  The physics of GRB powered by a magnetic energy flux is reviewed. Magnetic
fields are natural for transmitting the energy from the central compact object
to the small amount of baryons required for a GRB. When dissipation of the flux
of magnetic energy by reconnection inside the flow is taken into account, the
magnetic model assumes several more convincing properties. For baryon loading
typical of observed GRB, most of the dissipation takes place just outside
photosphere, so that prompt emission is produced efficiently, and the magnetic
field strength in this region is high, resulting in efficient synchrotron
emission. Remarkably, the dissipation also causes very efficient acceleration
of the bulk flow. This effect is illustrated with a classical hydrodynamic
equivalent. In this context, the distinction between the flux of magnetic
energy $cB^2/8\pi$ and the Poynting flux $cB^2/4\pi$ is important, and an
interpretation of the Poynting flux as a `magnetic enthalpy flux' illuminating.
Numerical and analytical results for flow acceleration and the relative
contribution of photospheric (thermal) and nonthermal emission as functions of
the asymptotic bulk Lorentz factor are given. The transition between X-ray
flashes and true GRB is predicted at $\Gamma\approx 100$.
