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GMSV: Magnatune (& follow up)

Posted By Barry Ritholtz On October 2, 2003 @ 3:14 pm In Media,Music | Comments Disabled

The San Jose Mercury News picked up last night’s discussion [1] of Magnatune . . .
(Good Morning Silicon Valley: “The real winner of The Great Recording Industry Business Model contest [2]“)

Follow Up (10/4/03)
I’ve been discussing the music business models a lot lately. As a strategist, I’ve followed the music industry for years. I view Magnatune [3] as the next step for independent labels; They are a bridge to an internet based indie model.

Magnatune [3]‘s success will depend on how well they execute, and how rapidly musical talent adopts their structure:

In terms of execution, they have to get past two hurdles: finding that talent and promoting them to the public.

It’s crucial that Magnatune [3] has a critical mass of bands signed up in a broad variety of musical genres; That’s what will attract music consumers to their website in the first place. They are almost there now, and at the rate they’ve been going, I don’t think it will be all that long before they have true critical mass in terms of lots and lots of varied content. (Personally, I’d like to see Jazz [4] added as a genre).

Assuming they are able to attract enough new talent, it then becomes crucial that they can break through all the musical clutter.

While radio has gone one way (narrower), the net has gone in the opposite direction. Clearchannel [5] now dominates [6] what’s heard on the radio in the US; The playlist of music the public hears over the airwaves has become shorter and shorter. Conversely, on the web, the amount of content has just exploded. Between mashups [7], mixes, acoustic/live, and of course, P2P, there is simply an overwhelmingly vast amount of music out there.

Being able to be heard overe the din will be quite a challenge.

Structure is an entirely separate matter. I think of Magnatune as a transitional music business model; They are the indie label of the near future. They use the connectivity of the net to find acts, to promote their music, to get it heard by the public, and to sell and distribute it.

I think we will see other Magnatune like labels. Whether they consolidate into a handful of large independents, or proliferate into 1000s of small outlets has yet to be determined. But its a huge step forward from what the big labels do – manufacturing polycarbonate discs, shipping them to distribution centers around the country, where they get trucked to warehouses, and then eventually to the retail chains. Magnatunes model is light years ahead.


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URL to article: http://www.ritholtz.com/blog/2003/10/gmsv-magnatune-follow-up/

URLs in this post:

[1] discussion: http://bigpicture.typepad.com/comments/2003/10/magnatune_music.html

[2] The real winner of The Great Recording Industry Business Model contest: http://www.siliconvalley.com/mld/siliconvalley/business/columnists/gmsv/5603418.htm

[3] Magnatune: http://www.magnatune.com/

[4] Jazz: http://www.jazzonln.com/

[5] Clearchannel: http://www.clearchannel.com/

[6] dominates: http://www.users.muohio.edu/kelleycs/2003_05_25_medihistory.html

[7] mashups: http://www.google.com/search?q=mashups&ie=UTF-8&oe=UTF-8

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