Despite Declining CD Sales, CD Baby Experiences Growth in 2008

This post originally appeared on Techdirt

While CD sales dropped 14% overall in 2008, CD Baby — a popular online music store that lets independent artists sell music directly to fans — actually saw an increase of 2%. In addition to selling physical discs, CD Baby offers optional digital distribution through iTunes, Amazon MP3, Napster, Rhapsody, eMusic, etc. and directly through their website. Still, almost 30% of albums last year were only offered as physical discs (though, some of these artists probably use other companies for digital distribution). While growth in digital sales was predictably larger (45%), even a small increase in CD sales in the face of the broader crisis is a sign that CD Baby is doing something right.

There are a few reasons why CD Baby could be having better luck with CDs than the rest of the industry. First, a lot of independent artists are discovered through live performances, and the CD has yet to be replaced as the standard format to sell music at shows. The credit card swipers that CD Baby offers artists accounted for $2.4 million worth of revenue last year (though, that includes sales of other merchandise too). Second, CD Baby seems to be taking advantage of the long tail, with minimal setup fees, minimal starting requirements (artists only need to mail in 5 CDs to start selling) and short-run duplication services, though they haven’t released enough data to confirm how distributed their sales have been. Lastly, great customer service and a sense of humour can’t hurt (e.g. an order confirmation email starts, “your CD has been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow…”). Although it doesn’t make any sense to base an entire business model on selling CDs, there’s still money to be made for artists and companies using CDs as part of their model.

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