Biz Briefs: A Market of One

Chances are that a guitarist specializing in Chinese flamenco hip-hop isn’t going to sell a lot of records. Companies such as CDBaby.com CafePress.com and Lulu.com are changing that by making small-time sales profitable. Their business model: take thousands of titles and sell a few hundred of each, adding up to lots of little sales. The strategy has certainly worked for CD Baby, a private company in Portland, Ore., which sells music by more than 100,000 independent artists, with each new one paying a $35 sign-up fee. The site also gets a commission on sales. So far, none of them have sold more than 8,000 albums. CD Baby, which handles billing and distribution and spends nothing on marketing, is already in the black, with revenues up 85% from 2003 to 2004, according to founder Derek Sivers. “The record labels have been whining that the whole industry is declining,” he says. “We’re like, ‘Oh, yeah? We’re doing well here.'” Similarly, San Francisco–based CafePress operates in the black and has doubled its revenues every year since its inception in 1999, and Lulu, based in Raleigh, N.C., expects to be cash flow positive by January 2006. Both privately held companies allow users to select the design and format for their music, print-on-demand books or other merchandise, which the sites then sell on commission. All great news for Chinese flamenco hip-hop guitarists everywhere. –By Carolina A. Miranda