Could something like this replace the record companies?

[irjason]

I came across this article today. This seems like an interesting idea. I wonder how well it could work? One downside now is that it looks like it couldn't succeed in the US because of a few laws. But to me the idea has potential.

Would you invest in helping a band record an album? Would you want to try something like this with your band?

http://www.wired.com/entertainment/m...eningpost_0303

With CD sales declining and labels whining, it might seem crazy to view recorded music as fertile ground for investment. But for thousands of fans-turned-music-investors on SellaBand and Slicethepie, it makes perfect sense to gamble on a favorite band's future.

"I don't see anything wrong with the music industry in terms of artists being discovered, financed and released," said Slicethepie founder David Courtier-Dutton. "The problem is [the labels'] economic model. It just costs way too much money to get to the point where they find whether or not anyone likes the music."

By having fans fund albums, these sites hope to channel money toward projects more likely to succeed. It's like holding a fundraiser to usurp the executive producer's traditional moneybags role, while crowdsourcing the A&R (artists and repertoire) guy's job.

The idea is to tap a band's online fan base to generate cash for recording and production costs, and in the process help musicians that are hot on MySpace move to the next level. The model is so intriguing that Amazon.com wants in on the action, although regulatory hurdles could keep music-investment sites from taking off in the United States.

"If you're one of 7 million bands on MySpace, no one's going to hear you," said Courtier-Dutton. "[Fan funding] gets you out of the sludge ... to the edge of the limelight."

The fan-funded music movement's "eureka" moment came in 2001, when a friend of SellaBand co-founder Pim Betist had trouble getting his rock-classical-electro record released.

"I literally said to myself, 'I know for sure that at least 5,000 people on this world would love this music, if only he could reach them,'" said Betist. "And then I thought, Wait a minute -- Friendster! Then it just hit me: If [each of those people] put in 10 bucks, you'd have enough to record an album."

Anyone can become an investor in a SellaBand artist by buying an advance copy of an album and a single share in the recording for $10. The site has raised more than $1.5 million from more than 25,000 investors. They've deposited an average of $50, but investments have run as high as $25,000.

Out of 6,500 bands, 14 have reached the $50,000 mark, which is when SellaBand helps find a studio and a big-name producer to record the album. (SellaBand artist Cubworld got paired with Gwen Stefani's producers.) Advertising revenue and sales revenue are split between SellaBand, the artists and investors. (Both SellaBand and Slicethepie keep the float: interest on fans' money in the time between collection and disbursal to the bands. If a band doesn't raise enough to record an album, the money is returned to investors.)

Although SellaBand's focus is on individual investors, Amazon.com is getting in on the action, too. The company's U.K. division added a section for SellaBand CDs. Amazon will invest $1,000 in every SellaBand album that reaches $30,000 in funding, and send the bands' music to its Amazon Vine reviewers. At $35,000 Amazon U.K. will e-mail its users to solicit more investments and help bring the album to completion.

You won't see many companies replicating the fan-funded music model stateside any time soon, however, because of stronger laws against gambling sites and unregulated stock markets.

"It's a tricky thing to do" even with slightly laxer European laws in these areas, said Courtier-Dutton. That's why SellaBand and Slicethepie (legal in the sites' home countries of Holland and England, respectively) are the only games in town.

If SellaBand's function is to replace the record label, Slicethepie's is to augment it. Like SellaBand, Slicethepie lets fans pay $10 for a share in the album and a free digital copy (with Slicethepie, the $10 investment rewards early investors with the right to buy up to five shares at the cut rate of 20 cents apiece).

Courtier-Dutton says record labels are excited about working with Slicethepie to let fans finance albums the suits deem too risky. The site has raised $400,000 so far, while attracting 7,800 artists. Bands only get funded if Slicethepie's blind-listening reviewers -- who generate 10,000 reviews a day -- rate them in the top 2 percent of new artists. Reviewers are paid 2.5 cents per review, with bonus pay if they pick bands that prove popular.

Bands that survive Slicethepie's voting showcase and raise $30,000 from investors get to record an album. (The Alps worked with longtime Cure producer Dave Allen.) Before an album is released, investors can trade their shares, as with SellaBand.

Bands or labels can buy out a contract at any time, albeit at a markup, meaning that the simple act of buying your favorite band's record could earn you cold cash.

"A band called Gilkicker were about to make a record deal, so they bought themselves out of the exchange," said Courtier-Dutton. "The investors trebled their money."

[primussucks9126]

I intern at a recording studio and we recently finished working with a sellaband artist. The whole album was recorded and mixed there. 1 person invested somewhere around 10gs in the artist, so I think the system shows some potential.

[irjason]

Interesting. That one person must have really believed in them. Personally, I'd like to see something like this in the US too. I find it strange that in my state I can bet on what horse will win the Derby, but not on the success of a band.

Did you get much of a feel from the band about how the whole experience was for them?

[primussucks9126]

Well the artist we worked with was a solo artist, Lily Vasquez, but she seemed really excited about the whole thing. And the way the system works, you can be in the US and still be a part of sellaband. Lily was from Jersey and people all around the world invested in her.

[irjason]

Hmm, if I ever have time to get in a band again I'll keep it in mind. Thanks for the info!

[metallicafan18]

Originally Posted by irjason

Interesting. That one person must have really believed in them. Personally, I'd like to see something like this in the US too. I find it strange that in my state I can bet on what horse will win the Derby, but not on the success of a band.

Did you get much of a feel from the band about how the whole experience was for them?

Nice one, same here dude. We live in the same area.

I think this is interesting. I want to check my band out into this.

[Pilgrim]

These types of ideas are EXACTLY what the recording industry should be exploring - but refuses to look at. They are blind to opportunity because they're locked into a business model that is leaving them.

Buggy whip, anyone??

[MonetBass]

Originally Posted by Pilgrim

These types of ideas are EXACTLY what the recording industry should be exploring - but refuses to look at. They are blind to opportunity because they're locked into a business model that is leaving them.

Buggy whip, anyone??

Right, and this new model puts a lot of fat cats' jobs on the line. But if the fans get behind it, they'll have no choice.

¡Viva la revolution!