krisis

Earlier tonight Twitter was abuzz with news that CDBaby would be increasing their take on digital downloads from 9% to 25% to coincide with the relaunch of their digital shopfront.

I quickly called foul. That’s a fourth of your profit just for distribution via a paid download, and an increase of over 275% from the old model. CDBaby didn’t help to develop your talent. They aren’t doing anything specific to promote or expose you. We’re talking about charging 25% of your gross profit to host files and process transactions.

CDBaby noticed my cry, and tweeted in to placate my concern:

It was the only way we could offer single song downloads which is what artist said they wanted more than anything else. … we were actually losing quite q bit of money on 9% (losing, not breaking even). You’ll still make far more than any other store

Also, a good friend chimed in:

it’s sad that cdbaby increased their cut of digital sales, but they’re the highest payout & let u set ur own prices = lesser evil

Losing less money in a bank robbery is still a bank robbery. So, why are we settling for evil?

As a musical artist there are only three reasons to let someone who isn’t contributing to the content or quality of your music profit from you – exposure, ease, and expertise. Exposure means finding an increasingly wider audience. Ease is making things simpler and more affordable from a time/resource standpoint than if you did it yourself. Expertise is finding people who have talents and technology you don’t have on your own.

At a 9% take CDBaby lowered the cost of entry into digital downloads (iTunes takes much more). Since indie artists were using their expertise to sell records, it made their ease a big win over the enhanced exposure artists might get elsewhere being digitally stocked alongside with major label stars. CDBaby was taking a loss on album sales and hearing demand for selling single tracks, but the best answer isn’t wielding an outdated model in a field where they were hopelessly outmatched by competitors operating at a much larger economy of scale.

At 25% CDBaby is losing its edge on ease – even while implementing an artist-friendly uploader to take the physical middle-man out of their digital distribution. It all stems from flogging an expired business model – trying to find a way to profit on $.99 micro-transactions. If they’re making a profit on downloads, it’s a bare one – it’s mostly going to their credit card processing companies. And, their exposure level is still in the indie-leagues. They’re down to trading on expertise.

Having said all of that, the moral of this story isn’t the evil of CDBaby. I believe they’re trying to do something good for their artists that will also keep them afloat. I don’t envision or recommend a mass exodus from CDBaby.

Instead, I think it’s just one more sign that indie artists need to find a new way to turn a profit. I can give you a hint – it’s not by shilling their entire catalog for a $.75 on the dollar. How long will it take to recoup the five or ten thousand they spent on recording in $.75 increments, not to mention paying off producers, managers, and supporting musicians? Even longer than it did when they were selling CDs out of the trunk of their car, that’s for sure.

What’s the solution? I’ll share my ideas in future columns, but right now I want to know your thoughts. How can an indie, local musician turn a respectable profit with their online presence?