I found out about them through cartoonist and musician Keith Knight. He offers one of the Marginal Prophets albums, Bohemian Rap CD, through Magnatune.
You can stream any of the music on their site for free, with occasional ads (so far the only ad I've heard is an ad for their membership service). Or you can join for $15 per month, which lets you download anything in their catalog, DRM-free, in a number of formats. They also explicitly allow you to give away 3 copies of anything you download. Currently they offer about 10,000 songs from 328 artists. The musicians get 50% of their gross revenues. They also give money to Open Source projects.
Musicians are encouraged to submit music to them. They ask for a non-exclusive license and publish it under a Creative Commons Attribution-NonCommercial-ShareAlike license. They claim to accept 3%-5% of the music that's submitted to them.
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