As the large record labels struggle to deal with evolving on-line music sharing companies like Napster and Kazaa, other businesses are getting a chance to break into the music marketing industry.
Like many young musicians, Derek Sivers played in a band. It was called Hit Me. But like many young musicians, he couldn't get any distributors to sell his CDs. So in 1997, he set up his own website for the band's music. And when all his friends wanted him to market their tunes on-line, too, cdbaby.com was born.
Director of Operations John Stoype explains that for $35 you get to advertise your CD on their website at whatever price you choose.
"Mom definitely buys your CD. You put it on there. Mom will come and buy five or 10 right off the bat. And then, the main customers are the people who see the bands play," he says. "I've seen bands play and during their set they'll stop and say, you can buy our CD at the door, but if you don't have any money you can go to my site, and they'll give their website, or you can straight to cdbaby.com and they'll ship it out in 24 hours and you'll have it in a few days. It's great."
It's great because CD Baby gets $4 for every CD sold. Indeed, it's a business model that just might work. Kids brought up on free music downloads from Napster seem more willing to shell out $8 for a CD from a band they've seen in concert, than twice that for one they can only afford to see on TV. But, while Mr. Stoype says CD Baby is selling about 600 CDs a day, he concedes the company is not likely to dominate the music market.
"The big thing now is people are looking to sell their songs individually, as MP3 downloads, things like that. There's probably going to come a time where the plastic disc that you purchase at the store is going to mean nothing. The way technology works, now someone can download a gigabyte of information in a short time," he says. "Why would you go to the store even to make the purchase?"
CD Baby employs about 30 people, most of whom are struggling musicians. It's signing new artists at a rate of about 1,000 a month, providing an outlet for recordings, and artists, that major labels wouldn't touch.
The satirical comments of Alexis Olson do well with CD Baby's unorthodox clientele. So do artists like Stan Ridgeway and John Entwhistle.
Inside the company's large concrete warehouse, Adam Sherbourne wraps up an Alexis Olson CD for shipment to a customer. He's a 20-year veteran of the music scene, and like many of the workers here, he also has a CD or two in the company's inventory. "It's simultaneously a not-paid-enough 'grunt labor' job for people struggling in a really bad economy. We take what we can get. The other side of that is that it's really nice, kind, even-keeled folks on a worksite, which is exceptional. I think we're all lucky to have each other," he says.
Still, Mr. Sherbourne is not about to credit his employer with anything so grand as the democratization of the recording industry. He says CD Baby may help some musicians, but certainly not all. "For $35 they are free to starve themselves. We have 50,000 titles and counting every day. And about 48,000 of them make no more money in this world than they did in the old model," he says.
Back in the front office, Vice President John Stoype takes a more positive approach, saying 20 percent of the bands do a good business, and the top 10 artists, like Dan Zanes, sell thousands of CDs each year.
The company has competition, especially from another Portland-based on-line retailer, oebase.com, run by former 'Gang of Four' band member Dave Allen. Unlike CD Baby, however, OE Base doesn't accept every band that comes through the door, which makes CD Baby the way to potential fame and fortune for anyone with a guitar, a song and $35.