Serving Alt-Artists, a Proud ‘Antilabel’
CD Baby, a Company for the Niche Musician
By LARRY ROHTER AUG. 12, 2014
PORTLAND, Ore. — In the world of digital music, CD Baby is a potent but quiet and thus frequently overlooked force. So it’s hardly a surprise that the company’s headquarters should be in a nondescript building hard by the airport here, with only a small identifying plaque at the entrance, far from the microbrew pubs and locavore restaurants that have become a calling card for this city.
But for more than 325,000 recording artists, in genres ranging from folk and rap to polka and bhangra, CD Baby has become a vital lifeline. For a fee, the company not only sells copies of their CDs and digital versions of their songs, it can also track, collect and distribute royalties for musicians who don’t have — or don’t want — a big record label or song publisher behind them.
One of every six songs in the iTunes catalog has been placed there by CD Baby, according to the company, which also has a robust presence on some 60 other music downloading sites. And with the explosion of streamed music and user-generated online video over the last year or so, the two million tracks that CD Baby has uploaded to YouTube have become a fast-growing source of income for its recording artists.
“We’re the antilabel in a lot of respects,” Tracy Maddux, the company’s chief executive, said in an interview here. “We’ve been doing this longer than anyone else, and with five million tracks in our catalog, we’re a lot bigger than anyone else” in the same niche. “But we know that things are changing rapidly and that we can’t stand still.”
CD Baby’s clients fall into a variety of categories, both in terms of the styles of music they play and their level of career development. Some are aspiring artists who have never had a contract with a major label — and know that they aren’t likely to get one — while others are refugees from that situation who have come to value their independence.
With a new CD, “Experiments in Time” and a leading role in a movie, “Memphis,” to follow next month, the lo-fi singer-songwriter Willis Earl Beal is seemingly an artist on the rise. His first two CDs were released on a conventional label, but he opted to go out on his own, he said, because he was making more music than the label wanted to release. He stumbled across CD Baby when he typed “independent music distribution” into a Google search box.
“For a middle-ground indie artist like myself, CD Baby is perfect,” he said in an interview this month. “It might not be ideal for somebody like Bruno Mars, but I can gauge what I want to do and you get to control everything, which is cool. You’re giving yourself a chance when you put your stuff up and pay that fee, because you never know who will hear it.”
Other artists, like Bon Iver, the National, Jack Johnson, Sara Bareilles, the Antlers and Macklemore, have used CD Baby as a springboard. Early in their careers, they distributed recordings through CD Baby and then, as their audience and commercial potential grew, shifted to more traditional arrangements.
The Seattle-based rap duo Macklemore and Ryan Lewis won four Grammy Awards in January, including best new artist, off the strength of “The Heist,” a CD distributed by a Warner Bros. affiliate. But earlier recordings like “The Language of My World,” from 2005, and “The VS. Redux,” from 2010, were released through CD Baby, as was the original version of “Wing$,” a hit single when included on “The Heist.”
“We build the highway,” said Phil Bauer, once a rapper, now CD Baby’s director of distribution. “The musicians drive the car.”
CD Baby’s business model is simple: It charges $12.95 to handle a single and $49 for an album-length work. Artists pick the price at which they want to sell their CDs, with CD Baby taking $4 for each physical recording sold and charging a 9 percent commission on digital sales.
The company has its critics, as becomes clear on various DIY musicians’ sites that compare CD Baby and rivals like TuneCore, Ditto, Reverbnation and Mondotunes. “They take 9 percent commission,” from the Ari’s Take blog, is one common complaint. “It’s a big pond, and it can be hard to get noticed,” from About.com, is another.
But artists with a long history at CD Baby cite features like weekly royalty payments and instant access to sales data as advantages they value.
Being able to look at sales figures “helps you see where people are buying your record all over the world and where you should go” when organizing a tour, said Ingrid Michaelson, an indie singer-songwriter who has released all six of her CDs through CD Baby. In addition, she said: “Sometimes you see that a song you’re trying to push as a single is not selling more than the other ones, and that can make you re-evaluate your choices. So it’s a great tool to have.”
CD Baby was founded in 1997 by Derek Sivers, a musician then living in Woodstock, N.Y., to sell his own recordings online. Friends asked to piggyback on his site, and the company, originally operated from his bedroom, grew rapidly; Mr. Sivers sold CD Baby for $22 million in 2008 to the CD and DVD manufacturer Disc Makers and is no longer involved in the company’s operations.
Though increasingly focused on the web, CD Baby remains heavily involved in the distribution of physical recordings, both to record stores and directly to consumers. A warehouse with row upon row of shelves, housing more than 1.5 million CDs in every genre imaginable, adjoins its corporate offices here, and the company has also stepped up its distribution of vinyl records as that format regains popularity.
Several other recent trends seem likely to improve CD Baby’s position, among them “termination rights,” a provision of copyright law which lets artists to regain ownership of their recordings. Once that happens, some musicans can then cut ties to their original record label and make their recordings available through CD Baby — as the hardcore vocalist, poet and former Black Flag frontman Henry Rollins has recently done.
But the most promising growth area looks to be music made by CD Baby’s artists that is used on YoutTube and in apps. The company has a program to collect a share of the licensing fees or ad revenues generated by those activities, which is enjoying “exponential growth,” said Kevin Breuner, CD Baby’s director of marketing, even as revenue streams from downloads stall.
“Over the last 8 to 10 months, you’ve seen the landscape really change,” Mr. Breuner, also a musician, said. “We’re down about 10 percent in iTunes, it’s true. But streaming is growing at a triple-digit rate and YouTube monetization is growing even faster, and that offsets the decline in downloads.”
Independent musicians, of course, may be less concerned about the sources of their income than the amount. But CD Baby’s ability to tap into the increasing diversity of the revenue streams flowing to its artists seems to have become one more argument against an affiliation with a traditional record company.
“I never set out saying ‘I don’t want to sign to a label,’ ” Ms. Michaelson said. “But why change from something that’s working?”