: Outswimming
   The Sharks

Perhaps the biggest revolution in music over the past decade hasn’t been the music itself, but in the way musicians are tending to their own music business and harnessing technology to successfully launch and sustain careers.

Seasoned pros and aspiring artists now know that a sound career can’t depend on managers, accountants, or labels to watch out for their own best interests, and armed with this wisdom and the power of the internet, more and more are taking business matters into their own hands.

In 1998 musician Derek Sivers was simply looking for a better way to manage his own career and to distribute his music online. As it happened, he developed the groundbreaking, artist-friendly retail site CD Baby, which receives CDs directly from artists, warehouses them, then sells them on the cdbaby.com web site.

The genius note in the CD Baby model is the payout to artists - three to four times what they’d get from a label. A typical label or distribution deal nets an artist $1-2 per disc, CD Baby offers musicians the chance to make $6-12 per CD, depending on the performer’s overhead costs for production, replication and packaging.

And, unlike traditional distribution and retail channels, artists who align with CD Baby set the prices for their music, decide the genres they want their music to be categorized in and are not bound to multi-year contracts.

You’ll find discs on the site for anywhere from $5 to $15.99 and, says Sivers, the site may be the only place (or at least one of the few) where releases by some artists can be found at all. "People don’t do price-comparison shopping," says Sivers "they generally want a CD or they don’t." Still, general market rules apply, and Sivers believes that a $10 price will move more albums than a $15 price for listeners that are "just curious, who hadn’t heard of an artists ten minutes ago and are thinking of buying based on the sound clips."

Operating for just 6 years, the site has blossomed. Today, they stock titles from more than 70,000 artists, and selling, according to Sivers, more than 1500 discs a day, half of them to people who just browsed the site the way they would in a traditional brick-and-mortar store. As of late September, the web site had sold more than 1.2 million discs and is scheduled to cross the $10 million mark in artist payouts in mid-October.

And, says Sivers, he and his staff of 28 still listen to every CD they sell.

You may not find any mass-market superstars on CD Baby, but it does attract a diverse mix of newbies and vets; regional artists, national and international acts, in virtually every genre.

"You decide what you want people to hear and where you want your CD to be located," says former Ben Folds Five drummer Darren Jessee, who’s selling his new band Hotel Lights’ self-titled debut disc, on CD Baby. "Then, you decide what the sales cutoff will be and CD Baby mails you a check when your account reaches that balance." Jessee still hasn’t ruled out the possibility of signing with a label, but says he’s using CD Baby both to build up a buzz and generate some sales in the meantime.

CD Baby doesn’t offer any marketing or sales support services, but Singer/Songwriter David M. Bailey says he thinks the site now has enough name recognition among independent music fans to become a destination site, similar to Amazon.

Both Bailey and Jessee say they rely on their own web sites and name recognition— a dedicated niche following in Bailey’s case; former Ben Folds Five fans in Jessee’s— to drive potential buyers to the CD Baby site. And even though CD Baby does no marketing, both say they’re satisfied with the word-of-mouth that the web site has generated in terms of drawing "browsers" to the store who might not have otherwise have found them.

"It’s part-store, part-community center," says Bailey, who has 11 titles for sale on the CD Baby site. "As the site has grown, my opportunities to learn from others and expose my music to new fans has grown." And if someone finds your music on CD Baby and likes what they hear in the MP3 samples, each album page includes a link to the artist’s web site so new fans can find out more.

Sivers is adamant about maintaining equality among artists on CD Baby, to the point where he says he’s refused to sponsor artists’ tours or invest in artists’ projects. The site does feature a few albums on its front page and in its "Editors’ Picks" section and there are several posts on CD Baby Talkback bemoaning the perceived "preferential treatment" given albums that make those sections.

According to Sivers, those features were added only after customers requested them, and he claims that being featured on the front page has no effect on sales. "I’ve double- and triple-checked this for years, and being on the front page does not sell a single CD," he says. CD Baby reports to Soundscan and lists both its weekly and all-time top sellers on the site, though without dollar or unit sales figures.

"It’s a simple, straightforward, no flash machine run by folks who genuinely want us indies to make it," Bailey says. "I’m married with two kids, and music has been my full time career for seven years. I couldn’t have done it without CD Baby, period."

Springboarding from the success of his original site, Sivers recently added sister site, cdbaby.net, which features links to marketing, management, and career resources for aspiring musicians. He now devotes most of his time to running the recently launched hostbaby.net, which offers affordable web site hosting for musicians.

"I just set out to take everything I had learned in creating CD Baby and use it to help a musician make a great web site," Sivers says. Most artists’ web sites are really bad, not the best representation of their music and perhaps even hurting them more than helping them."

For $20 per month, CD Baby web designers help artists design their sites, with online tutorials to guide them through musician-targeted features like creating a concert calendar, setting up streaming audio, and email lists. HostBaby will also register and keep current a domain name for an additional $10 per year, and offers disk space beyond the included 500MB at a rate of $10 per additional 500MB.

To date, Host Baby services nearly 2,000 customers, according to Sivers.

Last year, CD Baby entered an agreement with Apple’s iTunes, a move that some perceived as an indication that the notoriously maverick-minded Sivers was getting in bed with a corporation. "The only change in CD Baby culture we had to make in order to do this big digital distribution thing was having our first contract," Sivers says iTunes gives Apple a wholesale rate of 65 cents per song or $6.50 per album, out of which CD Baby keeps 9%. (CD Baby has digital distribution deals with other sites—including Emusic, Rhapsody, and MusicMatch—and details of those agreements can be found at http://cdbaby.net/dd.)

"I worked at Warner Brothers for a few years, so I know how to finagle the big beasts," he says. "It’s slow. It’s learning how there are nine different people handling different aspects of our account, and how to appeal to each one, in order to get something done."

Silvers sums up his company’s philosophy this way: "when artists are ready to make a good living from selling their music to the world, and skip all the sharks that run the old-school music biz, we’re glad to be here for them."