Magnatune founder John Buckman told technology law podcast OUT-LAW Radio that the company would soon release streaming products to earn revenue from the growing number of its customers who are streaming its music rather than downloading and owning it.
"What I'm finding is in an era now when we're all connected to the internet a lot, people don't really want to download music because then you have to manage it, you have to download it and make sure you don't lose it and if your computer blows up you have to go and re-download it," said Buckman. "What people want is access to music."
Magnatune currently allows anyone to listen to all of its music online, with announcements between tracks. Downloads or CDs are paid for.
Buckman said he had observed the shift in listening patterns over the past two years, during which time the number of listeners to Magnatune's online streaming service tripled to 45,000 a day, while its sales of CDs and downloaded albums halved.
He said he would soon launch streaming services for $10, $20 and $40 per month. In the most expensive package, users would be able to listen to any music, download any music and
"You simply don't have to think about buying any more, you just listen online and you give us a little bit of money and you can listen to everything as a stream," he said. "If you like something you can download it for free as well."
Buckman said that the $40 plan is "a little crazy". Under it, he said, a subscriber indicates what of the streamed music they like and Magnatune will post them 10 CDs every month from their list of favourites.
Magnatune is a small, four person company which is attempting to reinvent the business of being a record label and change the terms on which business is done, and is attempting to adopt a different attitude to intellectual property to traditional labels.
The label delivers CDs and downloads without the digital rights management (DRM) technology that major labels have used to prevent unauthorised file sharing. In fact, Magnatune specifically requests that customers share music with three other people.
Most radically, it offers consumers a choice of how much they pay for music. Consumers can choose to pay anything between $5 and $18 for any of the 500 albums on its books. Buckman said that his company considers trust an important part of the business process.
"It turns out that people are quite generous and they pay on average about $8.40, and they really don't get anything more for paying more other than feeling like they're doing the right thing," said Buckman. "But the reality is today nobody really needs to pay for music at all. If you choose to hit the 'buy' button at Magnatune then you're one of the people who has decided to actually pay for music. Shouldn't we reflect that honest behaviour back and say, well, if you're one of the honest people how much do you want to pay?"
The company also licenses music for industrial uses, such as on television, in films and in shops. Buckman said that it was the first to offer automated, flat-rate licensing on the internet.