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CD Baby CEO Tracy Maddux Knows What it Means to Do It Yourself

When Tracy Maddux—a passionate fan of live music—joined CD Baby, he decided he needed to see a show by each of the new employees he worked with. Nearly everyone at CD Baby plays music. It meant ...

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Tyler Volkmar
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CD Baby Reaches $1 Mil. Sync Licensing Payout

CD Baby Sync Licensing Hits $1 Million Mark Paid Out to Independent Artists:

Latest Quarterly Pay Out Shows Continued Growth in YouTube Monetization for DIY Musicians

CD Baby, arguably the world’s largest distributor of independent music, working with over 300,000 acts, has announced that on February 17, 2014 it’s paying out a record $400,000 in royalties to artists involved in the CD Baby Sync Licensing program for the fourth quarter of 2013. That’s a 70 percent increase over the previous quarter and 150 per cent more than the same period in 2012. It sends the total that CD Baby has paid in Sync royalties rocketing beyond $1 million dollars.

“This is just the beginning,” says Kevin Breuner, CD Baby’s director of marketing. “It’s gone far beyond ‘found money’; this is legitimate income. When YouTube begins it streaming service it’s just going to grow exponentially. We did a test, seeding out YouTube channels with a subset of album artwork videos. Within a few days we had over 50,000 views and hundreds of channel subscriptions. That’s huge. We haven’t even begun to tap the possibilities yet.”

Although trade press headlines have focused on moves by Spotify, Pandora, and iTunes Radio, it’s YouTube that’s become the music streaming destination of choice for young teens. It’s already bigger than Sirius XM, Spotify, and Pandora combined and unlike most of the other services, YouTube is already profitable. Soon they will be launching their music streaming subscription service.

CD Baby’s Sync Licensing service connects their enormous catalog of music with millions of online video creators. Artists that opt into the Licensing program are paid through ad revenue shares or licensing fees; it’s a way to connect them with sync opportunities from all those users of YouTube and several other video applications who add music to their videos. Over 15 million videos have been created using music from CD Baby so far.

It’s a perfect medium for artists to engage with their fans, who are encouraged to create videos using music. Some acts hold contests that give fans the chance to create an official music video for a song, and there’s a large fan remix culture on YouTube.

“There is so much consumer usage of music that has yet to be monetized,” Breuner says. “Even though it feels like there are hundreds of apps and YouTube is old news, it still pointing to the fact that there’s so much content being created and there is money for artists to make by monetizing it. This is just the beginning of consumer-generated content being monetized. We are on the forefront of this. The categories in last year’s YouTube Music Awards pointed to trends involving fans. It had nothing to do with sales or chart position but how well the music performed on a social platform. There was even an award for the Most Fan Remixed song. That’s all heading toward a different type of music system.”

The days of restricting content usage are history. Now artists are actively encouraging user-generated content, to have their fans creating and uploading videos using their music. The record payout is just the beginning for independent artists.

“In the past, artists waited until fans made a purchase,” Breuner observes. “Now there is value in what your fans do with your music in the social space. Artists are getting paid for things that are no longer about making and releasing an album. It’s the things people are doing online with your music that is generating revenue. There is now monetary value with how fans interact with your music. No matter how an artist's music ends up on YouTube, we're able to monetize it for them. Google is the number one search engine. YouTube is number two. And they are both owned by Google. Once the rumored YouTube subscription service starts, the game will change and payouts will go through the roof.”