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Carry My Tune

This independent artist turns away investors and calls profits a "side effect"--he just wants to move your music.

Vital Stats: Derek Sivers, 35, of CD Baby

Company: Music sales and distribution for independent artists

2005 Projected Sales: $12 million

Sound check: As a professional musician, Sivers already sold his CDs at live shows, but when he wanted to sell them online, he was dismayed by online record stores' attitudes. "They all said, 'Who's your distributor?'" recalls Sivers, who, like most independent musicians, didn't have one. Instead, he developed a website in 1998 to sell his CDs and those of a few musician friends. Earnest interest from other artists established Sivers' site as both the solution to independent musicians' distribution problems and a promising business.

Stairway to heaven:CDBaby.comis a dream come true for musicians, and a decidedly altruistic business. Its four tenets: Musicians are paid weekly for CD sales; names and addresses of fans are provided to musicians so direct communication can be established (though buyers can opt out); no minimum sales are required; and there are no paid placements or advertisements on the site. Artists set their own prices, and CD Baby takes a flat $4 cut for each CD sold.

Drawing a crowd: A month after iTunes launched, Apple Computer approached Sivers to make CD Baby its independent music distributor, encoding and delivering the independent artists' music to iTunes, and getting paid when it sells. Now, the over 100,000 artists currently on CD Baby are exposed to iTunes' immense platform and audience. "It really transformed this business," says Sivers. Digital distribution now accounts for a quarter of CD Baby's growth over the past year.

Independent spirit: "The company culture is to provide a service to musicians," says Sivers, who's turned away investors. "I think profit is always best as a side effect." While he's walked away from lucrative deals that weren't in line with his goals, Sivers now has fans of his music and business.

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This article was originally published in the November 2005 print edition of Entrepreneur with the headline: Carry My Tune.

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