Here is a copy of the interview text as it appears in this months' magazine of the Finnish Musician's Union. Below is a quickly translated into English (from the Finnish version) as well as the Finnish version as a PDF.
PDF downloadable Finnish version:
FAIR TRADE MUSIC
John Buckman’s Magnatune is an internet-based music licensing company that also sells music to consumers. For consumers, the company has made an original choice: buyer chooses the price by himself, and half of the sales income is accounted to the artist. For licensing, the rules are more strickt and prices fixed. According to Buckman, the company’s way of action profits both musicians and users of music.
by Lottaliina Lehtinen
John Buckman is a musician and an entrepreneur, who was born in London and raised in France. Nowadays he lives in California and England. Buckman started his musical carrieer as a jazz-guitarrist, and was employed for example to make film-music. About ten years ago he started a successful IT-company which he sold with good money, and can nowadays concentrate in doing things that he believes in. Buckman runs Magnatune, which according to him is the first fully Internet-based recording company. One could also call Magnatune an internet distributor, since each artist produces the master-tape by himself.
I meet John Buckman on a rainy October morning. Earlier that week I have heard him speak about the topic ”Is there a record company that is not evil?”. No wonder, that Buckman’s opinions about music industry seem interesting.
You have called traditional record companies ”evil”. Why is that?
By no means are all record companies evil, but the system is definitely corrupting. Music industry today is largely dominated by people who don’t have very good ethics, and who treat musicians like bubble gum. I have actually heard music industry people compare musicians with bubble gum: you chew it, you spit it out and you buy a new stick. This is an awful way to treat musicians, who love what they do!
One bad example of the situation is the largest independent distributor in America, who is quite famous for not paying anything until you threat to sue, and then the company tries to settle by paying half of what they owe you. Also the second largest North American distributor is a bad example. I don’t know anyone who’s been paid by this distributor. So yes, I think that these are very large, all-controlling companies that are evil.
If the distributor deals like this, the record label is in trouble. And because they have to pay their employees, the last person to get paid is the musician. In fact, whenever anyone is short of money, it is easy not to pay musicians, since they are the least defended. This is why we need musicians unions and some sort of free legal help. Otherwise the musicians just cannot compete.
Creative Commons –lisence is closely related to Magnatune. What is Creative Commons?
Creative Commons (CC) is an open plan, which aims at using the advantages of open source to music. It has created agreements, which the artist can use to transfer certain copyrights. CC does not tell you to give away certain rights; you can decide it by yourself. I require all Magnatune artists to use the CC-license.
About 80 % of the music that is licensed with CC is licensed with the non-commercial provision. This means that the music may be used, as long as the use has no commercial purpose. The worst thing for a musician would be if no-one ever heard his music. If you want to have work, you have to make people aware of your existence. This is where CC helps.
Collecting societies work quite well in Finland. Why should an author or an artist switch from collecting societies to CC?
Collecting societies mean significant revenue streams for musicians, and we don’t want that to go away. The problem with Finnish collecting societes is, though, that their members cannot use the CC-licenses – not even the non-commercial license. In America we don’t have this problem. There you can be with a collecting society and a user of Creative Commons.
How are the prices for commercial use compared to the remuneration negotiated by collecting societies?
CC does not get involved with commercial use at all. Through a CC-license you can use the music only for non-commercial purposes. If it’s commercial use, the user must contact the musician, who names the price for the use.
How was Magnatune born?
The start of Magnatune is related to my own and my wife’s experiences in the music business. I saw that getting a cd out is not a very good business for independent record labels. Unfortunately, a lot of interesting music would never be published without indie-labels. So, I started to think if there could be a business for a record label, that does not make cd’s.
For a musician who want’s to control his career, we’re one of the ways to make a living. No musician makes their entire livelihood from Magnatune, but a large number make 10-30 % of their income every year from us. For most musicians the main income comes from session work (studio work etc.).
What does Magnatune do and how do you sign your artists?
Magnatune is a record label that does not make cd’s. Artists send us their cd’s, and we pick the best to become our artists. We get about 400 cd’s a month and sign a contract with about 10. Our contract is non-exclusive, which means that the artist can also work with other companies.
We sell the music as downloads. We also license the music for commercial use in films and advertising, websites and many other uses. We split all income 50-50 with the artist. This means actual income, not only profits.
Our main business is actually music licensing. The consumer side is a way to market the music. In 3,5 years over 1.000 films have licensed music from Magnatune. These are all commercial films, not free use.
In Finland, on-line distributors also offer a 50-50 share. In that system the author also gets mechanicals through a collecting society. Is the author getting something from the music licensed through Magnatune?
When an artist works with us, he gives us the right not to pay mechanicals for our own use on our own website. But when the music is shown in other places, there is payment.
A very good example of this is the licensing to a film: every time that film is shown, there is collecting society revenue to copyright owners. We also license music to other record labels, for example to make compilation cd’s. They always have to pay mechanicals as well.
We’re very much supporting the collecting societies. They really help small companies: major companies pay a standard fee to collecting societies, and we don’t have to negotiate from a poor position.
What about cover songs?
