1. Magnatune:
Who they are +
Why they are not
evil
Presented by:Team Wolves
Debbie Y.J. Lin-Burdett
and Dana Butler
Media Economics Fall 2010

2. Magnatune is an independent
record company founded in April 2003 by
John Buckman. Based in Berkeley, they
started out selling music for download
through their website. John Buckman
takes on a causal a dialogue with users
of his site to establish and affirm the
Who are connection between users and artists.
they? After going through the trials and
tribulations of his wife’s first indie
record contract, Buckman picked up some
knowledge along the way, figuring out
how he would like to contribute to the
solution for the musicians by fairly
distributing quality music that “isn’t
boring”.

3. Magnatune is one of the first online
music sites to exercise Creative Commons
licensing*. It is also currently deemed
to be the only music site to provide an
unlimited DRM (digital rights
management)-free membership.
The four core values of Magnatune are as
follows:
Who are 1) Shareware- all music should be shared
they? and accessible
2) Diversity - all types of music should
be readily available
3) Rights - musicians should maintain
control of what is rightfully theirs
4) Creativity - an organic process of
music-making should be honored and
encouraged
*http://creativecommons.org/

4. Magnatune’s mantra is: “We are not
evil.” Featured on their site are 13
bullet points explaining exactly why
that is the case. http://magnatune.com/
info/whynotevil
Why they Their goal is to create the ultimate
music experience by allowing users to
are not enjoy the natural state of music.
evil Magnatune believes the general public
wants to preview, share, view art,
download and listen to everything, gain
easy access without DRM, all while
knowing the artist is in direct contact
with Magnatune, getting paid 50% without
any major labels fattening up from their
hard-earned efforts and talent.

5. MAGNATUNE VALUE CHAIN
Review Submission
Execute Contract
out
Magnatune Artist
p it
Review
Artist Package for
ma
CD/digital music files
Promo (bio,
photos, press
release) Content File quality,
Artist album artwork, playlist
Acquisition/
Acquisition
Review
File formatting
(WAV, MP3,
FLAC, OGG,
AAC) Marketing/PR
IT Developers/Programmers
Tagging by genre, artist,
new releases
Outside
Preparing
Linking (artist site, vendors, pages Artist Vendors
Digital Merchandising
within site) Packaging
Content for (Launch
Distribution Pending)
Prepare content for
Shareware,
Forwarding, Social Artist
Networks Review
Contract Execution
Magnatune
Marketing
Distribution
Membership Business Relationship to Third
Mobile Apps iTunes, Rhapsody,
Subscriptions Licensing Manager Party
Vendors/
Shareware
Membership Processing
Search Engine Marketing
(Google)

6. Content & Development
Magnatune is a non-production based
record label, meaning they do not
participate in the development of the
music their artists create.
Magnatune reviews content that is
submitted to the site by artists,
map it out accepting only 5% of what they
receive. Artists sign a non-exclusive
contract that entitles them to post
their album, artwork, and artist
biography to the site for membership
downloads, licensing, and
distribution through other music
sites.

7. Packaging
Magnatune’s distribution is completely
self-serve, offering a variety of high
quality file formats to ensure that
users are able to easily download
albums and licensees are able to
incorporate the content into their
projects whether it’s for film,
podcast, or live events.
map it out While Magnatune does not have an artist
development department, they do create
a kit that includes permission-free
artist photos and write-ups that the
press can download directly from the
site.
Magnatune has announced plans to offer
merchandising (t-shirts, posters, and
mugs) with joint branding from the
artist and Magnatune.

8. Distribution
map it out
ACCE SS TO
MAGN ATUNE

9. Distribution / Sales
End User-Web and Mobile
Magnatune has scaled back their membership
options to focus on monthly subscription
sales to members. Monthly membership
entitles users to download as much of the
catalog as they wish and encourages them to
share 3 copies with friends. This viral
approach to marketing is their primary means
of obtaining new membership business.
Magnatune’s mobile site provides users with
map it out access to their artists and links out to
iTunes for purchase.
Licensing through the Web
Magnatune licenses music to film makers,
podcasters, special events planners, and
producers who are able to enter the details
of their project, obtain a quote, and
download music for projects through
Magnatune’s site. There are plans to launch
a licensing platform separate from the
membership site, but currently all
transactions take place through magnatune.com

10. Magnatune Revenue Model
1) $15/month membership fee for
unlimited downloads
2) Licensing music at affordable cost
for independent
3) Merchandise (joint branding on t-
shirts, posters, and mugs)*
biz model
Musicians make money through the
following vehicles:
1) 50% of membership fees go directly
to musicians who listened/downloaded
2) 50% of licensing fees go directly
to musicians
* Launch pending

11. NEW
BUSINESS
MODEL: NO
LIMITS
MEMBERSHIP
BUSINESS
biz model Message from customers: “We don't want to buy your downloadable
albums one at a time, we want unlimited access. And we're willing to
pay.”

