January 9, 2002 — CD Baby (cdbaby.com), an online retailer of independently released CDs, announced yesterday that they have paid over one million dollars to musicians for CDs sold.

CD Baby was started as a hobby in 1998 by musician Derek Sivers, looking for a better way to sell his own CD online. His musician friends also joined up, and told their friends. Soon, without any advertising, word-of-mouth quietly made CD Baby the largest independent-only CD store, with 10,000 artists selling over 100,000 CDs a year.

A unique setup, CD Baby only sells CDs for artists who have chosen to release their own records instead of signing with a record label. CD Baby gets the CDs directly from musicians, sells them online and pays the musician immediately after the sale. CD Baby currently pays about $20,000 per week directly to musicians.

In a typical record deal, musicians only make $1-$2 per CD, if they ever get paid by their label. When selling through CD Baby, musicians make $6-$12 per CD, and get paid weekly. "We're helping break the stereotype of independent musicians as unsigned or amateur musicians." Sivers says, "They're often just as good as the artists who have signed over their career to a corporate label, but they've decided to focus on making music instead of being a media star."

Refusing all investment and advertising dollars, CD Baby is that rare bird in both the Internet and music spaces -- a profitable company. Hidden in a colorful Portland Oregon warehouse, the entire operation is run by only seven people, all of them musicians.

"I made the CD Baby web site in my spare time. Anyone can do it. Sell some great CDs, take orders, ship them out, and pay the musicians first. Don't spend the profits. Be a cool person. Let word-of-mouth happen. Voila! No need for all that corporate fat."

The company is actively growing and expanding while staying true to their mission of selling CDs for independent musicians. CD Baby is providing CD distribution for such online sites as MP3.com, IUMA, and Garageband -- and is the preferred retailer for Oasis CD duplication and Discmakers.

Sivers says, "I'm not an accountant. I never look at the numbers. I just make sure the musicians are thrilled, the customers are thrilled, and the rest works itself out."