The Times They Are A-Changin

Hello everyone. It is a beautifully crisp autumn day here in Boston. Wherever you are, I hope you are warmer than I am right now! As I sit here sipping on some hot chocolate, I figured I’d drop you a line. I’m finally going to break the ice in this post with some thoughts about a topic that I have firsthand experience with. I’ve been an active musician for over 10 years, and have watched the music business change drastically in recent years. Record labels aren’t as enticing as they used to be, and musicians these days are finding online companies to be a much more attractive option. I am currently a singer/songwriter with 2 Cd’s on iTunes, and am pursuing this dream at a different speed. However, there is a lot of traffic on this freeway.

In my role at OpenView Venture Partners, I am involved with our research and outbound process. I’ve seen a large increase in the amount of online companies that provide services to assist the aspiring musician attain their dream. I obviously find this space very interesting, as I’m currently a customer of some of these companies. It is a space with a wide scope of services, and some very strong leverage to offer musicians, promoters, and record labels in the industry. Some key players in this market that I’ve come across are CD Baby, Nimbit, Sonicbids and Tunecore. All of these companies have landed venture capital funding except for one.

CD Baby has been around for over 10 years, and provides the exact services to musicians that I just mentioned. CD Baby works with over 240,000 artists worldwide, and that number is growing daily. Their approach and personalized business model has earned them a lot of respect over the years, and have been thought of as the pioneers of this idea. They were recently acquired in August 2008 by a company they were already working very closely with, Disc Makers. The founder of CD Baby, Derek Sivers, recently shared some thoughts on his blog about how he finally knew it was time to hand over the reins. Prior to the sale, Sivers explains that he was not at a point where he wanted to sell the company or accept any venture capital financing. In his blog he mentions, “No way! There’s so much more I want to do! This is my baby. There’s no way I could let go.” After some second thoughts and advice from a colleague of his, he reconsidered. In another blog post regarding the sale he says, “I chose Disc Makers as the new owner because their president Tony Van Veen has been one of my favorite people for years, and I always felt they’d do a better job of running CD Baby than I would.”

My thoughts on this are very simple. From reading his blog it was clear to me that he had a hobby that turned into an amazingly profitable business. It gained momentum, attracted attention, and eventually had buy-out offers. He ended up fulfilling his vision, which didn’t include any kind of venture capital investment in his business. Derek Sivers has a new project called MuckWork in development, which is also related to musician services.
If you have a vision, stand by it. If you believe growth capital would benefit your company, and it feels like the right choice, then go for it. It really comes down to the passion you’ve put into your business, and taking it where you want it to go. What will it take for you to raise the bar? Follow the path that you are drawn to and you will find the answer along the way.

Links to Derek Sivers blog
http://sivers.org/bye-bye-baby
sivers.org/done