evil. They were one of the good guys, and gave her a 70/30 split of the profits, of which there were none. The label got battered at every turn: distributors refused to carry the label's CDs unless it spent thousands on useless print ads, record stores demanded graft in order to stock the albums and, in general, all forces colluded to destroy this small, progressive label.

Radio is boring. Everyone I know listens to interesting music, yet good music rarely is played on the air. Most musical genres barely are visible in record stores, and they are totally absent from the airwaves. These days, radio plays mostly Country, Pop and Rock, with a little bit of dull, safe Classical thrown in.

CDs cost too much, and artists receive only 20 cents to a dollar for each CD sold, if they're lucky. And, most CDs quickly go out of print. I buy more CDs from eBay than from Amazon.

On-line sales, such as Amazon.com, often cost artists 50% of their already pathetic royalty, due to a common record contract provision. International sales and markdowns often net the artist no royalties.

Record labels lock their artists in to legal agreements that hold them for a decade or more. If the agreement is not working out, labels don't print the band's recordings but nonetheless keep artists locked in to the contract, forcing them to produce new albums each year. Even hugely successful artists often end up owing their record labels money because the advances they're initially paid are structured as a loan to the artist. Furthermore, the label does its accounting in such a way that profits rarely are shown on the record company's books, hence no money exists to pay down the advance.

Using the Internet to listen to music usually is tedious. There are too many ads, too many clicks and the sound quality is not great. Simply put, it's too much work for not enough reward. A well-run Internet radio station, such as Shoutcast or Spinner, solves that, but the entrenched record industry wants to kill them too, through onerous licensing terms and annoying DRM schemes.

Given all these factors, I thought, “why not build a record label that has a clue?” Create a label that helps artists get exposure, make at least as much money as they would make at traditional labels and get fans and concerts. Magnatune is my project. The goal is to find a way to run a record label in the Internet reality: file trading, Internet Radio, musicians' rights, the whole nine yards. These aren't things that can be ignored.