12. Percentage of catalog that is downloaded X
number of days
long tail
43% of music catalog is downloaded by members on a daily basis

13. A Look at the Long Tail
long tail
“Because Magnatune isn't about major label music, I have always
suspected that we had a fairly long tail -- that lots of people
listened to lots of different music and that we weren't
especially "hit oriented".” John Buckman, Founder

14. Catalog Statistics
• 328 artists
• 743 albums
• 10079 songs
Social Networking Presence
• 280 facebook friends
• 1270 myspace friends
some • 274 twitter followers
• 657 tweets
figures
Membership today accounts for 74% of our
revenue. Over the past two years our
album download sales have declined while
the unlimited downloads memberships have
grown.
http://blogs.magnatune.com/buckman/
2010/03/new-business-model-for-
magnatune.html

15. STRENGTHS WEAKNESS
LIMITED REVENUE SOURCE
(limited options for user downloads can deter
EASY ACCESS some potential customers)
(as musicians, easy to submit, as user, easy to SMALL PRESENCE ON KEY
download, as client easy to get a quote for
licensing) SOCIAL NETWORKS
OPENNESS (small following on Facebook, MySpace and
Twitter limits their access to potential customer
(upfront about business model to encourage
base)
honest communication between musicians and
users establishes trust and company mission) MARKETING OUTREACH
DIVERSITY (marketing plan focuses on viral marketing
through shareware on their site and some
(coverage in all music genres)
Google AdWord marketing)
WELL INTENTIONED UNSOPHISTICATED PLATFORM
let’s take (encourages musicians to post and nurtures
music sharing and creation)
(barebones site that does not allow for artist
promotion, complicated site architecture,
a swot lacking customer review/forums on music)
THREATS OPPORTUNITIES
COMMERCIAL COMPETITORS ADVERTISING
(larger music companies with established artists (increased site advertising (for artists to
can take over this business or deliver music from optionally purchase or commercial advertisers)
their artists)
INCREASED PENETRATION IN
STRUCTURED PURCHASING SMALL PRODUCTION MARKET
(limited options for users may deter potential
(through increased marketing efforts)
customers)
GROW IN NICHE MARKETS
FREE-DOWNLOADING SITES (strong fan base on SecondLife could increase
(ilegal downloading may be a choice option that end user subscriptions by leveraging niche)
limits their revenue potential) following

16. Ease of use
Easy quote and content delivery creates
environment for return customers
Affordability
Licensing is much more affordable for small budget
producers
Accessibility
Mobile app increases customer access and usability
[strengths] Competitive Licensing Model
why they By offering competitive prices to small scale
projects, Magnatune has tapped an underserved
rule market. They have the opportunity to be the
istockphoto.com or gettyimages.com for music
Diversity
Library of genres is more well-represented,
attracting a broad potential audience
Niche Following
By positioning themselves on the side of the
independent artist, Magnatune has won loyalty of
music aficionados who are more likely to purchase
and renew subscriptions

17. Limited purchasing options for users
By no longer offering single-album downloads
Magnatune may be turning off potential
customers who don’t want to buy into the
subscription model and sending them to other
sites to purchase material they offer.
[weakness] Limited Delivery for users
By no longer offer streaming memberships,
What they Magnatune is missing the opportunity to hook
potential customers through the free streaming
are option.
lacking One dimensional site
While Magnatune is forward thinking in their
views about music, the site doesn’t
demonstrate that innovation and fails to allow
users to be active through forums or reviews
on their site.

18. Increased Revenues through Licensing
Magnatune states that licensing is their
fastest growing and most profitable revenue
stream. Magnatune offers affordable options
[opportunities] for small scale productions, which is
currently an under-served market. They are
what’s out planning to move their licensing portion to
iLicense.com
there
Brand Loyalty through Niche Markets
Magnatune has a strong presence on Second
Life, which creates an opportunity for brand
loyalty in a niche market.

