Sellaband = innovative business model whereby fans can invest in their favourite band

Description

SellaBand [1] is a service for musicians and bands to promote their work in an effort to gain "believers" who will help to fund the production and distribution of an album. Believers must raise $50k in order to graduate the artists into contractual agreements. Believers can earn money back from ad revenue used in tandem with giving away the music for free online at sellaband's site.

Sellaband is the idea of the Dutch entrepreneur Pim Betist, and has been managed by Johan Vosmeijer, a former Sony BMG executive who left the industry to start something new. On www.sellaband.com Artists and fans have one goal. Make music and profit together. Artists load up their music and profile. Fans look for Artists they like and believe in. With $10, they become Believers by buying a piece of an Artist’s future income on SellaBand. Once an Artist has reached the goal of $50,000, SellaBand uses this amount to record a CD. Then they provide the Artist with a high end studio, an experienced A&R manager and a top producer. After that they send the music in exclusive digipacks to the Believers. Both Believers and Artist are now in business together. The music is given away for free on our website. The generated advertising revenues are being split evenly between the artist, the believers and SellaBand.

Another good explanation:

"The site basically gives you a MySpace type page to exhibit your mp3s, but instead of friends, you get ‘believers.’ These disciples of your rock scripture invest in your music at $10 increments until you’ve raised $50,000. Then, the magic happens at the studio, your faithful get a copy of your album, and the songs are posted online for free. For every download, you and your financiers, the original ‘believers,’ share in ad revenue. (More details here.)

By deferring the cost and talent of scouting to a large population of music lovers, SellaBand puts powerful marketing and production tools into the hands of those with a personal interest in the music. Potentially, this is a perfect service for bedroom musicians who think they have the next big thing but have no exposure. It’s one of several examples of Crowdfunding." (http://newassignment.net/blog/keith_axline/dec2006/06/music_makes_a_ca)

Discussion

From Johan Vosmeijer, Managing Director SellaBand:

1. The money Believers put into their artists of choice is kept on a so called escrow-account. In case you don’t know what that means, there is a legally binding rule that we, as owners of the escrow account, cannot touch that money until a band has raised $50.000. In other words, we cannot turn this account into an investment fund, nor can we buy fancy cars from it or book nice trips to the Bahama’s. Yes, the interest will go to us, but that money will go straight back into the development of the website and the creation of an artist incentive program (useful tools for bands on their way to 50k).

2. Almost no band will ever raise 50k? Barely one month after our launch, one band is already over 10.000 (September 26th) in budget an counting. The big publicity wave on SellaBand is yet to come, but already 2,000 people have registered as Believers, and close to 3,500 Parts have been sold. Based on these figures we are very optimistic that in the (near) future, quite a few artists will be able to raise the money that is required to record with us.

3. Bands have free choice of producers and studio’s, as long as it fits into the budget. The only person that is ‘mandatory’ is the A&R person. He or she will be assigned by us and will then guide the artist through the recording budget. All of the money will be used for production, manufacturing and distribution, bands have the option to see the bills if they want to.