We never accept any cover songs. The publishing rights have to be owned by the musician. On the classical side we also accept music, where the term of copyright protection is already over. For more recent music the musicians have to own the copyrights.
Can your artist also be a member of a collecting society?
Yes. This is why we cannot license to Europe rights, which are governed by a collecting society. But we can license other rights, like a film license, to a European company.
One example of this is the new Renault Megane Car with an MP3-player. When you buy the car, the MP3-player is filled with music licensed from Magnatune. Also the car company’s tv-commercials feature music licensed from us.
The artist has to have a finished cd-master. What are your actual costs for the 50 % you’re receiving?
A company always generates costs. On top of paying the costs from running a company and paying salaries to our employees, we also have traditional marketing.
If you google Magnatune, you’ll find articles about us in every major music magazine’s web-pages. We also go to almost every major trade-show to promote our music. We have given away over 25.000 promotional cd’s at these trade-shows.
Magnatune is actually involved in marketing in many different ways. We also work very extensively with podcasting, which means small internet-radio broadcasting. Magnatune is the only record label that has made agreements about podcasting with the podcasters. This is significant marketing for us, because it’s profitable to musicians in all genres.
I would also mention that we never work with record labels, we only work with musicians. If we worked with record labels, we would have more music to offer, but we could not guarantee, that 50 % of the income went to the musician. When customers buy from Magnatune, they have to be sure that half of the price really goes to the musician. It’s like fair trade coffee – otherwise the customer would not feel like supporting us.
You make 5-year contracts with the artist. What if the artist want’s to make a major label –deal before the agreement period with Magnatune is over?
Musicians can do whatever they want. The agreement with us is non-exclusive, and it only covers separately mentioned songs.
But we do educate our musicians. One artist, who signed the first album with us, wanted to sign with a major label for the second album. This label wanted us to stop selling the first album. I told the artist that this is fine, but also asked him whether he has taken into account that through our sales he has received about 8.000 dollars a year for the past 3 years – is he getting an advance of at least 8.000 dollars a year to give the rights away? Since this wasn’t the case and since the label didn’t want to pay an advance, the first album is still with Magnatune.
What are the prices for Magnatune’s music?
When a consumer goes to buy an album download, he can choose the price between 4 and 16 euros. On average, people choose to pay about 8 euros. The reason for this is that it says in our web-pages that 50 % of the price will go to the musician.
Our pricing lets us to sell in countries like Mexico, where cd-prices are much lower, or where there’s a lot of piracy, like Spain.
It is true that 4-5 euros is less than what I would make in a traditional store, but it’s more than nothing and it didn’t cost anything to sell a download. This is an interesting way to sell music and it really makes people feel good.
What about the pricing in licensing?
The licensor cannot choose the price at all. Our prices are fixed depending on where the music is being used. For example, if you’re making a film only for a festival stage, the price is extremely cheap. But when you need world-wide distribution, the price is about the same as with any other licensing company. The difference with us is that we tell the price beforehand – major-companies don’t do this. Knowing the price beforehand is good for film-makers, because they can make better budget-planning.
At one of our event Gerd Leonhard presented his ideas about the future of music business, which according to him is going to be totally digital. Do you agree with this, and how do you see the future for musicians?
Most musicians need help marketing. This means that also in the future they will need help from people, whi have more money and better relations. So, the natural co-operation between creative people and the “suits” will continue.
I know Gerd very well. Magnatune represents a much more traditional way of thinking than Gerd Leonhard’s “music like water” –model. We are actually a very traditional record label – with the difference, that we actually pay the musicians and we work exclusively on the internet.
I don’t think that Gerd Leonhard’s model is necessarily good for musicians. If music would be subject to a “user rate” - like the water rate - which would go through a copyright society, all the money would go to Elton John, just like it does now. It’s much more interesting to let consumers find a good album and pay 20 euros for it.
I also don’t agree that the traditional recod business is gone. It’s all about finding new business models, and getting people exited about music.
Don’t you think that consumers trust a well-known trade mark and are more likely to buy albums from major labels?
I don’t think that for example Universal as a trade mark is worth anything today. The vast majority of cd’s by a major label recieve no marketing support at all anymore. Because of the declining sales, major labels use their marketing budget for just a few artists instead of using the same amount of money to market all of their artists. Being on a major label means that, unless you’re one of the few bands they choose to spend tons of money on, your position is no better than with an independent label.
I also don’t think that major labels stand for quality. Independent labels stand much more for quality – whether it’s Warp Records, Century Media or Blue Note.
How do you see the relationship between an artist and a record company in the future?
I think we need much more internet record labels that focuse on a few genres each, and become extremely good at what they do. The consumer has to be able to trust that when he buys something from that label, the quality will always be good. That would be the ultimate.
Because the internet makes doing business cheaper and also lowers a number of people in the way, it means that a label which focuses on a certain genre could represent artists globally and still pay half the money to the artists. Rather than today, where there are distributors and shipping companies between the musician and the consumer, and in the end the musician gets about 2 % of the price of a cd. In the future the musicians’ share could be 50 %, and we would have much more musical diversity on the planet.
[More information about CC-licenses in next Muusikko-magazines.]