Music fans can now put their money where their mouth is thanks to an enterprising new website, www.sellaband.com, which allows anyone to make a financial investment in an up and coming band and share in the profits if they hit the big time, writes Brian Boyd.
This reporter has just invested his life-savings (€30) on a Portuguese "lounge chill-out" band called Travellers (they're brilliant, please buy their record when it comes out). If nothing else it now allows me to jauntily describe myself a "Music Mogul".
The Sellaband website was set up last year by a small group of Dutch music enthusiasts. According to their managing director, Johan Vosmeijer, the idea was to move away from the traditional music industry model where only big record companies decide which bands get signed and instead place that power back in the hands of the individual music fan.
Sellaband wouldn't have been possible without the rise of the social networking site MySpace, which allows users to put their own music up on the web and sell it directly to the consumer with no record company middle men involved.
Sellaband takes the MySpace idea a bit further by allowing people to invest in new bands so that groups can now raise enough money from investors to record an album in a professional music studio with professional music producers.
The business model is disarmingly simple: once you visit the site, you will be able to listen to three songs (free of charge) by any number of new bands looking for a break. If you like what you hear and think any given band has potential, you have the opportunity to become a "believer" (an investor) by investing a minimum amount of $10 (€7.33) in the act. There is no maximum investment limit.
Once a band has reached the magical figure of $50,000 (€36,664) in investment money pledged, they then go into a studio and record a CD. Copies of this album are then sold online for $10, of which $2 is shared between all the believers who raised the $50,000 in the first place.
As a financial believer in a band, the onus is on you to do your own PR work for them (telling friends how wonderful the band is and how the can buy the album). For every CD sold in this manner, the believer gets a $1 dollar commission.
Nobody has yet to make a fortune from Sellaband, but these are still very early days. In little under a year though, an approximate 12,500 believers have invested more than $400,000 (€293,323).
Although all good fun and with a minimum investment of just $10, the Sellaband business model has been slammed by some financial journalists as ill-conceived and weighted against the investor. This is because a believer only makes money from a band's CD sales for the first 12 months. After this time, the full rights to the album return to the artist. Also, if at any time a Sellaband act sign a multi-million pound deal with a record company, believers get no share of this money.
In essence then, Sellaband should (according to its founders) be best viewed as a "premium bond-style flutter" rather than as a serious money-making venture.
The joy of Sellaband is that it allows anyone to have a punt, listen to lots of bands and behave like Simon Cowell. You also get to check your band's progress, and see how much and who else is investing in them.
My Portuguese lounge chill-out heroes, Traveller, currently have over 30 individual believers and thus far have raised $30,600. This is only since February of this year so we're all hoping that they reach the $50,000 target before the end of the year. Then the fun really begins as we see how many albums they sell and whether we get any return on our investment.
Come and join us in the Traveller fan club - for just a minimum $10 investment you will at least receive a complimentary copy of their album once it is made. And do please tell your friends about Traveller - my life savings depend on it.
Check out: www.sellaband.com
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