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August 24, 2006

Sellaband to crowdsource free music

Marshall Kirkpatrick

51 comments »

German startup Sellaband.com is hoping to leverage the wisdom, and cash, of the crowd to produce high quality independent music for free download on their site. It’s a fascinating prospect even if it seems unlikely to succeed.

The way it works is this: bands upload sample music to Sellaband.com, promote the heck out of their profile page and ask fans to chip in $10 per share of a recording that will be produced when the band raises $50,000. The fans can take their money back out at any time before the goal is met. Once recordings are made, they are offered for free on the Sellaband site, where ad revenue will be split between the bands (60%), Sellaband (30%) and the hired producer and manager. Fans each get a copy of the recorded CD and bands are free to offer them any other benefits, like concert tickets, that they wish. Sellaband retains rights on the music for 12 months. The company seems confident that bands will be able to find 5,000 supporters (called “Believers”) willing to put up $10 apiece.

One week since signing on, most of the 130 bands on the site have raised between $200 and $500. One Goth band from the Netherlands has raised $4500. Sellaband says that the $50,000 goal is what’s needed to provide the kind of quality equipment and support that a major record label could provide. The company takes none of this money, only 30% of the site’s ad revenue. The company is made up of people who used to work at major labels and you’ve got to admire what they are doing. You’ve probably also got to give them some credit when they say that they can produce a better album with $50,000 than you or I could, they may well be right.

The web site is very well designed, has clean URLs for profile pages and could work well in conjunction with other social sites. In fact, one quote on the site calls Sellaband “the next step in the mypace generation’s guerrilla assault on the industry.” Unfortunately, it’s one thing to get thousands of teenagers to accept friend requests from a band and I think it’s another to get them to enter a credit card number and buy a stake in a band on the internet. But maybe I’m wrong. If there was some option to pay even smaller amounts, via cell phone text message perhaps, then this would seem more viable.

Perhaps though the prospect of building a site filled with free music from bands that large numbers of people agree are good, and getting a CD out of it, will be motivation enough for lots of people to part ways with $10. Of course they can get a refund at any time, but the likelihood of remembering to go back and get your $10 put back on a credit card seems small. Grant Robertson writes over at the Digital Music Weblog that Sellaband is the type of thing he’s expected to see for some time, but reserves judgment on the strategy.

I like the new business model idea for music, I like it a lot. Last month Mike reviewed another service called Amie Street, where people purchase individual tracks at prices set according to demand - starting at free or for pennies. Users who recommend songs in that system get to share the revenue from sales. I’d love to follow up in two years and see which, if either, of these systems has proven viable.

  • Sphere It

This entry was posted on Thursday, August 24th, 2006 at 5:56 pm and is filed under Company & Product Profiles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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  1. www.techtagg.com

    August 24th, 2006 at 8:42 pm

  2. Wwwhat’s new? » SellABand - Ayudando a lanzar tu primer CD

    August 25th, 2006 at 12:55 am

  3. Pythoneer » High quality music

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  4. Crowdsource » Blog Archive Techcrunch Sceptical on Sellaband «

    August 25th, 2006 at 4:43 am

  5. SellABand (5?) at TibsBits::NL

    August 25th, 2006 at 6:37 am

  6. TechCrunch Japanese アーカイブ » Sellaband、クラウドソーシング(crowdsourcing)で無料ミュージック

    August 25th, 2006 at 7:51 am

  7. Online Fandom » Quick Link to another new business model for music

    August 25th, 2006 at 9:23 am

  8. Recognize Design :: Design, Marketing and Beyond »

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  9. Andreas Matern’s Weblog » Techcrunch » Blog Archive » Sellaband to crowdsource free music

    August 27th, 2006 at 1:35 pm

  10. fundavlog blog

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  11. popinstitut Sub1 » Blog Archive » Sellaband - Bands suchen Mini-Investoren für Ihre Alben

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  12. Is that my dog? » Blog Archive » Sellaband to crowdsource free music

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  13. SellaBand « frosti

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  14. Techcrunch » Blog Archive » Universal Music Group to try ad driven music downloads through SprialFrog

    August 29th, 2006 at 8:55 am

  15. accelzone - techie weblog » Universal to try ad driven music downloads through SpiralFrog - still with DRM

    August 29th, 2006 at 9:00 pm

  16. TechCrunch en français » Rentrée-Crunch

    August 31st, 2006 at 4:21 am

  17. Music website ideas | DropShipArea.com

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  18. Techcrunch » Blog Archive » Amie Street Takes Innovative Music Model Into Beta

