CD Duplicator Buys CD Baby; Recognizing A Digital Future

from the changing-times,-changing-business-models dept

Thu, Aug 7th 2008 7:08pm — Mike Masnick

Lots of folks who follow the music space are aware of CD Baby, who has helped independent artists sell their music for years. It basically was a one stop shop for many independent artists, getting their music available in a variety of different places, for either download or physical CD sale. Earlier this week, the company was bought out by Disc Makers, the aptly named company that manufactures CDs and DVDs for independent musicians and filmmakers. The two companies had worked together as partners for many years. Still, what strikes me as most interesting about this is that Disc Makers clearly is recognizing that relying on the physical disc reproducing business to keep growing is a likely to be a losing bet. So, it appears to have come up with a decent plan for positioning itself for the changing market. If only other businesses were willing to do that.

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Filed Under: cds, digital music, independent music, mergers
Companies: cd baby, disc makers

12 Comments

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Paul, 7 Aug 2008 @ 8:05pm

I need a compelling reason to buy digital
The last time I bought CDs from CD Baby it was a no brainer to choose the physical CD over a digital mp3 download. The physical CD represents both a back-up copy and an orginal source that future proofs me from having to buy some new format in the future.

Allofmp3.com had it right. Charge a lot less for the digital copy and I won't mind buying it again at some future date.
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Sukey, 7 Aug 2008 @ 9:01pm

Re: I need a compelling reason to buy digital
RIP allofmp3.com. I was a huge consumer of their product (downloadable music at a bargain basement price.)
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Anonymous Coward, 7 Aug 2008 @ 9:05pm

Idiots
allofmp3 accomplished its price by not paying any royalties. It charged so little because it was all profit.
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Anonymous Coward, 7 Aug 2008 @ 10:28pm

Re: Idiots
Those who throw rocks....

Allofmp3.com TRIED to pay royalties for the music, they even setup an escrow account that accumulated money equivalent to the royalties. Unfortunately the music oligopoly did not agree with their business model, and pressured governments to get them shutdown.

So much for free trade.
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bobbknight, 7 Aug 2008 @ 11:05pm

Re: Idiots
As I recall allofmp3 made or attempted to make payments to the Russian royalties board or what ever it is called. These payments were by order of the US companies refused.
The were legal until the USA got them put out of business.
But now a totally new company has taken it's place and if you had an allofmp3 account with due credits they are still good.
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Joseph Weisenthal, 8 Aug 2008 @ 12:05am

I don't get the connection between the disc maker's business model and CD Baby's. The fact that the former acquired the latter doesn't suggest that they solved their business model problem -- they just bought into a different one.

A big problem for aging, declining companies is an unwillingness to see the writing on the wall. Take EarthLink. In an effort to "solve" the problem of the declining dialup biz, they squandered all kindsa cash on MVNOs and Muni-wifi. Instead, they should've just stopped reinvesting their profits (which remains sizable) and collected their cash until the last keg was tapped.
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Roy, 8 Aug 2008 @ 1:51am

Re: (Joseph Weisenthal)
Except independent musicians aren't going anywhere. If CD Baby is a popular source for indie music, then they aren't pulling an Earthlink.
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Mike (profile), 8 Aug 2008 @ 1:56am

Re:
I don't get the connection between the disc maker's business model and CD Baby's. The fact that the former acquired the latter doesn't suggest that they solved their business model problem -- they just bought into a different one.

I'm not so sure. I mean, it depends on what they do with it, but on the surface, it appears they may have recognized what the "true benefit" is that they offer their customers: helping independent musicians package and distribute their music -- and to make money doing so.

CD Baby helps them do that as well.

A big problem for aging, declining companies is an unwillingness to see the writing on the wall. Take EarthLink. In an effort to "solve" the problem of the declining dialup biz, they squandered all kindsa cash on MVNOs and Muni-wifi. Instead, they should've just stopped reinvesting their profits (which remains sizable) and collected their cash until the last keg was tapped.

Hmm. Well, I almost totally disagree with you there. :)

I think Earthlink did the right thing, but what killed it was bad management, and some bad choices. The idea that they should sit on their cash cow and not try to change with the changing market seems highly questionable to me. As a company they had assets and core competence that could be put to work in other arenas, and they tried to do that. That they failed was more a problem of execution (and some bad regulations) rather than a failed strategy.

The "writing on the wall" is that they needed to be in a different business, preferably one that leveraged some of what they'd done in the past. Telling them to just die in peace doesn't make sense.
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saru, 8 Aug 2008 @ 10:10am

RE: allofmp3 mafia
allofmp3 rips off artists by not paying royalties - I know this for a fact. they have copies of a CD-R promo of unreleased material I sent to fans for download/sale. They have never reported these sales of unauthorized materials, and all attempts to correspond have been met with silence. If you feel like supporting the Russian mafia while musicians starve, go for it...
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mjt, 8 Aug 2008 @ 12:14pm

"while musicians starve" ...

That made me laugh. Anyone believe you when you say that?

Damm branded communities!
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TvV, 8 Aug 2008 @ 6:49pm

model
Here's the model: Disc Makers sells to independent artists and is the largest manufacturer of CDs to that market. CD Baby is the largest seller of independent artists' CDs AND the largest aggregator of independent digital content in the US, with over 2 million tracks under management.

This deal represents two kinds of diversification: downstream (now we manufacture AND sell) and product (now we're the major player in CDs AND downloads).

CDs will be around for a long time, and for both DM and CD Baby, CD sales are still growing. That said, someday that growth will cease. For that reason Disc Makers has been successful diversifying for several years into other product areas that independents need, like merch, promotional printing, downloads, and marketing services.

The mistake most people make is assuming that the name Disc Makers = dinosaur. We do a lot more than make discs. Maybe someday we'll change our name to Artist Makers?

Oh, and CD Baby comes with Host Baby, the largest web hosting service for independent musicians.

Nuff said?

Tony van Veen, prez, Disc Makers
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Dave, 13 Aug 2008 @ 7:47pm

Re: model
I think discmakers charges way to much so they need to diversify. They say they are the best, but many musicians I know have had problems then got a better product elsewhere and for much less. Places like nationwidedisc, (I would say oasis but that is just disc makers) diskfactory, cddvdnow, ultimateentertainment and even cdpostershop. I own a small label and work at a club and have seen cds from every stinking place out there it seems. I think discmakers is better off spreading their wings and growing their interests in other markets and products while they can. with all the hungry compitition out there, they are losing market share. People are getting smart and wanting to spend less. Why should Discmakers stoop to that level when they can become the "operating system" for the independant musicians. They they can get all the CD companies out there to help them make money by partnering with them, rather than competing with them.

I know die hard discmaker fans, they will not switch cause they got burned elsewhere and lucky with discmakers. So with that said they can keep that going until the last keg so to speak. Then afterward they can be the fabric of the industry rather than just makers of discs (yoda speak).
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