Wired.com article: "Put Your Money Where Your Indie Rock Is" by Eliot Van Buskirk
"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."
...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.
...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.)"
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