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  19. Music Sans DRM On Amie Street « Ray-Deo

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  20. Remixtures / Na Web 2.0, “crentes” financiam músicos através de fundos de investimento - Parte I

    November 1st, 2006 at 1:12 pm

  21. The News before The News » DRM, EMI, iTunes and Sellaband

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  22. mojbiznes.pl

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  23. techcrunch » Blog Archive » Amie Street Takes Innovative Music Model Into Beta

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  24. TechCrunch en français » Amazon fortement impliqué dans le renouveau de l'industrie musicale

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  25. Amazon Helping To Change The Business Of Music — hometown.at

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Comments

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  1. Andy Rutledge

    August 24th, 2006 at 6:22 pm

    Count as one more europe startup, at the end I believe there would be more and more non-US startup.

  2. blake robinson

    August 24th, 2006 at 6:50 pm

    While I can see something like this succeeding at some point in the future, I really don’t think the music industry is ready for something like this. Also, it’s not immensely difficult to make an album for $50k, especially for a young band.

  3. Raj

    August 24th, 2006 at 7:06 pm

    Most good records these days are made on far fewer than 50K budgets. It’s not the cost of making the music that’s expensive — it’s the promotion after the fact. Major labels probably recoup their investments in bands at a far less rate than VCs recoup their investments in startups ™.

    Read this classic bit called “The problem With Music” by famed independent producer Steve Albini on signing to a major label:

    http://www.thebaffler.com/albiniexcerpt.html

  4. jimbo

    August 24th, 2006 at 7:47 pm

    this sounds rediculously cool. i hope it catches on.

  5. Danno

    August 24th, 2006 at 8:16 pm

    the site is pretty cool. check it out, there is some good music already

  6. Tcruncher2

    August 24th, 2006 at 9:31 pm

    Marshall,

    Do you ever sleep? ;)

  7. Music Lover

    August 24th, 2006 at 11:15 pm

    I do not see this catching on that fast. If they can stick with it for a few years, it has the chance to fly.

  8. unblock myspace

    August 24th, 2006 at 11:39 pm

    the concept to raise money is great … never heard about this before… may be i try this some time :)

  9. fistball

    August 24th, 2006 at 11:57 pm

    If this really works, I think it will work VERY WELL too for a book publishing tool as well. “* blink * we have a business idea here…

  10. LKM

    August 25th, 2006 at 2:00 am

    Wow. This may be the first time in 10 years that I’m going to actually buy a CD. Awesome idea, I hope it works!

  11. Ljova

    August 25th, 2006 at 4:13 am

    please see my concerns about Sellaband.com and its operations, here: http://whatmepractice.livejournal.com/106508.html

  12. atari

    August 25th, 2006 at 5:39 am

    hmm, why a set funding amount? you’d think some bands would have higher expectations / requirements than others (depending upon genre, number of artists, type of recording, etc.) why not just allow bands to choose the funding goal?

  13. InDagda

    August 25th, 2006 at 7:22 am

    Ljova - its good that you raise your concerns, but I think that you are coming down a bit too critically on this idea. Just to answer to your points;

    1) The donors get their money back if the goal of $50,000 is not reached, end of story. Sellaband probably also eats up the credit card transaction fee (which for 100s of transactions adds up).

    2) In part this is probably to make sure that the band doesn’t just give the money to their “producer” and walk away. Of course they (Sellaband) have probably cut deals with their own producers (hence the list). Its a small price to pay for the band having to not put down a single cent on the recording.

    And at this point lets just cut out to the best part of this whole deal. THE BAND IS ABLE TO MAKE AN ALBUM FOR FREE!! If that isn’t a sweet deal then I don’t know what is! And to top it off its a professional album too boot. All they stand to lose is the time spent raising the capital.

    3) Of course the money doesn’t go to the Band! It goes to paying for the Band to be able to produce a professional Album for no cost to themselves, plus 5,000 professional quality CDs to give to the generous donors. Talk about one very sweet deal for the band. Of course the money is going to pay for a producer, studio time, and the production of the CDs - that is the stated goal of this project! The artists pay day comes from when they sell CDs at concert gigs or online, plus the artists get a piece of the ad revenue that they generate (a lions share I might add).

    4) This is very different from being like a major label for so many obvious reasons. The first being that the artist’s album is retained for only one year. This is simply amazing in and of itself. After that one year the artist has free reign to do as they please with THEIR OWN ALBUM! (this is a shout of excitement btw). And that leads to the next great point. The artists actually OWN! their own album. NO major label would ever let that happen. Another point, the artist get a full share of the money for CD sales, all paid for by generous fans and music lovers who are willing to help fund the project with $10.

