When Snocap and music retailer CD Baby ended their partnership earlier this month, Snocap made like it pulled the plug. But today CD Baby president Derek Sivers put out numbers that show why it's no surprise Snocap had to lay off 31 of its 57 employees. Its partnership with CD Baby only generated $12,000 in revenues.
In a post to CD Baby's blog, Sivers details the costs his company faced dealing with Snocap as a partner.
We had to hire 6 new full-time customer service people just to deal with the thousands of problems. We couldn't fix problems ourselves, only pass them on, because all fixes had to be done by Snocap. A hundred times a day we had to helplessly apologize to our clients.
Every company meeting revolved around Snocap. Every employee had to be trained in the endless FAQ about Snocap. For the last 8 months, the CD Baby office has felt like a Snocap office. All we were doing, all day long, was dealing with Snocap issues.
But the pain felt necessary, because Snocap, with its deal to distribute music over MySpace, was expected to pay-out big. That little fantasy died when Snocap came to CD Baby with numbers, Sivers writes:
$12,000 total sales for the 8 months they'd been active. Since we keep a 9% cut, that's $1080 for us, total. Ouch.
As a curiosity, I quietly enabled MP3 sales on cdbaby.com, without telling anyone. A "buy MP3" button showing up next to the "buy CD" button.
In 3 weeks, with no announcements, we sold over $110,000 in downloads. Hm.