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.
Napster has hinted that the company is up for sale again, saying in its response to a dissident shareholder group that the company is once again exploring possible strategic alternatives, and has retained UBS Investment Bank to assist in the process. The company hired UBS two years ago to explore a possible sale, but no deal emerged. Napster informed shareholders of the move in a letter that also said the company believes that three proposed dissident board candidates are “unqualified.”
The company said the dissident candidates “have offered no specific business plan, other than suggesting a vague review of Napster’s business,” and also “have no significant ownership in Napster and, in fact, have been frequent sellers of Napster stock.”
Napster instead urged shareholders to re-elect its current slate of independent directors.
Source: DMW Media
It has been reported that Sony has agreed to acquire Gracenote for approx $260M. Gracenote provides a range of music-related solutions including MusicID, which detects which song is currently being played by an application and loads track information for the user (such as artist and album names). MusicID leverages a database of over 6M CDs and 80M tracks. Its technology has been in development since 1995 (previously under the name CDDB).
Consumer music app services such as Apple iTunes, Yahoo! Music Jukebox, and Winamp use Gracenote for their music detection capabilities. It is reported that Gracenote will continue to operate separately from Sony after the deal closes, but I still think this is a bit of a major blow to other major labels. Gracenote has technology that is leading the industry and now allows Sony to produce more tech startups in the music industry without having to worry about music recognition.
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