CD Baby

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CD Baby is an online music store specializing in the sale of physical compact discs from independent musicians directly to consumers. Additionally, the company has become a digital aggregator of independent music recordings, distributing content to several online digital music retailers.

CD Baby is the d/b/a of Hit Media, Inc., a Nevada Corporation [1] owned by CD Baby founder Derek Sivers. According to the company's web site, CD Baby was founded by Sivers in 1997, out of his home, and currently operates out of Portland, Oregon. [2]. CD Baby allows content owners to set their price point for selling physical compact discs – CD Baby retains $4 of every sale, the remainder gets paid out to the content owner on a weekly basis. They also charge a one-time $35 setup fee per CD. [3].

Contents

[edit] CD Baby and musicians

Any content owner may sell their music at CD Baby. CD Baby has no minimum sales requirement for its members; an artist who sells only one CD per year would still remain a part of the company's catalogue.

In 2004, CD Baby began offering a digital distribution service to its members. By opting in to their digital distribution service, content owners can authorize CD Baby to act on their behalf to submit music for digital sale to online retailers such as Apple's iTunes, Real Network's Rhapsody, Napster, MusicNet, among others.

[edit] Successful artists at CD Baby

In addition to the many unknown independent artists in the CD Baby catalog, there are also several artists who have been signed by a major record label. These include 80's icon Tiffany, successful European artist Lory Bianco, and Jack Johnson who sold his music at CD Baby prior to signing with a major record label. The catalog also includes an album with early demo songs by Madonna which is being sold by her former producer Stephen Bray. Also, Gary Jules released his debut album on CD Baby before it was released by a major label; it contains the hit song Mad World.

[edit] Origins to present

CD Baby began with its founder and president, Derek Sivers in Woodstock, New York. Sivers was a full-time musician who created the website to sell a CD he'd made online. As a hobby, he also began to sell the CDs of local bands and friends. Because he was already making a living as a musician, he was able to be flexible with making CD Baby the "utopian" online store for independent musicians. To do this, Sivers followed four main principles based on his personal preferences:

  • The musician will be paid weekly for their CD sales
  • The musician will have the full name and address of everyone who purchases their CD
  • The musician will always be allowed to sell their CD, regardless of how many copies they sell
  • The musician will not have to worry about advertising or product placement hurting sales

In addition, Sivers made sure to listen to every CD he sold (currently someone is employed to do this). The operation was run mainly in Sivers' bedroom.

Sivers eventually hired John Steup as his Vice President and first employee. In an interview, Sivers recalls saying to Steup: "This thing might get huge one day. I mean, we might have 100 artists here."

Steadily, CD Baby grew as more artists wanted to sell their music through the website. Sivers always dealt with the artists directly.

CD Baby was somewhat inspired by a website called Songs.com founded by Paul Schatzkin, Tom Kimmel, and Michael Camp. Songs.com, though not having the nonexclusive policy CD Baby does, was also a website that sold primarily independent music. However, ten months after Songs.com was sold to Gaylord Entertainment for $3-million, Gaylord folded all it's digital initiatives, including Songs.com. Schatzkin would then send an email to members of Songs.com, recommending CD Baby. Schatzkin was also the instigator of CD-Baby's toll-free phone line, "1-800-BUY-MYCD."

Sivers never accepts money to advertise a CD more than any other CD and doesn't negotiate with investors or display advertisements. Currently, there are sixty or so employees of CD Baby whose work ranges from warehouse work to customer service to listening to CDs.

Though Sivers is not interested in selling digital music by creating a website such as MP3.com or eMusic, he has been approached by Apple iTunes to put the CD Baby catalogue on the iTunes Music Store as a digital medium. Rhapsody, MusicMatch and Napster gave Sivers similar requests. Sivers decided to introduce digital downloading as an optional service for CD Baby's artists. [4]

Although the majority of artists who use CD Baby are North American, about thirty percent of orders for CD Baby are overseas. For this reason, Sivers aims to create CD Baby warehouses in Japan, Europe and Canada.

In 2003, Sivers won a World Technology Award for Entertainment.

[edit] Statistics

CD Baby statistics as of October 26, 2005:

  • 153,818 artists sell their CD at CD Baby.
  • 2,747,171 CDs sold online to customers.
  • $34,471,383.42 paid to artists. [5]

[edit] External links

[edit] Further reading

  • The Future of the Music Business: How to Succeed with the New Digital Technologies, by Steve Gordon, Backbeat Books, 2005, ISBN 0-87930844-3, p. 213-225 ("An Interview with Derek Sivers, Founder and President of CD Baby")
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