Derek Sivers
@sivers New Zealand286K followers
Musician who accidentally built CD Baby, sold it for $22M, and writes books on how to live
CD Baby, HostBaby, Wood Egg
exit story · 2008 · e-commerce
How Derek Sivers Sold CD Baby to Disc Makers (2008)
CD Baby was built by Derek Sivers and sold to Disc Makers in 2008 for $22M.
Key facts
- Buyer
- Disc Makers ↗
- Year
- 2008
- Price
- $22M
- Revenue at sale
- —
- Years operated
- 11 years
- Channel
- Direct sale
Why they sold: Derek felt he had finished what he set out to do with CD Baby, and the company's internal culture had become painful for him. He did not need the money and wanted it to fund music education.
The story of CD Baby
Derek Sivers started CD Baby in 1997 to sell independent musicians' CDs online, and it grew into the largest online seller of independent music. Wired reported that it paid out around $70 million to independent artists and labels over its first decade, and Sivers owned 100% of the company.
After receiving several acquisition offers in one week, and also approaching Amazon, Sivers chose Disc Makers. Amazon would have paid a few million more, but Disc Makers was a CD manufacturer that already served his customers and knew them well. A few months before the sale he moved CD Baby and HostBaby into a charitable remainder trust, so Disc Makers bought the company from the trust for about $22 million in August 2008.
The trust pays Sivers a small annual percentage during his lifetime, and the rest is set aside for music education. He left the company right after the sale and went on to write books, including Anything You Want.
Lessons Derek Sivers shared
- 1.Decide your deal-breakers before negotiating, such as not having to stay on after the sale.
- 2.If you plan to give the proceeds away, set up a charitable trust before the sale rather than after.
- 3.Be honest about what you personally want instead of following the default path of maximizing money.
Paraphrased from the maker's public posts and interviews (see sources).
The maker
See the CD Baby product page or Derek Sivers's full profile for everything they have built since.
Other exits by Derek Sivers
Sivers has said the internal company culture had become unbearable and that he felt he had done everything he set out to do with the business, with little vision left for its future.
by Derek Sivers
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Sources
- wired.com — wired.com/2008/10/derek-sivers-so/
- sive.rs — sive.rs/trust
- sive.rs — sive.rs/2015-10-built2sell
Facts are taken from the maker's and buyer's public statements and press coverage. Prices and revenue are shown only when publicly stated; self-reported figures are not independently verified.
Keep exploring
CD Baby acquisition FAQ
Who bought CD Baby?
CD Baby was acquired by Disc Makers in 2008 from Derek Sivers.
How much did CD Baby sell for?
CD Baby sold for $22M, as publicly stated.
Why did Derek Sivers sell CD Baby?
Derek felt he had finished what he set out to do with CD Baby, and the company's internal culture had become painful for him. He did not need the money and wanted it to fund music education.
How long did it take CD Baby to get acquired?
CD Baby was sold about 11 years after launch, through a direct sale (sold directly to a buyer, often a competitor, customer or acquirer that reached out).
What did Derek Sivers learn from selling CD Baby?
Decide your deal-breakers before negotiating, such as not having to stay on after the sale. If you plan to give the proceeds away, set up a charitable trust before the sale rather than after.