CDBaby vs. Paypal

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Ok, perhaps this posting will only be relevant if you have a CD…

If you’re like most independent artists, you’re either working with Discmakers or Oasis to mass produce your CD and line up digital distribution via iTunes, Napster, PayPlay…etc.  Discmakers tends to be the most popular and the avenue I’m most familiar with. Dismakers is great but not wonderful.  Why?

Don’t Use CDBaby if you don’t have to!
When Discmakers sets up your distribution, they also setup a CDbaby.com site for you.  It will look something like www.cdbaby.com/YOURNAME. For every CD your sell, CD Baby takes a $4 cut.  Ouch!   Can you imagine how much CD Baby is making off of indie artists each year!?  It’s ridiculous!  What’s the alternative?  Use Paypal.com.  No doubt about it, Paypal is the most innovative tool for small businesses, entreprenuers, and individuals looking to make $ off of what they do.  Its a free service.  No charge to set up!  But Paypal takes a minimal cut from the money your make (63 cent from every CD I sell).  Compared to $4, that’s nothing!  Visit Paypal to learn more.

People Like Sales
Once you setup your paypal account, have a sale! People love sales and are prone to buy more when you have one.  It’s just the way it works.  From experience (and also common sense), there is 5x more interest in my CDs when I’m having a sale.  So it’s Christmas!  What can you do? Here are a couple suggestions…

  • Tell people they can get 25% off your CD if they buy it through your website
  • Tell people the CD is buy one get one free
  • Tell people they get FREE shipping!

Paypal will allow you to set prices, shipping rates, tax, basically anything you wanna do. It’s really just great! And they will handle all the $, exchange rates, credit cards…etc

The Only Negative of PayPal
Depending on who you are, this may not be a negative atall:  If you use paypal, you must ship out your own product.  (CDBaby takes care of shipping for you)

 Leave your own Holiday Money-making comments!  And remember…

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  • http://www.myspace.com/teedrockwell Teed Rockwell

    CD Baby is worth the money. Don’t forget that if you do your own shipping, you have to pay for postage, packaging, take time to go the store to buy the packaging materials, and do the labor of packaging, labeling, and dropping packages off at the post office. CDbaby also prepares your inventory, which makes it easier at tax time. I hired somebody to do this before the internet existed, and it cost me a lot more than four dollars a CD. in fact, I had to quit using that person because it was too expensive. CDbaby does it cheaper because they have it automated. They also are heavily linked in. I got the best paying gig in my life from somebody who saw my CDbaby page.

  • http://www.joyike.com grassrootsy

    Good comment Teed. You make a good argument. I suppose it depends on how much time you have on your hands. I am working as a full time musician so I devote all day during the week to administrative things like these. This is how I think about it.
    Lets say you’re selling your CD for $10.

    CD Baby sells it to the consumer for $10 and still adds shipping charges on top of that. (Roughly $3). So CD Baby is still making a full $4 of your shipment and you’ll only making 6,

    Now from personal experience It only costs $1.50 to ship a CD via the United States Postal Servie. An envelope is roughly 50cents…maybe even less. (I buy a box of 100 for $15) . So after factoring shipping costs, I still make roughly $8 off my CD…as opposed to CD Baby’s $6.

    I still think everyone should have CDs on CD Baby though…simply b/c not all consumers trust paypal.

  • http://www.myspace.com/kleerstreementertainment KleerStreem Entertainment

    I totally disagree with you about CD Baby, especially for Indie Artist that want more exposure. The global exposure you get on CD Baby is well worth the $4 / CD they take for selling your CD. New artist need all the exposure they can get & CD Baby is but one way to gain more exposure. New artist are always told to go play for nothing to gain exposure, so, why are we worried about CD Baby taking $4 for each CD they sell?

    We recommend artist sell CD’s any place they can….if you are selling on 5 sites you are generating revenue & revenue is one of the main driving forces that keeps a artist / band playing & touring. As long as you get $2.50 – $3.00 / CD you are still making money & in the music business every dollar earned is a plus in our book. One of the worst things you can do in the music business is to ‘limit’ yourself. I would never recommend one of our artist to turn down global exposure for $4 a CD. Don’t assume all the sales you gain from any site will be pick up on another site, because they will not.

    —End

  • http://www.tallmanwithguitar.com George C

    The best route to go, in my opinion, is to do both, but direct ALL buyers to your own site. Let CDBaby do their own marketing and earn the $4.

  • http://www.joyike.com grassrootsy

    agreed. yes i think its best to do both.

  • http://www.anon.com anon

    Paypal reccomended for small time sales, but once you get into the many hundreds or thousands.. its a pain in the a$$ to deal with shipping. I did it for about 6 months before I handed it over to CD Baby completely.

    If you decide to do it yourself, the cheapest way is:

    1) Buy a box of 100 CD Mailers on ebay. Its dirt cheap.

    2) Go to the post office and pre-purchase $1.86 postage stamps (might be different now). This will cover the majority of your single CD purchases. Also by the way, use USPS flat-rate boxes to ship 44 CDs at a time to your distributor or CDBaby for like $9.

    3) Monitor your paypal site for incoming orders and package them up yourself. For single CD orders, you can just drop in the mailbox since you have pre-paid postage.

    4) When folks order more than one CD…you need to go to the post office and get exact postage (or figure out postage requirements and prepay for double or triple orders).. This is a pain in the a$$ to keep up with for many orders someing in each week.

    Anyway – it’s fun at first to ship out your CDs, but you will quickly get tired of it, especially with a day job. CDBaby is well worth it (they also handle international shipping and returns…and they do iTunes) I have made tens of thousands through CD Baby and its no-hassle program.

  • Markovic

    I also think $4 per CD is more than worth not having to deal with fufillment AT THIS STAGE. Were it not for CD Baby, I could not afford to sell CDs overseas!
    However, my experience with corporate conduct does not leave me optimistic about CDBaby’s future. Within a matter of months, the things we came to rely on CD Baby for, such as affordability, value, responsiveness to customers….it’s all going to disappear!

  • http://www.didipop.com Hannah

    Hi -

    good info – any tips on how to set up paypal as far as tax and shipping goes? I am in California – and I don’t know the best way to handle it – esp if people buy more than one cd. I was thinking of setting up a cart… but do I charge less for cds and more for shipping – or…..??????Thanks

  • http://www.joyike.com grassrootsy

    Hey Hannah. I didn’t personally know the answer to this question but found some information line that might help you: http://flyingcart.com/blog/tag/tax/

    Make sure to scroll all the way down the page for info on how to use Paypal’s Tax Settings.

    -grassrootsy

  • http://www.joyike.com grassrootsy

    Hey Hannah. I didn’t personally know the answer to this question but found some information line that might help you: http://flyingcart.com/blog/tag/tax/

    Make sure to scroll all the way down the page for info on how to use Paypal’s Tax Settings.

    -grassrootsy

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  • http://www.lauraharrisonmusic.com Laura

    Hi grassrootsy,
    Thank you for this really great discussion. I was hoping you may know the answer to this. My only motivation, at the moment, for selling my CD through cdbaby is because of Soundscan. I want the sales reported to soundscan. Is there any way that paypal can do that? I went to Nielsen website and they said that the dealer needs to have a Point of Sales (POS) inventory system…does Paypal do that? I went to paypal and can’t find it on their site.
    Thanks so much for your time.

  • http://msimpress.wordpress.com msimpress

    grassroots! i have a quick question if you use your own personal paypal account will neilsen soundscan be able to track your sales if you already have a barcode for your work??