A happy member

I received this delightful email today from a new Magnatune member:

Subject: Magnatune: Happy Member! I've been a member for about 3 months now, just wanted to say you guys are doing a great job. I like that you handpick all of the best albums that apply, release weekly updates (which I look forward to every week now!), and allow non-members to listen to the complete album without having to spend a penny (this is how I've been spreading my newfound favorite bands/artists like Brad Sucks, Fresh Body Shop, Immune, Jackal and Wolf, Tiny Little Blackouts, and most recently Sophia Marie that was just released today!). I feel the new way things are going are going to be great, you guys will be getting a lot more members, more people will be subscribing for a fair price and enjoying great music, everyone's happy! Thanks again!

Here's a blog entry today from another member: what I really enjoy about it is how someone who usually listens to world/classical branched out in heavy and alt-rock, because they could, thanks to being a member, rather than shopping for one album to buy.

Here is their blog entry: (from http://elrhiarhodan.livejournal.com/13725.html)

Music Recs for a Sunday Evening   I've been on a singer-songwriter kick lately - since I've "discovered" Ani Difranco (thank you gyzym for all the awesome recs).  And coincidentally, I've renewed my Magnatune membership, which gives me complete and unlimited download access to their catalog.  If you're not familiar with Magnatune, you should be.  They are the anti-recording company.  Artists that sign with them get 50% of the revenue from any sale, and up until recently, they had a sliding scale for payment (you could choose how much to pay for a download).  As of last week, the site has gone competely membership based, so for $15 a month, you have unlimited access - all you can eat - to DRM-free downloads. I've been exploring their Rock and Pop section (usually I'm buried deep within the World and Classical catalogs), and I've discovered a few really wonderful artists that I need to share: Sophia Marie: This is a total departure for me - but the girl!bass is incredible, and so are the songs.  Love, sex, hard rock.  The album is called Twisted. Mercymachine:  A hybrid between Leonard Cohen and Kate Bush.  Check out In Your Bed, a concept album about unrequited love and sexual politics Brad Senne:  Rough country folk - the ruined voice reminds me of early Dylan.  Of the three albums on Magnatune, I most recommend Aerial Views, and the song "Road Trip," which has been playing in my head for days. Lastly, check out Robin Grey, who has a bit of Cohen and Richard Thompson (the notes also say Tom Waits, but I don't hear it myself).  English, and extremely sardonic.  The album is Strangers with Shoes. For those of you with iPhones, Magnatune has an app that gives you complete streaming access to the catalog for free.

Magnatune's 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".

In this blog entry, I crunch the numbers and compare the long tail of our two businesses: selling single album downloads, and the behavior of our unlimited download members. As you'd expect, when people can download albums without an incremental cost ($15/month for unlimited access, vs $8 per album) they tend to download a more diverse range of music.

Catalog Coverage

This chart shows what percentage of Magnatune's catalog is downloaded every X number of days.

Some facts to pull out from this chart:

• Every day, 43% of our music catalog is downloaded by our members. After a week that number grows to 78% and at 14 days 94% of our catalog has been exercised (downloaded at least once). That means the entire catalog really is being used, which is fantastic!
• Each day, 1% of our albums are sold as single-album downloads. After a week, this grows to 9%, and after 30 days this is 36%. Because single-album downloads require a "purchase decision", a less diverse range were sold: many great albums on Magnatune remain undiscovered each month by single-album purchasers.

Note that these single-album download statistics are from the entire past year, so they include data before our switch two days ago to focussing on our membership business.

Much more of our music catalog gets exercised with download memberships than with single album sales. That's good news for several reasons:

a) the founding goal behind Magnatune is to support and promote interesting, unusual and endangered music
b) more of our musicians get more fans with the download-membership model
c) our members are interested in all the music on the site, not just the most recently released stuff

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Total Downloads

Here is another way of looking at our "long tail": downloads of a catalog as a percentage of total downloads. Ie: does the most popular stuff account for most of the downloads?

• In a 30 day period, our top 10 albums accounted for 23% of single album sales. The top 20 represented 30%.
• In comparison, unlimited download members' top 10 represented 11% of the catalog. Their top 20 represented 17%.

  As a chart, this is:
  

The most popular single album sale in the past 30 days ("Braid Soundtrack") represented 12%, whereas the most popular member download (Daniel Estrem, JS Bach vol 2) represented 1.7%.

In both scenarios, Magnatune experiences a fairly long tail, with the top 20 titles representing just 30% of single-album sales, and just 17% of album downloads.

