CD Baby
There’s a couple great companies in the music world and one of them is CD Baby. Derek Sivers is kind of a Seth Godin-style marketing genius that started with a great concept and focused on counterintutive ideas to drive his business model. One of these counter-intuitive ideas is that you should give open and honest accounting to artists. Second idea is you should pay them promptly. This sounds obvious.
Let me tell you, it’s not.
In the old days, when I ran Annex Records in the late 90′s, I quickly realized what a losing proposition the music industry was. Here’s how it worked: you invested tons and tons of money (at least for me and my organization) in recording and production. Studios, CD replicators, PR firms, they don’t really work on terms. You pay them COD. You pay them when you use the service. They get their money. Believe me.
So if you’re a small band and you want to put out a record, you spend a couple grand on all of these things if not more. Then you approach a distributor. You can also make your own distributor by approaching independent record stores and asking them to stock your CD on a case-by-case basis.
But distributors employ people in the music industry. And back then that meant (and still does to a large degree) shady people that do things the way they do them because that’s how they do them and you can go to hell if you don’t like it. So, even when these distributors or independent stores sell a few of your records, you should not hold your breath waiting for the check to come.
Seriously. Please do not hold your breath.
We sent The Long Walk Home off to Redeye Distribution which, back then, worked with a lot of down-on-your-luck-terribly-run-indies like Annex. Two years later, we had sold a small amount of CDs but hadn’t seen a dime from Redeye. Every time I called them some junior intern would send me some inscrutable spreadsheet that literally made no sense. Because I had a background in Finance I felt like I could at least take a stab at deciphering information presented logically. But of course they were designed to be inscrutable. Because they were designed not to pay (at least that’s what I picked up on their behavior at the time). In fact, my hypothesis at the time that a central part of the old Redeye business model was to aggregate a lot of really small bands through their distribution platform and then simply never pay them, counting on the fact that tiny bands wouldn’t have the time or money to collect on just a few dozen CDs sold.
You see the problem? You invest a ton up front and don’t see a return on that investment for over two years. You know what I call that? A bad business.
Contrast that to CD Baby where I’ve been paid multiple times, I can receive clear and transparent accounting any time I want in an easy to read format and I get comprehensive online distribution at a fair price through every major emusic retailer.
CD Baby has a clear focus on empowering musicians and, as a result, they’ve built a loyal base of users and music purchasers. It’s a valuable marketplace for independent music. They have a high ‘net promoter score’ because of the simple and surprising way they treat their music providers and, as a result, the business has grown. Nice job, guys.
blog comments powered by Disqus
Leave a Reply