Downtown Music Acquires CD Baby Owner AVL Digital Group (Price Tag: $200 Million)

Downtown puts its money down.

Downtown puts its money down.

One of the industry’s hottest distributors has been gobbled up.

Something big has been rumbling around CD Baby for months.  Now, we know what it is.

Just this afternoon, CD Baby parent AVL Digital Group was formally acquired for roughly $200 million. The buyer, Downtown Music Holdings, gobbled the distributor and various associated AVL properties, including those traversing video monetization and royalty management.

The NY-based Downtown Music Holdings is the parent to both Downtown Music Publishing and Songtrust.  The buyout also covers ALV-owned divisions AdRev, DashGo and Soundrop, part of a steady clip of mega-acquisitions in the indie distribution, publishing, and royalty accounting sectors.

CD Baby CEO Tracy Maddux, based in Portland, will oversee the Downtown-owned AVL unit.

Neither party has confirmed a sale price, though multiple reports peg the dollar value at approximately $200 million.

The buyout follows a rising trajectory for CD Baby.

The distributor has recently been given top accolades by both Spotify and Apple Music, obviously two critical endpoints for the distributor.  The dual accreditations quickly shuttled CD Baby into a rarified circle of distribution companies.

Justin Kalifowitz, founder and CEO of Downtown, confirmed the deal while lauding Tracy’s acumen.  “Tracy and his team have built a portfolio of music businesses operating at unmatched scale,” Kalifowitz relayed.  “AVL’s technology, diverse offerings and artist-first approach are well-positioned to power some of the fastest growing segments of the industry.”

Maddux was pumped up.  “This transaction will allow us to take the services we offer the independent music community to the next level,” he said.  “We are excited to continue to build leading platforms that help artists release, promote and monetize their music all around the world.”

Indeed, the combination could vastly increase the publishing opportunities for emerging artists.  CD Baby is already a monster distributor, with artist revenues tipping the $100 million annual threshold.  That’s a big number, and CD Baby is estimated to handle as much as 1/6th of the total direct-to-fan distribution volume — worldwide.

AVL currently boasts a clientele of more than 900,000 artists, labels and other rights holders.  That translates into a volume of 10 million tracks, which CD Baby pushes across platforms like Amazon Music Unlimited, Apple Music, Spotify and YouTube Music.

Not bad for a business that started as a hobby back in 1998 by indie musician Derek Sivers.

Incidentally, Sivers sold his burgeoning service to AVL back in 2008 for approximately $23 million.  At that point, CD Baby was heavily focused on CDs and iTunes distribution, both obsolete technologies in 2019.  But CD Baby’s current lock on streaming obviously informed the valuation run-up, alongside an aggressive string of acquisitions.

As a result of the deal, Downtown now claims to be the “leading provider of end-to-end services to artists, songwriters, labels, music publishers and other rights holders.”  In total, this Soho shop now counts 300 employees across 14 markets in North America, Europe, Asia, Australia, and Latin America.

So what’s next?  Is Downtown going public?

Let’s see: Kalifowitz is obviously playing this game aggressively, and diversifying across numerous lucrative areas.  Downtown already boasts an illustrious song catalog, though DIY distribution, video monetization, and royalty accounting are undoubtedly valuable assets and hubs of expertise.

The deal is expected to formally close in April.

 

5 Responses

  1. Avatar
    Dean Hajas

    Congratulations CD baby….glad to be part of the ride.

    • Avatar
      Tony van Veen

      Actually, no. The management team and I are acquiring our physical products division: Disc Makers, BookBaby, and Merchly. Excited about continuing to help creators make money from their creations with CDs, vinyl, USBs, books, and garments.

      Tony van Veen

  2. Avatar
    Dave Kaspersin

    We have been on cdBaby from day one. And so far have made over
    $90,000.00 for us and our Artists.
    However, since Spotify, Pandora etc have started, our income has dropped a lot.
    We have over 100 albums on cdBaby, and we used to sell a lot, and we did great on downloads.
    But not any more. I have wrote to cdBaby and asked them to stop promoting Spotify, with no results.
    If Streaming is not forced to pay a fair amount, the Music Industry will come to an end.
    No One will buy your music when they can listen to it for Free and rip it !
    A lot more here:
    http://musicianroyaltyripoff.org/

    Dave Kaspersin
    President
    Dynamic Recording Studio Independent Label / Dynamic Web Pages
    2844-46 Dewey Ave.
    Rochester N. Y. 14616 -4630 USA

  3. Avatar
    Count Drawko

    I paid CD Baby, AKA, CrookeD Baby, over $1,000.00 to publish 10 albums in 2014. That same year, they breached their contract with me via unauthorized distribution and I cancelled all publishing agreements with them immediately. In blatant disregard for copyright law, CrookeD Baby has continued to pirate my works with CD Baby Partner/s. This has been continuing for over five years. Even their Audio and Video Labs parent company has portrayed themselves as my legitimate record label. For example:
    https://www.walmart.com/ip/Mystical-Journey/454450490
    https://www.walmart.com/ip/Divine-Retribution-CD/431290839
    https://www.walmart.com/ip/Ongaku/565192927
    They illicitly sell physical CD hard copies of my albums via Amazon and other online venues. For example:
    https://www.amazon.com/At-Your-Service-Count-Drawko/dp/B00HS1H066/ref=olp_product_details?_encoding=UTF8&me=
    https://www.amazon.com/Dawn-Creation-Count-Drawko/dp/B00HS1H0DY/ref=sr_1_16?qid=1559879048&refinements=p_32%3ACount+Drawko&s=music&sr=1-16
    https://www.deepdiscount.com/count-drawko-ninja/888174496580
    https://www.deepdiscount.com/count-drawko-at-your-service/888174496610
    https://www.ie.wowhd.com/count-drawko-enchanted-voyage/888174496597
    https://www.cduniverse.com/productinfo.asp?pid=9121797&style=music
    They illicitly provide my music via digital distribution to online streaming services. For example:
    https://open.spotify.com/artist/0n0S508yP84gjbXLxBdzlV
    https://www.deezer.com/us/album/7968568
    They have even marketed my albums in other countries for outrageous prices. Here is a $377.45 + shipping copy of At Your Service being sold via Amazon Mexico:
    https://www.amazon.com.mx/At-Your-Service-Count-Drawko/dp/B00HS1H066
    Additionally, CD Baby has perpetuated illegal distribution via internet radio stations. For example:
    https://www.deezer.com/us/album/7723071