Here is a chart showing the tail itself:

Note: since the 2nd most popular single-album sale represented 1.6% of sales, we scaled the chart to 2%, so that the Braid Soundtrack (12%) is off the top of the chart (that helps make the chart more readable).

On this chart, you can see that single album sales have a steeper decline than membership, but not hugely different.

In other words, no matter how we sell our music, all of the catalog gets purchased about evenly. Unfortunately, since single album sales at Magnatune have been on a decline for 4 years, each artist's numbers were fairly small, though evenly distributed among all our artists.

With unlimited download memberships, each musicians sees quite a few more downloads of their music, so that artists get quite a few more fans because of Magnatune.

New Business Model for Magnatune

Magnatune relaunched itself today with a new business model. We're now in the no-limits membership business.

Why the change? Simply put: 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.

The two graphs below spell out a clear message from our customers:

We don't want to buy your downloadable albums one at a time, we want unlimited access. And we're willing to pay.

Here is our revenue over the past two years, comparing downloads vs membership:

here is the same data, this time charting each as a percentage of total revenue:

You can see that download revenue has decreased in both relative and absolute terms. In contrast, revenue from memberships has grown 80% in the past year alone. I don't know of any other long-lived Internet music services that are experiencing our kind of revenue growth.

We've also simplified our product offerings:

• Our CD manufacturer has become very unreliable (presumably because of financial problems) and so we've decided to stop selling CDs. They accounted for 4% of our revenue and were also declining. Most people who want CDs simply download the WAV files from us and burn their own.
• Streaming memberships are no longer being sold. The download membership, even though it was twice as expensive as the streaming membership, was chosen by 92% of our customers. People who already have a streaming membership can continue with it, but we won't be offering it to new members.
• We have decided to stop selling single-album downloads completely
• Download memberships are now a simple $15/month, and cheaper still if you choose to prepay more more than 3 months. $15.08 was the average of all the "pay what you want" download members, and the price seemed more than fair, so we choose to simplify and go with a flat $15/month.

So really, it's not so much that we're changing business models, but rather that we introduced "unlimited memberships" two years ago, and they've been so successful we're deciding to focus on that.

Some things that are not changing:

• We're still not evil: we have always paid 50% of membership fees to our musicians, been DRM free, and used Creative Commons licensing. All that stays the same.
• We will continue selling commercial use licenses of our music, though in a few months we will be moving that business to a new music-licensing web site we're building (iLicenseMusic.com).

I'm personally really excited with the change, because 4 years ago I noticed that our download sales were declining, and it wasn't until 2 years ago that I finally figured out what people wanted. Magnatune has been going since 2003, and the future looks rosy.

-john

Magnatune sends check to GNOME Foundation thanks to Rhythmbox

A long while ago, I pledged Magnatune to pay 10% of its sales due to Rhythmbox (a fantastic music player for Linux), back to the GNOME Foundation. Today, I wrote the check.

Rhythmbox has really excellent integration with Magnatune (for four years now!), which makes for a wonderful marriage between open source and open music. The latest versions support Magnatune memberships, for all-you-can-eat music support on Linux. Read more about it here.

Let me break down the numbers:

Sales from Rhythmbox overall:

• $7159 total sales
  
• 905 album sales

of which:

Ubuntu changed the ref= on RB sales coming from their distro, so they get credit (and paid) for their sales.

Ubuntu's RB was responsible for:

• $1017 in total sales
  
• 131 album sales
  
• (fyi, that means an average "pay what you want" of $7.76 per album)

So that leaves for RB/GNOME:

• $6142 in total sales
  
• 774 total sales
  
• (fyi, that means an average "pay what you want" of $7.93 per album)

Also FYI this means that RB has raised $3579.50 for independent musicians (because we pay out 50% of what comes in to musicians, and the 10% RB payout is coming out of Magnatune's half)

What this means is that I've now sent a check for $614.20 to GNOME Foundation.

Many, many thanks for Adam Zimmerman for writing and maintaining the excellent Magnatune features in Rhythmbox.

-john

Twitter & Facebook - what you're listening to

I've added buttons to all the artist and album pages that make it easy to post to Twitter and Facebook that you're enjoying an album at Magnatune.

Look for these two buttons on the left column:

when you click on the twitter link, a tweet is pre-filled out that you're "Listening to XYZ -" and the URL for others to listen to it. You can change (of course) the tweet to say whatever you like:

the same is true for Facebook users, though here Facebook pulls the album art from the page, and lets you add your thoughts:

People have started to use this feature, even before I blogged it!