Starving musicians might just have a new source of revenue – YouTube. More teens listen to music on YouTube than through any other outlet, according to a 2012 Nielsen study. Now CD Baby is helping over 100,000 indie artists monetize on their music by making YouTube videos of album art accompanying tracks.
“YouTube is the 2nd largest search engine after Google GOOG +0.86%,” said Tracy Maddux, CEO of CD Baby, a company which offers label-like distribution services to unsigned musicians. “We know YouTube is a music discovery venue for folks in the millennial generation.”
CD Baby has partnered with online music licensor Rumblefish to upload 1.5 million album art videos, with 250,000 uploaded so far. It’s hoping to make money for musicians – and itself – through ad revenues and by microlicensing songs to user generated videos. If a user adds a CD Baby artist’s song to a cat video or yoga tutorial, the artist collects money on it – so far, CD Baby has been paying out over $200,000 per quarter to artists for use of their music in user generated videos. And if an advert is placed on a video, CD Baby keeps 25% and the artist takes 75% of revenue.
“YouTube is just another platform that we view as an opportunity for artists to promote themselves,” Maddux explained. “We provide an opportunity to get artists not just on YouTube but to a point where their music can be monetized.”
Maddux also claims that by putting links to buy the music that’s playing on YouTube CD Baby could hypothetically earn cash for artists, although it does not yet have statistics on the conversion rate of listening to YouTube videos and then clicking through and buying songs.
CD Baby, founded in 1998, puts independent albums out on platforms like Spotify, iTunes and Amazon for $49 a record and $12.95 a single. Unlike services such as Distrokid, which doesn’t keep anything for distributing records, CD Baby takes 9% per cent of all digital music sales, and $4 per CD sold. A similar alternative like TuneCore charges $29.99 per album for the first year, with subsequent years costing $49.99.
CD Baby may still be a pricey option for many musicians, but the opportunity to license indie music is an interesting option. Its more extensive service, CD Baby Pro, helps artists collect royalties worldwide for $99 an album. CD Baby Pro signs up artists as songwriters with authorities like BMI and ASCAP and registers songs to collect publishing royalties. CD Baby is able to charge such a hefty fee because collecting royalties is a time-consuming and arduous task, and publishers traditionally wouldn’t sign up a little-known act.
Acquired in 2008 by a private equity firm, in the past 15 years CD Baby has paid out almost $300 million to independent artists. With 325,000 active clients, CD Baby sees an average daily sign up of 200-300 titles.
CD Baby has also been profitable for the past five years. And while it offers useful tools, the royalty slices it takes are not ideal for musicians. Thankfully for artists, an increasing number of services are hoping to help all those struggling singer-songwriters