Magnatune is a site holding a large collection of music of several genres and styles, which you can freely enjoy online, or purchase the CD or download the music. However, the way in which this company makes businesses is by selling customized licensed material on the music it hosts.
The process is so simple that it might actually take on in the internet music industry: just fill in a 5-question form indicating what the purposes of the material will be, and the site automatically indicates how much it costs to purchase the license, which you can buy using a credit card, and is automatically downloaded in WAV format. Since all the math is done by the site, it saves users haggling over the price, which the company claims to be substantially smaller (50%) than what other competitors charge for licenses. Also, musicians of any style can upload their music and see if they can get a deal using this site.
Magnatune.com In Their Own Words
“The shareware model applied to music. Listen to 493 complete MP3 albums from musicians we work with (not 30 second snippets). If you like what you hear, download an album for as little as $5 (you pick the price), or buy a real CD, or license our music for commercial use. And no copy protection (DRM), ever”.
Why Magnatune.com It Might Be A Killer
This site presents an honest business policy that is so appealing in itself that is in truth hard to beat. For instance, all the licensing documents can be read before agreeing to abide by them, plus their ethical approach is really cool –in relative terms, that is— as all the artists that get their stuff licensed through Magnatune.com receive 50% of the license fee.
Some Questions About Magnatune.com
We are all well aware of how complicated things are in the music industry, and although this site presents what seems to be a very valid alternative to the ridiculous price tags in CDs, it’s unlikely that end-users will go clean all of a sudden and start buying their music from this or any other site. So, in any case, Magnatunes.com would end up with commercial licensing to make a profit, but it seems to me that their catalogue needs to present a bit more of variety in order to catch film and/or advertising producer’s eyes; are they planning to do this any time soon? 
