Magnatune Offers Fair Trade Music,
Rewarding For Both Listeners & Artists

Many people have heard of the fair trade movement as it relates to agricultural crops such as sugar, coffee, and cocoa, but few know that a similar, and vitally necessary movement has begun within the music industry.

Although the fair trade music movement began for different reasons and has a different history than that of the global fair trade movement, it draws a significant amount of inspiration from that movement and has applied many of its ideals to address long-standing inequities within the music industry.

Much like small coffee farmers in developing countries, musicians typically receive only a very tiny percentage of the profits from their own product and tend to operate from a position of economic vulnerability. Typically, by the time the music industry middlemen take their own cut of a given music sale (the distributor and the label primarily) the musician is left not only without a profit, but actually in debt. In the online world, for instance, Apple typically takes a 35 percent cut from every song and every album sold in iTunes, after which the label takes another cut, sometimes charging gratuitous fees in the process. The "new technology" fee, for instance, appears in many major label contracts. The labels assert that new digital distribution technologies pose a risk to their existing business, and many will withhold more of an artists' sale in order to offset this risk. The "new technologies" deduction can run as high as 25 percent.

The result is that often, the artist is left with a mere six to eleven percent of the sale of their own work, and by the time that artist pays any lingering promotion, booking, and recording related expenses, he or she is lucky to break even. This phenomenon has noticeable parallels to the small coffee farmers who receive prices for their coffee that are less than the costs of production, forcing them into a cycle of poverty and debt. It's this dysfunctional, artist-unfriendly model that has led prominent musicians such as David Byrne to ask "Record Companies: Who needs Them?"—the title of his address at last year's Future of Music Summit in Montreal.

Fortunately, the Internet has started to level the playing field. A fair trade music organization like Magnatune.com, for instance, never could have existed before the advent of the Internet and widespread broadband technology. While traditional labels still often view these technologies as a threat, Magnatune leverages them to sell the musician's work directly to the public. Since launching in 2003, the Magnatune site now sells music by more than 250 different recording artists. There are artists from every genre, from ambient pioneer Robert Rich to the brilliantly sardonic indie rocker "Brad Sucks" to major classical groups like San Francisco's Philharmonia Baroque Orchestra. Magnatune also sells traditional CDs by mail, but the majority of its sales are digital downloads.

Refreshingly, a full fifty percent of every sale on Magnatune goes directly to the artist, while the other half goes toward Magnatune's bandwidth and staffing costs. Magnatune also employs a host of other explicitly artist-friendly business practices, such as forming non-exclusive deals with artists and allowing them to keep the copyright to their own music. It's worth noting too that while many independent labels will agree to split sales fifty-fifty with artists, many will do so only if the label happens to be profitable. Fair trade music organizations like Magnatune, by contrast, pay the artist regardless of their profitability status.

As encouraging as all of this is, however, it turns out that the music industry's relationship with the artist isn't the only one in need of reform. Because the Recording Industry Association of America has taken to suing private citizens in an attempt to control piracy in the digital landscape, the acrimony that once existed primarily between artists and labels has now spread to the industry's relationship with music consumers as well. The advent of DRM or "digital rights management' technology has only served to salt the wound, as consumers lose control over music that was once at their sole discretion after purchase.

The result is that in addition to creating a more just system for musicians, many fair trade music organizations are also working to make things more equitable for consumers as well. Visitors to the Magnatune site, for instance, are able to listen to full album previews for free (instead of mere snippets) before deciding to purchase, and can then choose how much they want to pay for an album—anywhere from $5 to $15.

"Our customers can pay as little as five dollars for an album download if they choose," says Magnatune founder John Buckman, "yet on average people pay eight dollars. This proves that when people are given the option of supporting the artist directly, they'll pay more than they're required. This is a very different view than the one taken by the recording industry at large, which often characterizes their own customer base as potential pirates."

Fair trade music companies have found other ways to express their solidarity with customers. The drastic production and distribution savings provided by the Internet, for instance, is passed along more directly to customers and unlike most digital music sites which offer only "lossy" compressed audio formats, people are able to choose higher quality audio formats, including CD quality WAV files. On Magnatune, customers are also able to re-download their purchases at any time for no additional cost, and they can also share copies of their purchases with three friends for free. Magnatune says that the result of these practices has been greater exposure and increased sales for their artists.

"People often discover great music through their friends," says Buckman. It's always been this way: from mix tapes, to CDRs, to peer-to-peer file sharing. It's such an obvious point, and everyone knows the truth of it, yet the music industry has always fought it. Instead of fighting it, Magnatune is successfully using it to gain exposure for our artists. By doing this, we allow music consumers to find out about the fair trade music movement, and in our experience, once they find out about it most are thrilled to have the opportunity to pay artists directly for their work."

As the concept of "sustainability" begins to transcend its status as a progressive buzzword and  gain ground as a business concept, things look good for the fair trade music movement. While sales have been declining at major labels, they are steadily growing at many progressive and independent ones. In this respect, it's important to note that the fair trade music movement is not merely ethical, but is a positive business practice as well. This makes particular sense when you consider that the cornerstone of the industry—the artists themselves—will be more readily able to continue producing quality work under the fair trade model, versus spiraling into a cycle of disillusionment and debt. Music industry executives who viscerally understand how special and rare is the musician with even moderate sales potential should also understand that fair trade practices can only serve to enhance and expand the long-term viability of that artist. The result will not only be a more vibrant cultural landscape, but a more thriving music trade as well.

• Magnatune.com
• CDBaby.com
• Calabashmusic.com
• TuneTribe.com
• Jamendo.com
• Globalcrafts.org
• Fairtrademedia.co.uk

• Futureofmusic.org
• Fairmusic.net
• Eff.org (Electronic Frontier Foundation)

• An awareness of problematic music industry practices
• Payment of a fair price to the artist
• Charging of a fair price to the consumer
• Sales data transparency to the artist
• Pay the artist regardless of their own profitability status