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Jeff Price- CEO Tunecore.

Moses, you hit the numbers right on the mark, and your conclusions apply to any physical pick/pack/ship model: there's simply no way the vast majority could be making money, and those few who have likely got there because of their own hard work, or they had a pre-established fan base. All the more reason why digital distribution levels the playing field, especially if starting and maintaining costs are reasonable (that is, no need to mail in a disk), and there's no percentage sliced off the back end. More money is put into the hands of the artist, who can use it to market or make more music. GREAT WORK!

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Hey Moses. I really enjoyed the read on this one. Very insightful but I'm not sure I agree that CDBaby was ever anything more than a place to go if you could not get a "real" deal. It always seemed a little hokey to me and got less attractive as digital became more and more the mainstream.

CD Baby has (had) the same problem as Burger King. The name (and origin) is limited in scope and will always have the stigma of being so "yesterday". The math is amazing but, as you state, most people never did the numbers. I have many friends who were major label artists and have extended their careers by starting their own labels and "distributing" through CD Baby. These are not sophisticated business people. They are artists and, to them, this was the infrstructure that they lost or walked away from when their major label run was done. I hope they all see this article of yours and realize that the numbers are really not in their favor. There is a better way although it remains to be seen if Discmakers will change the formula.

Look forward to part 2.

Regards. Ivan F.
Alvarez CdA Group
www.CdAGroup.net

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Man, I always from day one thought CD Baby was a giant waste of time for my band, I gave them a test of selling 10 cds, and we are a popular band, especially on the internet, and it took them over a year to sell all 10!

What a crap company. I didn't need them really for anything that I wasn't already doing and doing much better too. They just never made sense to me. Like paying someone to work for you because you are too dumb, ignorant, lazy, or too trusting, and them doing it badly in the first place. What they wanted you to do was to tell everyone to buy your records from them.

Makes no sense, you just need to tell these exact same people to pay them from you, via paypal or whatever, or even via amazon.com (thank god for Amazon.com, as they indeed really do sell many thousands of our records and we get a commission, WORLDWIDE). And, then you simply mail them out to the people that ordered a CD directly from you (plus you get to learn who your fans are that are buying your stuff so that you can hit them up to get your back catalog).

At least with amazon.com you can either have them warehouse your cds and send them out and you get the sales money, or they sell your cds that they got from other distributors and you set up a link to your amazon.com page that pays you a commission for every sale. So, you get paid twice for their sales!
CD Baby was never that smart, nor convenient, nor efficient, nor effective.
It was a “Rube Goldberg invention” way of selling records at best. At worst, it was a “nice” way to exploit poor selling bands.

Sal - Electric Frankenstein

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Dude, this is the most compelling read I’ve come across in eons! I couldn’t look away from the monitor. I dropped everything.

Jer Olsen, CEO
http://MusicBootCamp.com

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Hi Moses,

I'm excited about the Disc Makers acquisition of CD Baby. The idea that Disc Makers is going to get into aggressively marketing new music is a great angle. There are many music fans out there that love to spend their time discovering new artists. I agree with you in that, if marketed correctly, CD Baby could be the iTunes of brand new music.

Disc Makers has brought in a real businessman in Tony Van Veen. We just don't have enough of them in the music industry. We need guys like Van Veen who are trained in business (not music) and are focused on the bottom line for music artists and their companies - profit.

I have attended several panels where Derek Sivers spoke and heard him make many non-businessman statements such as when questioned about illegal file downloading, his response is flip. "Don't worry about it. Artists need to worry about exposure not theft." It was clear to me that he didn't understand or care about the income of his CD Baby music artists. They need exposure, yes, AND they need to protect the music they have out there.

At the same time, it appeared my concerns were not shared by others as I heard several people say that they hoped people WOULD steal their music. As if somehow, by people stealing their music it would validate them as artists...?

Thanks Mo!
SG

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Moses,
Man,you are the shit! I knew somethin wasn't vibing when my band,ThirtyRound Clip, joined the Baby in 2007....I heard all this hipe....4 us....nada (we r in that 96% range).Most our sales via CD Baby come from peeps seeing us on My Space and clicking our "CD Baby banner"....Thanks for the real story....I can't wait to read Part 2....I can tell u one thing that sucks:It seems to take FOREVER to get reports from itunes,etc to our CDBaby digital distribution...We did an experiment:We purchased 3 tunes at the end of 2007....it didn't show up as a "sale" until March 2008 (at itunes)....if this is "normal",well,it still sucks!
Ok,L8

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Dear Moses,

Thanks for the eye-opener. In regards to CD Baby and marketing, you're right. CD Baby tried to educate the artists to be self-marketing, and CD Baby did more than Amazon used to, and more than the other online distros (that have come and gone), but that was only in comparison. For their cut, CD Baby did not do real-world marketing, and some of their web imagery was downright clunky.

