Derek Sivers never set out to become the largest distributor of
independent music in the world. Back in 1997, he simply wanted a way to
sell his own CD from his website, which few artists were able to do at
that time. Then a full-time musician, Sivers agreed to help a few of
his friends sell their CDs through his site. Soon word spread, and
other artists approached him about carrying their CDs on the site. By
1998, Sivers had brought 100 artists into the fold and hired an
employee to help him handle the volume. As the number of artists
releasing independent CDs exploded, Sivers realized that there was a
large, unserved clientele out there. He quit performing and created a
musician-friendly Internet distribution service that turned prevailing
music-business practices upside down.
In contrast to traditional record labels and distributors that have
always paid meager artist royalties, CD Baby has a relatively unique
goal: to maximize an artist's take. After an artist pays a $35 setup
fee to get a title into the system, a page is launched on the CD Baby
website with album art, artist bio, and sound clips. Then, for a flat
$4 fee per mailing, CD Baby bags and ships each disc purchased via the
Internet to any location in the world. If the artist sets a price of
$15 per disc, he nets $11 per sale. If a disc sells 1,000 copies (a
figure that would get you dropped from most record labels), CD Baby
pays the artist $11,000.
From the grass roots to the elite, the music
industry has taken notice of Sivers, who has rejected lucrative offers
to sell his company and declined payments to give preferential
placement of an artist's disc on the site. It's never been about the
money for Sivers; it's always been about helping musicians. This ethos
prompted Esquire magazine to dub him "one of the last music-business folk heroes."
You've had people offer to buy your company but you've never taken the deal. How come?
I didn't get into this for the money, so I'm not going to get out of it
for the money. That was never the point for me. In the dot-com boom,
you saw people start a business with good intentions, but the investors
wanted bigger returns, so owners began to compromise their original
intentions and started mildly screwing people. Once that happens, they
have to shut down because people know they are getting screwed, or the
owner sells the business and becomes miserable because what started as
a golden egg turned into a rotten egg. To me it's failure when what you
set out to create becomes corrupted-even if you are making a lot of
money.
What's the most important lesson you've learned through all of this that you would like to share?
The hardest lesson I've learned is that you have to work at what's
exciting to you. The things that excite you most and keep you awake
long after you should have gone to bed and then make you jump out of
bed early are what you should be doing as much as possible. For years I
listened to people who were telling me the things I should do. Most of
the time I just took their word because I thought they were smarter
than me. I'd slump my shoulders and say, "OK, I guess I'll do that even
though it's not exciting to me." I've learned that whatever part of the
business I hate doing, there will be someone out there who loves doing
that.