SONG CONTEST BLOG

1. Follow Terry McBride
CEO and Co-Founder of Nettwerk Music Group
Terry McBride is a two-time recipient of the Pollstar Industry Award for Personal Manager of the Year for his work with Sarah McLachlan (1997) and Avril Lavigne/Coldplay (2002), and recipient of the Walt Grealis Special Achievement Award at the 2003 Juno Awards, recognizing an outstanding individual who has contributed to the growth and advancement of the Canadian music industry.

2. Follow Derek Sivers
Founder and former President of CD Baby
Winner of the 2003 World Technology Award, Derek Sivers founded CD Baby “by accident” in 1998 and turned it into the largest seller of independent music on the web, which he sold a decade later to Disc Makers.

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On demand music streaming service, Spotify, has been on my radar since the company announced a distribution deal with CD Baby in the first week of February.  CD Baby, the leading force in independent music retail and digital music distribution, represents more than 175,000 artists which account for over one million tracks, all of which are now available through Spotify’s lightweight music streaming application.  This licensing deal marks the ‘long-tail’ trend in music availability and consumption, and celebrates the access independent artists have today to mass audiences through pioneering music services, many of which had treated indie talent as nothing more than an afterthought after securing major label catalogues.  Under the aphorism of “access not ownership”, the Luxemburg-based company has been growing exponentially since its €15.3m venture capital injection in October 2008 and, in turn, joining an elite group of legal music experience providers such as Pandora, Last.fm, TheSixtyOne, and others, which have found success in catering to music consumers through a balanced and worldly music library whilst reserving significant real-estate for up and coming artists: a pop-culture and grassroots music mix that appears to be paving the way for a new industry.  A spot in Spotify’s limelight is not yet available directly for small acts and labels but CD Baby has certainly lowered the barrier of entry.  Thank you Derek or, rather, Disc Makers for making this possible…

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Digital music distribution is a hot item on this blog and those who read it know that I keep a close eye on the three major players catering to small independents, namely ReverbNation, TuneCore, and CD Baby.  All three have lowered the barrier of entry for indie artists and small labels to distribute their catalogues to iTunes and other major online retailers for upfront fees as opposed to hefty commissions by the likes of The Orchard, INgrooves, IODA, IRIS, and others, who generally avoid small players anyway.  Now, a new digital music distribution dotcom has emerged but with an ad-supported business model.  WaTunes aims to thrive on ad revenue by providing artists and labels with a free (no frontend fees, no backend commissions) distribution channel to online retailers such as iTunes, Napster, and eMusic.

The slightly questionable website service description and makeshift appearance promises to provide the same level of content marketing and distribution as its rivals, and much more.  In theory, WaTunes is offering a very attractive service to a huge potential market, but is it sustainable?  SpiralFrog, We7 and Qtrax have yet to prove that their ad-supported download services have legs.  In this economy, I’m not sure that any upstart can scale on advertising revenue alone.

Business models aside, I’m somewhat concerned about WaTunes’ cryptic service description and the fact that their web pages are riddled with spelling mistakes and poor marketing copy.  It’s a bit like walking into a fancy restaurant only to notice that the toilets are overflowing with shit halfway through your dinner.  Going with my gut here (no pun intended), I feel that the musician-led platform may be biting off more than they can chew… but I would love to be proven otherwise.  I like free.  Who doesn’t?

Discmakers, the CD replication giant that recently acquired CD Baby, announced the launch of a new promotion yesterday for independent artists.  The company’s CD and packaging artwork division, The Design Studio, is providing customers that place design orders by the 10th April 2009 with a chance to appear front and center on their print brochure.  During the eight week campaign, a panel of professional graphic designers will select 10 CD album artowkr designs from that week’s “pool of design approvals”.  On the 20th April 2009, one Grand Prize Winner will be selected for placement on the brochure’s front cover, along with five other selections to appear inside the fall edition.  Details…

Successful digital music distribution is, first and foremost, gauged by how cheaply and swiftly you can get your music on iTunes and whether your distributor can offer any marketing support, usually reserved for major label clients or independent megastars.  Although the current leaders, namely The Orchard, IRIS and IODA, now cater to the long-tail musician community, independent artists (a huge market) are being catered to by new, easy-to-digest digital music distribution models that appear to surpass the existing competition.  CD Baby, for instance, the most renowned online CD retailer of independent artists, has leveraged its resources for its target demographic and, resultantly, enjoying exponential growth in the digital music distribution sector.  With no start-up costs and just a 9% commission, the indie retailer is an excellent choice for up and coming artists.  A relatively new entry in the space, TuneCore, is making a splash with an equally unbeatable offer: $0.99 per track, $0.99 per store per album, and $19.98 per album per year storage or, $9.99 flat per song, all-inclusive.  No commission.

Due to sinking CD sales, digital music distribution has become the primary means of placing new music in front of consumers in a variety of online mediums.  As the retail options for independent artists increase, so does the value proposition from the digital music distribution service providers.

Surprisingly, the world’s most renowned indie artist retailer is experiencing growth in CD sales, of all sectors.  CD Baby, founded by Derek Sivers and recently acquired by Discmakers for $22 million, has reported significant uplifts in recent physical sales and titles: 2% increase in CD sales, and 7% increase in new album titles since 2007.  That’s good news but, more significantly, the company boasts a 45% increase in digital music distribution revenues during the same period which is a better reflection of where the music industry is at.  Overall, CD Baby has paid out $34 million to its artist members in 2008, a 28% increase from 2007.  Although these figures reflect the company’s revenue growth as opposed to the mean earnings of its members, considering the current financial climate, it’s promising data for the indie artists community too.

CDbaby has been selling CDs online for the last ten years on behaf of approximately 250,000 independent artists, accounting for 4.5 million CDs and $83 million in sales revenues distributed to its clients.

Derek Sivers, CDbaby’s founder, interviewed on Venture Voice