CDBaby Sale Seems To Have Been Way To Cheap. $22m Is Crazy!!

Derek Sivers earned $22 million from the sale of CD Baby, according to an interview surfacing Thursday.  Sivers sold the company to Disc Makers in early August of this year after breaking ground in the do-it-yourself, or DIY, artist space in the late 90s.  “I knew that was about the right price,” Sivers disclosed to Venture Voice.  “We actually didn’t bicker or negotiate over the price one bit, I just set a price and they said okay.”

According to Sivers, CD Baby pulled revenues of roughly $100 million at the beginning of this year, a fourfold increase over a three-year period.  The company employed 85 people at that point, though Sivers rarely visited the office.  “I really started letting go in 2002,” Sivers shared.

A lot of people are talking about a good winfall for Sivers, but Im really too sure what numbers they are looking at. CdBaby published a report stating their sales from January to July 07, which made up of $21m in revenues, thus by the end of the year Im sure they would have around $50m in revenues. From what I have seen of web based enterprise acquisitions lately, they are normally around 5x revenues, thus placing Cd Baby around the $250m mark. Therefore selling at $22m is just a crazy cheap price and not a winfall!

Other sites who have shared their opinions include, Paidcontent.org, TheDeal.com, Silicon Alley Insider, and Digital Music News.

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