Membership without obligations

In a previous blog entry, I wrote about how you can now choose how much you want to pay for an all-you-can-eat Magnatune membership. These memberships let you listen and download everything on Magnatune, without any limits.

From today on, you are no longer required to commit to a 3 month minimum: you can have as short a membership as one month.

Also, since the majority of people pay for memberships using Paypal (vs credit cards), we now support Paypal's recurring payments feature, so that you can choose to auto-renew, yet retain total control over billing by being able to cancel from within your Paypal account.

I've been working with Leah Belsky (from open-source-philosopher-guru Yochai Benkler's group), to phase in each change at Magnatune in a controlled-experiment kind of way, so that both Magnatune (me) and the academics (Benkler's group) can get data that is meaningful, quasi-scientific and which hopefully leads to insight.

The final step in this transition happened today.

Memberships to Magnatune are now:

1) no commitment: one month at a time, whereas previously the minimum was 3 months

2) pay what you want: you fill in the amount you want to pay (no drop down box), though there is a $5/month stream membership minimum, and $10/month download membership minimum.

3) paypal recurring payments: use paypal recurring payments instead of a credit card, so you are completely in command of your membership, and can cancel it from Paypal if you like.

4) non-recurring and recurring both available: you choose whether you want your membership to auto-renew, or if you want to renew it by hand yourself

5) DRM free, Creative Commons licensed, and perfect audio quality: so you are free to enjoy our music as you wish

6) shareable music with your friends: you can share music you've obtained from your membership with your friends, though we ask you to be mindful of our business model and recommend you share no more than one album per friend per month

7) Everything: complete access to all our music. Downloads, 4h podcasts, streaming, iTunes & Amarok & Rhythmbox & Songbird support, and more.

8) Musicians get paid: with everything you do, 50% of your membership fee goes to the musicians you listen to. Magnatune remains fair to the musician.

This is no "fire sale", this is a post-scarcity business model that we have been adopting, and let me say that it's been working really well for us. I'm continuing to see a lot of people join as Magnatune members, and can proudly say that each day, we make twice as much money from our memberships than from our download sales. Memberships have quite literally turned our business around, so that we're growing strongly again.

We're simply continuing to face the "Internet Reality": a world where everyone has more music than they know what to do with (from Bittorrent to Last.fm and beyond). The way to compete in this new world is not try to create artificial scarcity, but offer something better than what is available for free, in all ways that we can think of.

In other news, we're putting the finishing touches on the Magnatune iPhone Application. You'll be able to listen for free to all Magnatune albums. Non-members will hear my slightly-annoying voice at the end of each track, telling you what you just heard, while members can enjoy all our albums, commercial free, on their iPhone. Assuming that Apple accepts the application, it'll be an easy download from the iTunes Application Store.

Comments

[Ken Kennedy]

Awesome, John. I think this is brilliant. I've actually been meaning to go set up an account myself, but the 3-month minimum had been just the teensiest bit of friction...it's not the money, it's more the activation cost of a three month commitment. I know, sad, isn't it? *grin* I really think this will encourage people to give it a try, almost risk-free. I know I'm going over to set things up today.

iPhone app sounds great, too...I'm going to pass that info along to some friends I think might enjoy it. I've got a Android G1 myself; I may have to take a poke at an app for Magnatune. Great idea. imeem already has an app for the G1, and I have to admit, I really like it. Anything that gets your music out there should be a help.

Good luck, and thanks again for being so far-sighted. You really "get it".

[Falls a Star]

I think this is a fantastic business model and I'm glad it's working out so well. :)

[Chris Deep]

Sounds a good idea, a kind of music club. I like making little videos for You Tube and Vimeo. Could I use tracks downloaded as a member for this, or do you still require a separate donation for each album thats been used?

[John Buckman from Magnatune]

re: "I like making little videos for You Tube and Vimeo. Could I use tracks downloaded as a member for this, or do you still require a separate donation for each album thats been used?"

If you're a member, you're absolutely free to download the high quality audio files using your membership and create videos for YouTube & Vimeo, so long as the video you are making is then placed under a Creative Commons by-nc-sa license (non-commercial, share-alike).

That's our one stipulation: using free & open music means your own works which use our music have to be free & open as well.

-john

[Karl Plesz]

Ground breaking. Forward thinking. Radical. Cutting edge. Avant garde. This is the kind of online music business model I've been dreaming of. Well done.

[thomas]

John, thank you for the update. I was about to ask about a membership that expires by itself, et voila, there it is!

Let me suggest one more thing: Have the "download" members freely decide how their fee is split between streaming and downloads. I listen to music offline by >90% and I'd guess the ratio is pretty individual.

[Georg S. Adamsen]

Splendid. Really.

However, I was surprised that you do not require a secure connection for membership applications. Perhaps I did something wrong?

[Mark A.M. Kramer]

This is INCREDIBLE! Another reason why I am a member of Magnatune. I am REALLY looking forward to the launch of the iPhone application. Kudos!

[gurdonark]

Dear John:

I am pleased to read what progress you are making here. I signed up for the 3 month subscription when it first came out. Soon after I had the subscription, I determined that I wanted to make a one-time payment for a lifetime subscription.
At that time, I could not get an answer to my question of how much in addition to the unelapsed portion of my 3 month subscription I should send to achieve a lifetime subscription.

Today I went to try again, now that my 3 month has expired. However, the form calls for me to write how much per month I wish to pay, when I wish instead to buy a lifetime subscription for a single flat payment.

What I seek is the information or a form to accomplish my goal, as well as suggested pricing for the item I wish, i.e., a one-shot payment for a lifetime membership.

Thanks, in advance, for your help with this.

best, robert

[John Buckman]

What I seek is the information or a form to accomplish my goal, as well as suggested pricing for the item I wish, i.e., a one-shot payment for a lifetime membership.

To do a lifetime membership, you go to the "sign up" page, and choose "lifetime" for "how long" and type in how much you want to pay for that.

The url is:
http://magnatune.com/member/signup?type=download

[Elliot Wisotsky]

John,
What about existing comments? Do I have to choose service under the new plans or will my existing plan roll on?
Thanks,
Elliot

[gurdonark]

Thank you, John. I see that what I was missing is that the "one-shot" payment option clicks into place once I check the lifetime box.

[Peter]

Good move. I joined yesterday. I love The Union Trade album. Thanks very much.

[victortechico]

I have a list in my mind I entitled Braveheart: Heroes of the Brave New World. John Buckman, You sir is now in that list. I am just honored to have known about you! Your ideals are simply endearing. I will talk about you where ever and when ever I can! Go Braveheart!

[Shawn K. Quinn]

When I go to the page today, I only see options for 3 months, 1 year, and lifetime. Is the 3 month minimum back in place?

[John from Magnatune]

Yes, I've put the 3 month minimum back in place: there isn't an option for single month only memberships.

The reason is that after several months of it being offered, I saw a slight *decrease* in the number of daily new members. That's the total number, not revenue.

What I think this means is that if Magnatune charges so little for it's membership, people value it less.

I restored the 3 month minimum, and the number of per-day new members went back to the old level.

I've read in some marketing articles that people value less things that are priced seemingly too generously, and that's what it seems was the case with the too-low-prices magnatune memberships (ie, no commitment beyond 1 month)