How Magnatune is fixing the music industry

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The Plan: problems with the music industry and how Magnatune is trying to fix them.

Finding good music is hard

Problem: most music sites have little quality control, hence it's very difficult to browse for good music. Many "musician sites" charge artists to join, and accept anybody who pays the fees. You get bad quality and musicians lose out.
Solution: less music/higher-quality, peer editorial approval process keeps mediocre talent out. Artists on the label approve of who else can get on.
Solution: aggregate enough music on one web site so that it becomes a destination.
Solution: offer high quality Internet radio stations in specific niches. Allow people to explicitly specify what genres they enjoy.

Most music is out of print

Problem: small press CDs quickly go out of print, or are quickly removed from store shelves and thus unfindable. Even on major labels, most releases are out of print within 3 years.
Solution: Internet-based distribution means music never goes out of print.

Expensive niche market distribution

Problem: niche market music can often sell in the thousands (ie: new age, early classical, Indian classical, heavy metal, baroque & renaissance classical), but expensive distribution network and physical costs make traditional CD pressings expensive and a very risky investment.
Solution: use Internet radio, easy music browsing over the web, Internet communities, mp3-file-trading as distribution mechanisms. Don't print CDs, instead offer music as perfect-quality WAVs or high-quality MP3s that buyers can burn to CD themselves.

Cost to produce high quality recordings

Problem: record companies were put in place to fund the cost of recording studio time.
Solution: High quality audio production is available cheaply, and many artists cover all production costs themselves, delivering a final master directly to the record company (often with a home studio). Recording studio costs are way down due to over-supply. Most artists have connections to friends who can pull a favor to record inexpensively.

Traditional distribution

Problem: most CD distributors limit or prohibit sales over the Internet.
Solution: must completely forego traditional distribution, since existing distributors are deathly afraid of the Internet and are trying to stifle its potential.

The RIAA & lawsuits

Problem: the Recording Industry Association of America sues MP3 web sites and file sharing companies because they usually violate copyrights.
Solution: obtain right from the copyright holder to all the music that we distribute. Require all artists to sign a contract certifying their ownership and our right to distribute their music. Use the Creative Commons license to enable others to freely share Magnatune music for non-commercial use. Magnatune is not about violating copyright: we only deal with music where we can obtain a free and clear license to the copyright, so that we can legally distribute our music over the Internet.

Getting the word out

Problem: there are tons of music sites on the Internet, so how will people find Magnatune?
Solution: many artists have their own web site, and will want to link to Magnatune to promote listening and sales of their music.
Solution: Magnatune is an economic experiment, and the press may be interested in writing about it.
Solution: all songs can be heard in their entirety from the Magnatune web site, and have a DJ announcing the song and the Magnatune source.
Solution: help bloggers embed Magnatune albums on their blogs, so that more people can discover our music.
Solution: many people like the Magnatune philosophy and want it to succeed. They are donating advertising exposure, as well as writing about Magnatune in the discussion groups, newsletters and web sites.

Most musicians don't make money from CDs

Problem: niche artists make very little money (less than $1000) for a typical CD release (500 to 2000 unit sales). Musicians make money performing, and the CD serves as a promotion medium.
Solution: attempt to return artists at least the amount of money a traditional CD would net, but remove their financial risk and greatly increase their distribution. They'll get more promotion, concert offers, and can sell more CDs, t-shirts and posters at concerts to their larger fan base. Eventually, when/if the sale of downloaded music is a proven success, Magnatune should be able to provide artists more money than they would be paid a traditional record company.

Signing existing label-signed artists:

Problem: current proven CD-producing artists won't want to participate in Magnatune, because it's not a proven money-maker.
Solution: release recordings from their back catalog that isn't selling well at the moment.
Solution: many proven CD-selling artists have had a terrible experience with the record industry, and now want to either self-produce their music, or work with company that treats them fairly.
Solution: aggressively pursue personal contacts, especially for well regarded, niche-genre artists. There are many good artists in these genres, recording costs are low, but poor distribution network and high costs limits artist's possibilities, increase their frustration.

Signing unsigned artists

Problem: many good unsigned artists exist, how to find them?
Solution: aggressively pursue artists through personal connections, mailing lists, WebBoards, Usenet, etc.
Solution: after a few initial successes, artist word-of-mouth should kick in.

Quality control

Problem: MP3.com and napster-clones all have too much lousy stuff, and few full albums.
Solution: we are a record label, so we only sign artists of high quality, who pass both our quality assessment, and the assessment of our peer-review board.

Paying the artists for their efforts

Problem: unclear whether people will pay for Internet-distributed albums.
Solution: offer all music at a good audio quality streaming for free, to encourage people to discover our music. A DJ will announce each song.
Solution: make clear to potential buyers that their money supports 50%/50% (of the purchase price) the artist and the Magnatune web site. No money goes to The Industry.

Paying for the web site

Problem: running a web site can be expensive (computers, bandwidth, insurance).
Solution: Magnatune's split of sale will go back into funding the site. Magnatune founder will initially fund the site, and has no short-term need to return-on-investment as costs are low.

Quality of purchased downloaded music

Problem: MP3s don't sound as good as CDs.
Solutions: don't use 128kb MP3s (as mp3.com) -- allow purchasers to download highest-quality VBRs as well as WAV files, and Ogg Vorbis files.

Outreach to fans

Problem: existing buyers of artists don't know when that artist releases new music.
Solution: every signed artist will automatically be given a free email announcement and discussion list. Also, genre-based forums will help good artists get noticed.

Hard to keep sales up

Problem: music sales are highly vulnerable to seasonable, fad-driven and economic cycles.
Solution: offer a subscription service, where subscribers have rights to download all music at perfect fidelity.

Hard to get your music heard

Problem: there is too much music out there, it's hard to get people to hear your music.
Solutions: free subscriptions for DJs, outreach to Internet Radio stations to re-play our music, guerilla PR marketing based on our "The Music Industry is Obsolete" stance.