Alumni Interview with Derek Sivers
What is your company?
My company is called, CD Baby. It is a little online record store that sells CDs by independent musicians. We only sell CDs that come directly from the musicians. No distributors. Musicians send us CDs. We warehouse them, sell them to you, and pay the musicians directly. I have been in business, and thriving, since March 1998. I have 13 employees and we're the 2nd-largest seller of independent CDs on the web, 2nd only to Amazon.
Why did you choose the business model of selling the recordings of independent musicians only?
It really wasn't a "business model" at all! It was a hobby. I was making a full-time living touring and doing sessions (I've actually been a full-time musician since 1992). In 1996 my own CD sold about 1500 copies at live shows, but it still wasn't enough to impress the big online stores at the time (CDnow, etc.). Since they wouldn't take independent artists, I thought, "Why don't I just make a little dream-come-true CD store for indies like me?" I thought it would take an hour a day, tops.
Like recording a song that's been in your head, when you have a vision, you just want it to exist. I envisioned the best CD store: Paying the musicians every week, showing the musicians every CD sold, taking every artist even if they sell 1 CD a year, and more.
So in 1997 I was just selling my own CD and I asked some fellow musicians if they'd like me to sell their CD too. But then friends told friends, and now my little hobby has sold over 100,000 CDs to people around the world. For the first year, CD Baby was just me. I'd put the day's orders in my backpack and ride my bike down to the post office. Started the company with $500, and it's been profitable ever since the 2nd month. We weren't touched by the dot-com boom or crash. Never took any investors and advertising. I'm such a cheapskate that things stay profitable here.
It's been more successful than I ever expected. Watch out when you start a "hobby"!
- 16,249 artists sell their CD at CD Baby.
- 177,124 CDs sold online to customers.
- $1,144,039.50 paid to artists.
What were your achievements prior to starting your own business?
Just after graduating from Berklee, I worked at Warner Brothers in NYC for 2 years. I learned a LOT about the inside of the music industry.
In 1992 I was the guitarist for Ryuichi Sakamoto on his world tour, with Victor Bailey and Darryl Jones on bass, and Manu Katche on drums. Since 1992 I've been a full-time musician, doing everything from big-money spots for Nike to low-money gigs with a circus. Saying "yes" to everything, and finding a way to do it.
What is your favorite part of the job?
Paying out that $20,000 - $30,000 every week to musicians. Knowing that Interscope records can't say the same.
What are some of the personal rewards that have come with your job or career?
I always thought I was going to be a famous musician. And now, in a weird back-door way, I am a famous ex-musician that has become famous for helping musicians? Something like that.
What do you think are the requisites for someone starting their own business?
Make sure it's something the world is asking for. Like you saw in the dot-com boom, you can't just launch another "petfoods.com" and think that the world will make you rich.
Think, "What do people need that they're not getting?" and see if you can fix that. Don't just open another recording studio in Boston. There are enough now. But maybe there's a twist on that idea that's not happening. A service that isn't being performed for one niche in the market. Be the only one doing that niche, and be the best at it.
Of course if "starting your own business," means, "being a freelance musician" then the answer is a little different: be VERY multi-talented.
- Practice your instrument(s). Know how to do many different things. Say "YES" to everything, including, "Can you play Leo Kottke acoustic finger-style guitar for this session?" or "We need a jazz pianist for an art opening, can you do it?" or "Can you sing on this jingle?" or "You're a bassist, right?" or "Can you write and make a recording of a techno piece for Nike by Thursday?"
If you can say, "yes" to everything, there are a LOT of little jobs out there that collectively can make a living.
- Get out there and be social and meet people all the time. Even just hanging at the local music store or whatever. Pick up the phone and make stuff happen. Pursue every opportunity. Answer every classified ad (I used to audition for bands that I didn't want to be in, just to see if they had any members I could steal for my own projects. It worked!).
- Open your mind, if you're stuck in that "musician = rock star" mentality. I was in a circus for 10 years singing The Pig Song and Don't Stick Your Finger Up Your Nose a few times a week from age 18 to 28. I was a singing clown doing birthday parties for 4 year olds, often driving 4-8 hours each way to get to the gig, but it got me $600-$1000 a week, lead to many other opportunities, and taught me a hell of a lot about how to keep people's attention on stage. If you can entertain a crowd of 4 year olds you can entertain anyone. And after 50 demoralizing shopping-mall gigs, singing your songs to the food court while the local teens throw food at you, you learn a little more humility, and stop expecting the world to treat you like a star.
What is the most challenging aspect of your job and/or career?
Answering emails. Having to work on things the world is expecting of me, (like answering emails, fixing problems, etc.) when what I really want to do is bash ahead and learn more new exciting things.
What are the skills that you are called upon to use daily in your work?
People skills. Read: How to Win Friends and Influence People
Marketing skills. Read: Guerrilla Marketing
Negotiation skills. Read: 48 Laws of Power
How did your education at Berklee train you for what you are doing today?
Berklee gave me that solid musical background with a wide base. My musical table has many legs and is very steady. So many musicians out there only know how to do one thing: play bass in a metal band, or sing like Joni Mitchell, or whatever their niche may be. If nobody wants that one thing they do, they're screwed.
You could say that all those tapes and books and resources in the Career Development Center got me started thinking about the business aspect of music. Which is just another leg to stand on. I guess I could be a techno keyboardist on tour, or the bassist in an afro-pop band, or a recording engineer right now, but the "run a business" part of my training is what caught on.
What are the current trends in online retail that will most likely shape your business' future?
No idea. I don't even think like that. The world is just whisking me along for the ride, like Forrest Gump. None of this is planned. I don't even think about the future.
Do you have any other success stories of actions that you have taken or decisions that you have made, which has resulted in the advancement of your career and/or business?
It always starts with someone you know. Here's one:
Talk to some guy at a studio, That guy needs a place to live, Becomes one of my roommates in NYC, He's an assistant engineer on a recording project for Ryuichi Sakamoto, overhears Ryuichi saying he hasn't picked a guitarist for his next tour, tells me about it, and sneaks me a DAT of the new album. I transcribe the whole thing, add my guitar playing, mix it back onto a DAT, and my roommate gives it to him, he loves it, and they fly me first-class to Japan, where I'm in a band with Manu Katche on drums, Victor Bailey on bass, and later Darryl Jones on bass, touring Japan and Europe, playing to 12,000 people a night.
Guy from BMI comes to talk to my class at Berklee College of Music, I overhear him say he's hungry, I sneak out and order 3 large pizzas, they arrive, cracks him up, he asks me to talk to him after class, and we keep in touch, I keep in touch every month for 2 years, When I graduate college, he tells me Warner Brothers was looking for a new tape room guy, and that he already told them all about me, and if I just call them right now I'm basically hired. I call them, I'm hired, I move to NYC, and work a great job at Warner Brothers including building them a recording studio and being staff producer/engineer for 3 years, which leads to many other things.
My sister's wedding, cute friend of hers says her back hurts, I give her a killer backrub, she tells me she works at an ad agency, I tell her I'm a musician. Next week she calls and says, "Nike needs a 2-minute techno piece with these specs for a European commercial. It only pays $10,000. We're sick of our usual guy. Can you do it?"
It all starts with someone you know. Know a lot of people. Keep in touch. Keep practicing, so you're prepared for any opportunity. Be great.