Online Retailers

At the bottom of a page is a selected list of online retailers. Jump to there if you don't want to bother with the explanation and analysis below.

Online Retailers- Explanation and Analysis.

Once you either had to have a distributor or deliver CDs to stores yourself and keep track of their stock, etc. If you didn't have a distributor you had to persuade stores to carry your CD and actually put them on the shelves, as opposed to putting them in a back room and forgetting about them. Now there are two further options. You can sell your CDs from your own website or supply them to an online retailer to do the work for you.

Selling CDs from your website involves setting yourself up for e-commerce, which can be a hassle. The book "How To Promote Your Music Successfully On The Internet" (see under Major Players) goes pretty thoroughly through the options and mechanics of this, as well as breaking down the numbers so you can calculate when a certain option becomes cost effective. In addition, you have to handle CD delivery yourself, mostly by mailorder.

Online retailers, however, will handle all these elements themselves. The way it works is this: there is usually a setup fee (though not always), which in theory covers their initial costs in listing you. High setup fees can be considered a ripoff. For the setup fee you should get a webpage and listing on their online store, with at least a picture of the CD cover, and possibly music samples for buyers. Then you just have to send them CDs, they sell them for you (hopefully), send them to the buyers and handle the money.

Let's look at the Big One, CDBaby, as an example. You pay a one-off setup fee of US$35. Then you send them around five CDs. They don't want more CDs than that to start with because their business model is based around artists who usually sell only small numbers of CDs. They use one CD to scan artwork and make music samples. From this they create a page that has your CD artwork, CD description, 2 minute mp3 samples of the tracks you specify (ie. not complete tracks), and provision for buyers and sellers to add reviews. See here for an example. You specify a price for the CD to sell at, and CD Baby take a flat US$4 cut from each CD. They pay you at a frequency you choose, up to once a week. You're not going to get into cash flow problems with this deal. CDBaby can also handle digital distribution for you, putting you on iTunes and other legal download services. They charge no admisistrative fee for this, and take just a 9% cut. Note, however, that their digital distribution agreement has drawn some flak, despite it containing a 30 day opt-out anytime clause.

There are now probably hundreds of online retailers like this. They service a potential international clientele by mail-order. Their business model is fairly obvious. They cover their upfront costs, and then all they have to do is warehouse CDs and wait for orders. They don't have recording costs, they don't have stock costs apart from storage, they don't have promotional costs. The thousands of musicians around the world who sell CDs like this have already covered all those costs. So the online retailers can afford to stock everyone- and they mostly do. Most of them don't screen CDs, they'll take all comers. (This is not always true.) They can make money off extremely low volumes from a very large catalog. CDBaby is the biggest of these retailers, and so far it has paid musicians more than US$10 million.

So what's in it for you? The online retailers take all the order fulfilment work off your hands, and can give you a trusted presence in local and overseas markets (particularly the US). They won't do much in the way of promotion, but do give you more web presence. And you can be discovered by browsers on the store and start building an international fan base...potentially.

The costs need to be considered, though. First there is the setup costs. Then your other main cost is mailing CDs, and this isn't trivial. Small amounts are most expensive to send. To make a profit, you need to factor these costs in as well as your CD manufacturing costs. How you choose to account for setup and promotional costs obviously depends how many CDs you are looking at selling. You have to juggle fixed "per unit sold" costs with your more general costs.

Choosing An Online Retailer.

The bit above about costs, particularly mailing costs, is obviously a factor here. More importantly, there is the question of what you want to achieve. If you only want to sell CDs locally, a local online retailer is still a good option to check out. If you sell CDs off your website, you'll get to keep more money per sale. You'll have the hassle of order fulfilment and collecting money, though. You also have to consider that buyer mistrust of unknown websites may cost you sales. A buyer at your website is trusting you with their credit card details ( potentially ) and trusting you to fulfill orders. I guess the success of E-Bay says that this isn't necessarily a big issue. I guess you could even sell your CDs directly on E-Bay. However, having a trusted vendor like CDBaby handling your CDs could make all the difference. And, if you want to sell internationally, online vendors are the easy option.

The general advice on the Advice page applies here too. Check out vendors thoroughly, GOOGLE them to check their reputation and any breaking scandal about non-payment, etc. High upfront costs are to be avoided, they suggest the business model is to scam money off musicians rather than actually bother selling CDs. Check out a number of vendors first to get the feel of things.

All that said, if you want to go international, CDBaby has got to be your first priority. They have the reputation and the buyer awareness, and probably the biggest buyer clientele.

The Retailers.

Amazon are the biggest seller of Independent CDs on the Internet. However, setting yourselves up with them is complex. For a good discussion of this see David Nevue's book How To Promote Your Music Sucessfully On The Internet . (See under Major Players.)

CDBaby
This is the big one. US based online indie retailer CDBaby should be your first priority for a US presence. Derek Sivers, the founder, has the status of a near saint in certain quarters. That's probably somewhat over the top...However, it can be said that CDBaby have a hugely positive reputation in the US and no reason to blow it.