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August 11, 2006


Thomas Lord

Nice. Would you mind discussing the contract terms a bit?

Are Magnatune and Magnatune artists splitting 50% of the 50% that Pump Audio gives up? or is Magnatune forgoing a share? Or something in between? Is Pump Audio still free to contract separately with Magnatune artists? Would Magnatune Artists be better or worse off contracting with Pump Audio directly?


John Buckman

They magnatune agreement with musicians is always the same : we give the musician 50% of whatever we receive. That's always how we run it, no exceptions.

So, Pump gets 50%, and then the 25% of the total goes to us, and 25% of the total to the musician.



Are Magnatune artists still free to contract directly with Pump Audio (and receive the 50% that Pump normally pays out)?


John Buckman

"Are Magnatune artists still free to contract directly with Pump Audio"

Absolutely: everything we do is non-exclusive.


Thomas Lord

I completely and utterly believe that John is in this biz as much for love as anything else and so I don't think he would set out to screw artists -- but, on the other hand, perhaps someday he sells magnatune and someone else is running the shop.

The non-exclusive contracts are weak protection for artists unless the artists can *cancel* the contracts at will. This is heady stuff but lemme try to explain:

Suppose Alice the artist signs with both Magnatune and Pump Audio. Bob the buyer wants to get a sublicense and now has a choice: he could buy from Magnatune or he could buy from Pump Audio or, even, for gosh sake, he could buy from Alice herself. Now, Alice probably shouldn't sell to Bob herself: Pump Audio and Magnatune are adding the service of getting the contracts right and enforcing them. But, Bob still has a choice of Pump or Magna. So, there is a de facto price war between those two. As the price goes down, the main loser is Alice the artist. Follow me?

There are lots of ways to fix that but one way might be to make sure that artists can cancel a contract a moments notice (to kill a price war) and to operate more directly on trust and loyalty. The idea is that perhaps John can keep building up a really killer catalog that Pump just *has* to deal with and then he can dictate that the artist get's 50% of Pump's price and he and Magnatune split the rest (while, overall, the price stays reasonable).

The contracts may be non-exclusive but artists should really want just one of them at a time. Therefore, artists should be a little bit skeptical of the 5-year lockin with Magnatune and the 1-year lockin with Pump. (No offense intended, Mr. Buckman, and please keep up the good work.)


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