19. Established Competition
Magnatune is a competing in a space where larger
established music service companies dominate.
While users are only given the option to purchase
a monthly subscription on their site, their
mobile application links to iTunes where users
[threats] can download many of their artists’ material by
what the song. This could increase the speed of
subscription erosion and leave their site as a
worries place users browse before purchasing elsewhere.
them Free DownLoading
Magnatune enters the marketplace at a time when
music sales are on a steady decline primarily do
to illegal downloading. With music buyers wary
of purchasing music for established artists,
selling subscriptions for access to independent
artists is a daunting task.

20. Reinstate individual download option:
Magnatune may be missing out on revenue
by allowing users to purchase
individual albums through other music
sites (iTunes, Amazon, artist web
sites)
Expand Promotional Options for Artists:
Magnatune should dedicate space on
their site for artists to purchase
additional promotional space on their
d+d = recs site for enhanced promotion.
Build a community that can advertise
the brand. While Magnatune encourages
sharing music, but they have no space
for users to review and recommend
albums. By offering a space for
artists and users to communicate they
can create greater stickiness for their
site.

21. Creating weekly podcasts or live chats
with artists would be an additional
promotion vehicle for artists at
minimal cost. This exposure could be
more enticing for artists and attract
additional talent.
d+d = recs
Increase revenue by offering premium
placement ads for artists who want to
invest in additional promotion or sell
advertising space to commercial
entities they also deem as “not evil.”

22. Magnatune is representative of a forward-thinking
digital content distributor whose model requires
some fine-tuning. By positioning themselves on the
side of the artist, they have created a space that
is financially and ethically enticing for artists
and avid music fans. With that said, Magnatune's
decision to limit the download options and failing
to offer a participatory site for users and
takeaway musicians, they are missing the chance to bridge
theory with practice.
thoughts Magnatune's focus on affordable license places them
as a leading resource for an untapped market of
independent content creators who are often crippled
by the costs of licensing commercial music content.
This revenue stream is proving to be a lucrative
venture for the company and could possibly secure
their place in digital music delivery.

23. Updated Home page
as of 9/4/10
add Features
ons What’s
hot

24. Download Page Sample
DOWNLOAD
FORMATS:
MP3- high
quality VBR as
well as 128k MP3
add
(lower quality)
WAV files -
perfect quality
ons FLAC format -
perfect quality
AAC files - high
quality iTunes
only
OGG Vorbis -
high quality,
open source
format

25. TOP 50 MAGNATUNE SEARCH TERMS
# Search term count % of total
1. bach 443 4.2% 26. brad sucks 67 0.63%
2. mozart 266 2.52% 27. rapoon 66 0.62%
3. braid 264 2.5% 28. harp 60 0.56%
4. solace 197 1.87% 29. kitka 59 0.56%
5. rob costlow 166 1.57% 30. blues 59 0.56%
6. moonset 155 1.47% 31. sieber 56 0.53%
7. vivaldi 150 1.42% 32. block scholars 55 0.52%
8. piano 134 1.27% 33. stellamara 53 0.5%
9. beethoven 133 1.26% 34. violin 51 0.48%
add 10. artemis 127 1.2%
11. jami sieber 124 1.17%
35. lara 51 0.48%
36. instrumental 51 0.48%
12. chopin 102 0.96% 37. satori 50 0.47%
ons 13. cello 102 0.96%
14. guitar 98 0.93%
38. costlow 50 0.47%
39. the west exit 49 0.46%
15. folk 89 0.84% 40. justin bianco 48 0.45%
16. medieval 88 0.83% 41. lady gaga 47 0.44%
17. lute 87 0.82% 42. c25k 47 0.44%
18. shira kammen 81 0.76% 43. handel 45 0.42%
19. falling you 81 0.76% 44. couch to 5k 45 0.42%
20. baroque 81 0.76% 45. compilation 45 0.42%
21. general fuzz 79 0.75% 46. jeff wahl 44 0.41%
22. celtic 78 0.74% 47. dj cary 44 0.41%
23. shiva in exile 70 0.66% 48. meditation 43 0.4%
24. robert rich 69 0.65% 49. bach guitar 43 0.4%
25. flute 69 0.65% 50. tilopa 42 0.39%

26. http://www.magnatune.com
http://www.en.wikipedia.org/wiki/
Magnatune
what/who http://blogs.magnatune.com/
we used buckman/2010/03/new-business-
model-for-magnatune.html
http://www.twitter.com/magnatune
http://www.facebook.com/home.php?
#!/pages/Magnatune/114003135276790