This has strayed off-topic a bit. Unless you're into music and/or business
planning for e-commerce, you probably should hit delete now...
> > How about this one, doing *EXTREMELY* well selling CDs online:
> >
> > http://CDBaby.com/
> >
> > Of course, that has almost nothing to do with his choice of PHP (the
> > language he could understand the easiest) and everything to do with
> > intelligent business decisions on the back-side.
> >
> > No VC.
> > No "we'll make money later".
> > Just great service at a fair price.
> >
> > I'm sure there are others out there.
> >
> > *CAN* it be done? Sure.
> >
> > Can the idiots who invested millions in companies with a business plan
that
> > involved *NO* revenue model make it? No.
>
> What is "doing extremely well"? Do you know that from facts or you have
> just been told?
Number 1 volume seller of CDs on the 'net? Amazon.com
Number 2: CDBaby.com
Reference:
http://musicians.about.com/library/sellcds/blcdbaby.htm
(Follow "Back to Retailers Index" to read about his few competitors that are
still around)
And is Amazon even making money yet? Last I heard, they were going to lose
"only" a few million this year. :-^
I would say that being #2 behind Amazon that's spent a bazillion dollars
promoting themselves and has lost money year after year that amounts to more
than the GNP of small countries is pretty good, wouldn't you?
And he doesn't even accept major label music -- only indie. So, like, how
does he get to be #2? He works his ass off and has a savvy business plan
that's good for his vendors (the musicians), and fair to his customers.
Just in case that's not enough, here are some more reasons that I know it's
successful.
#1. He has grown the company slowly from him and a friend part-time to six
(6) full-time employees. Wanna see a picture of them? It's on the site or
the companion site http://cdbaby.ORG (.ORG is for musicians
behind-the-scenes info)
Meanwhile, his competitors (now defunct) spent VC money to hire 120 people
to do the same job... Hmmm. VC to hire 120 people overnight, or grow
slowly to 6. Which one was the good business plan?
#2. He's been around for several years, survived all the dot-bombs, and has
(I think) acquired the content/inventory of a former competitor or two and
cut a deal to sell CDs for a complementery web-site (http://garageband.com).
#3. His competitors have almost all folded or laid off 80% of their staff.
He's had no layoffs.
#4. He sells ~10,000 CDs per month (more near Xmas). He gets $4 a CD. You
do the math.
#5. I've done some work for him.
#6. Never met a dissatisfied vendor, and I'm in contact with hundreds of
them.
#6b. Most of his competitors have many, many dissatisfied vendors, and I'm
in contact with them. :-| You can review archives from just about any
music-related mailing list, and look for "CDBaby", "Amazon", "The Orchard",
and "CDStreet" and so on. I'll tell you now which one is always recommended
by virtually everybody.
#7. He has a chart online from his accountant of what he sold. Some doofus
tried to sue him for "false advertising". He sent his books to the judge,
and the case was thrown out. So that chart showing his sales of 10K units a
month is almost-for-sure not fake, eh?...
#8. I'm a satisfied vendor and customer.
#9. He's routinely invited to speak at music conferences, so I'm not alone
in my assessment.
#10. You can estimate what he spends on bandwidth etc, and employees, and
work it all out. He ain't wealthy (yet), but his business is healthy.
#11. Visit the site. You'll figure out why he's successful. There's no BS
or huge over-blown hype. Just CDs for sale. Hell, find a CD you like and
buy it. You'll understand even better why it's successful :-) Try mine
first: http://cdbaby.com/rosner http://cdbaby.com/jademaze
#12. One of the artists (Of A Revolution) that was listed on the cover of
Performing Songwriter a few months ago derived much of their success and
sales from his site. Getting your band name listed on the cover of
Performing Songwriter is not trivial. Getting it there without major label
support is phenomenol.
#13. He *UNDERSTANDS* his vendors, because he got started by needing a site
to sell his CDs. He's the *ONLY* one who passes on the contact info for the
purchaser to the artist. His TCO to get started as a vendor is minimal
($35+ 5CDs). The $35 covers him scanning the artwork and RealAudio encoding
the songs, cuz he knows not every musician can do that easily/correctly.
His forms to fill in to sell a CD are designed for anybody to figure out.
I actually could go on with a lot more little stuff, but I reckon that's
more than enough :-)
> If they are really doing so well because they have a business plan with
> a revenue model, why do they succeed when others that also have a
> business plan with revenue model don't?
Which dot-bomb had a business plan, with a revenue model, which did *NOT*
involve going into heavy debt and blowing huge piles of VC money for several
years in a market-share grab on the Internet, where the barrier to change
brands is one (1) click, where the only "plan" for payoff was to go IPO
"some day"?... That's not a business plan. That's a recipe for disaster.
*MOST* of the dot-bombs never had a chance.
A business plan is a *REALISTIC* estimate of what you're gonna spend, what
you *CAN* do, and how much money the things you *CAN* do will make. Either
the income exceeds the expenses, or it's not a business plan any more.
> Would their model work outside the US?
It already *DOES* work outside the US! He'll sell indie music CDs for
anybody on the planet. For buyers, he'll accept anybody's money, and ship
CDs anywhere on the planet. Shipping charges are in his "Help" page. He'll
even open the CD up and only ship the CD and artwork (no plastic jewel box)
if you're outside the US.
Actually, there's no reason why another one couldn't be set up outside the
US to focus on a different music market, if somebody was willing to invest
the time initially to run it. Count on a lot of time opening boxes,
entering data, scanning artwork, encoding audio, and stuffing CDs into
mailer packs... But if somebody's actually ready to work, yeah, it could be
done. I'd keep the day job at first though.
It would have to be some place with an existing populace of music buyers
within reasonable shipping distance to get started, and, most critical, an
e-Commerce provider who will work with you as a non-US business to run the
CC transactions. That could easily be a fatal snag if you're not willing to
open a US checking account or do whatever needs to be done to set up
e-commerce in that country.
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