Michael Holloway from the Open Rights Group conducted a fantastic, in-depth business-analysis of Magnatune, the open/free commercial record label that uses free, Creative Commons licensed music to sell commercial licenses. Magnatune has blazed a lot of new trail — especially in "secondary" genres like classical (Magnatune has experienced 20 percent annual growth in classical sales at a time when industry-wide classical sales have fallen 90 percent).
Magnatune's most popular genre by far – with 30% of sales – is classical, followed by new age, electronica and rock, which represent around 10% of sales each. The classical market is in serious decline: In 1980, classical recordings comprised 20% of the industry's revenue, which dropped to 2% by 2000, and to 0.75% in 2006. Yet Magnatune has seen 20% growth annually since autumn 2003.
John recognises that obscurity is a musician's biggest hurdle, and his innovative approach to overcoming it is to provide 'open music', which is "shareable, available in 'source code' form, allows derivative works and is free of cost for non-commercial use."
Shareable: Users are invited to share their purchased tracks with up to three friends, can listen to the entire catalogue for free via the website's 128kbps streams, and can download any song as a 128kbps MP3 file.
Available as 'source code': Ten per cent of the catalogue is also available in its component parts, e.g. scores, lyrics, MIDI files, samples or track-by-track audio files.
Derivative works: The CC licence used by Magnatune explicitly permits users to make derivative works – such as remixes, cover songs and sampling – for non-commercial purposes, which is further facilitated by the provision of the 'source code'.
Free for non-commercial use: Users can download songs for non-commercial projects, such as a home video soundtrack or compilation album intended for family or friends.