I also noticed the CD Baby excitement has been waning. For the record, I've sold at least 40 units of 4 different CD titles (not counting downloads) on CD Baby since 2000. It goes in spurts.

The only detail I'd argue with you about is saying the Myspace provides superior social marketing. Yes, it's social, and there's lots of traffic, but it's not really marketing. I'm still (stubbornly) of the opinion that Myspace is nothing but The Borg with a Happy Face. No one has yet reported any major profit or tech-advantage by being on Myspace. Myspace buzz is limited to the Myspace universe. If I want to network/rave with another musician and all they have is a Myspace page, I have to become a member, which I'm too busy and focused to do as I'm already getting plenty of web traffic just from surfers or people who come to my gigs. I'd rather have 1000 meaningful web-contacts than a million that just take up valuable time and are hard to vet for fraud, incompetence or lunacy. I'm better at Realspace.

That aside, thanks again for looking behind the screen and taking time to break it down for us.

All the Best, JJB www.johnnyjblair.com

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Look - his site is like the clubs : they expect you to bring the entertainment AND the audience!! Not only is this unfair - most importantly, it DOESN'T WORK. If you have a fan base, have the show at your jam space, and keep ALL the money - similarly, if you have an online audience, then funnel them to YOUR site, not some pony tailed George Carlin wanna be!!!! (ok, so maybe that makes no sense, whatever.... I'm running low on insults here)

There's no point in paying to be there or most any other similar sites unless you bring a fan base with you to cover the costs, but if you have a fan base willing to buy your stuff, then WTF do you need CD Baby for?!?! Put a Pay Pal button on your home or MySpace page, hook it up to your debit card (you don't even need a credit card anymore), and stop letting these leeches and confidence men convince you that doing all the work and giving them a piece of the pie is somehow furthering your musical aspirations!!

Whatever - he's a sad example of how disingenuous this industry can get. He plays it like he's helping people out, but he's just a parasite with the same motivations as the people he claims to offer an alternative to, as far as I'm concerned.

Yes, I'm cynical and bitter, I know it - but at least I told Sivers he was a twat 5 years ago!! ;-D Adam The Beggarz

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Moses,
Thanks for the insight. As I understand Disc Makers also owns Oasis CD manufacturing, we do seem to be witnessing the dawn of another corporate empire and another nail in the coffin of independent music.

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Hi Moses,

Read your article, and it pretty well outlines what has been my experience on CD Baby.

I kept writing to Derek and suggesting that he needs to market to the "buyers of new music," and not to the creators and sellers of new music. Trying to sell music to others, who are also trying to sell music is not the right approach. And, the math, and the results, underline this. The records I sold on CD Baby, were entirely as a result of shows I performed.

Moses, I am really looking forward to your assessment of the digital distribution practices of CD Baby. I find it very wrong that many of the digital sites contracted by CD Baby to distribute my music, are giving away free downloads of my music. This is not what I signed up for, and not what I agreed to. They have no right whatsoever to be givning my hard earned work and valuable product away for free.

I am very interested to hear your response. Please do write me back, or give me a call.

Thank you Moses.

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Moses,

Great article. Can't wait for the second installment. A couple of things:

1. Why would DiscMakers want to buy CDBaby? Because DM is a big, hungry machine that needs food. CDBaby supplies that food in droves. Few folks with 'real' record labels/careers use DiscMakers because they are not set up for that type of customer (one that has street dates, custom packaging, etc.). They are in the business for the long tail customer: The band that is doing their first CD and gets the lovely color catalog every month or so from DM. The artist that believes that DM is going to do so much more for them (Taxi is a classic example of this) that they won't have to lift a finger and they'll sell millions. And something inside me believes that the DM model doesn’t rely on repeat business or represses. It's always fishing for new guppies. It matters very little whether any of their big marketing promises work. They don't need to. They've already got their money and there are plenty of other new bands needing their CDs made that they don't even have to worry about it. Especially if we make a big enough deal about it, have seminars, and so forth. And CDBaby isn't a magnet for sales so much as it's a magnet for artists to hang their store.

2. Tony VanVeen did NOT buy CDBaby, Corinthian Capitol did. Tony reached out to his friend (or vice-versa), but rest assured, the guys that wrote the check were serious venture fund guys; guys that likely have musical taste that ventures to edgy when they put the new Barry Manilow CD in the player in the Benz. They are in it for one thing: ROI. Not music folks, not retired execs, just people looking for a successful business model that they can throw dollars at and grow it to sell it again.

Footnote: I'm a broker with offices in [location withheld] and believe me, all of us out here in the brokerage world that feeds the real music business (and there are 10 or 12 of us), we're talking. We're looking toward what the future holds for us and are frankly somewhat dismayed that the playing field has been turned on end. Or very likely could be. We're a group that has pride and ethics in what we do, likely spend time in clubs seeing the artists we create goods for. Music people. Small business owners. And what doesn’t kill us only makes us stronger.

Keep up the good work!

Mike