    Not to be too harsh Ljova, sketicism in this day and age is a very wise thing. But this truely appears to be a very fair and balanced approach to making music and giving the artist a really good chance to do something big. No matter how you shape it, the artist is put first in this deal. They walk away from this with no debt, and only the time spent making the album and raising the money. For a pursuit of passion like music, that is more then a fair price to pay. And in the very end the artist owns the album after just one year. To say that the artist is getting a raw deal is like saying that a double chocolate moouse pie with whipped cream on top isn’t sweet enough.

  14. David Catalano

    August 25th, 2006 at 7:38 am

    Ok, I too hope a concept like this catches on. It will be weird getting a CD in the mail. I was ready to sign up (as a Believer) and start believing in anything I thought sounded good. And why not? I can always withdrawal my support at anytime without penalty right?

    WRONG!

    Look at the Terms and Conditions. You are penalized up to 1USD for withdrawals. Sellaband will refund your money in “an appropriate period of time.”

    Quote:
    Section 3.8
    If the believer decides to withdraw his payment before reaching the goal from his SellaBand account, SellaBand will refund this to the Believer in an appropriate period of time. SellaBand is entitled to reduce the refunding amount with US$ 1,00 (one) transaction costs per each Refund request.

    Section 7.3
    Should the agreement be terminated before reaching of the goal, the Believer is entitled to repayment of the amount that the Believer has paid for one or several artists, less the costs incurred for each individual Part.

    What does “less the cost incurred for each individual Part mean?”

    7.4 Believers have to keep their account active to receive their income. Payments to the Believer are done according to Para 2.7.

    Ok, what is involved in keeping your account ‘active’? Unfortunately there is no Paragraph 2.7.

    So, in the end, don’t do as I hoped to do, put up $1000 and spread it around to whoever you think sounds good. You’ll be out (at best 10%) and in some cases it’s not clear.

    Note that this agreement is under German law. Any discrepancies in the English version will defer to the German one.

    Verstehst du?

    So, in the end, I hope this site makes it. I’d prefer that they just hold onto my CC and only bill me once a ban has reached their 5000 part goal. If they changed this then there’d be a lot less risk to “Believers” that are interested in sponsoring more than 10 or 20 bucks.

  15. danny

    August 25th, 2006 at 9:09 am

    Doesn’t makes sense….I get a CD for my $10 investment that I put in myabe 18 months ago… That’s an opportujity cost that I’ve lost…I could of use that $10 to buy anohter CD…or maybe get myself a #5 combo at jack in the box….or better yet put 3 gallons of gas in my car….

    What’s the point…couldn’t I just wait til they release the CD and buy it for $10?

  16. David Catalano

    August 25th, 2006 at 9:45 am

    Not everyone shares your point of view. That doesn’t make anyone wrong, but everyone has different motives.

    I was interested because I want to support artists who might not otherwise MAKE it to releasing a CD and getting their career off the ground. I wouldn’t mind investing 18 months early for a CD.

    But the snag (for me) is that the money isn’t used until the goal is received. So why then should I have to pony up my money before the goal is reached. I would just commit now, pay later. Again, they could have my CC on file and do it automatically, I don’t care. But I don’t want to withdrawl support for an artist that hasn’t gained momentum and lose 10% of my money.

  17. Arjun

    August 25th, 2006 at 10:20 am

    I just invested in the band Q4. I think what many people are missing here is that the ad/sales revenue generated is also *shared* with the “Believers”.

    Check out their “How it works” page.

  18. Jeff Howe

    August 25th, 2006 at 10:21 am

    InDagda,

    I love the idea; Go crowdsourcing! But I have problems with its realization, at least in the way I’m reading the terms and conditions. First, I’d like to know whether the masters do revert back to the artist after a year. The language is very ambigious (”the artist ‘can’ obtain the masters after 12 months”) Much more troubling is the requirement that the artist sign a publishing deal–which as any musician knows, is generally the plum IP as it applies to any version–ringtone, cover, etc.–for any composition). I go into this in considerably more depth on my blog today–www.crowdsourcing.com.

  19. Bo

    August 25th, 2006 at 11:48 am

    By the way, it’s a dutch startup, not german!

  20. Wildkat

    August 25th, 2006 at 3:22 pm

    I can see some potential for evil from the record companies here:

    1 - Watch the site and track the bands you think are most likely to be good fits for your label.

    2 – using dummy accounts, pump money into those bands

    3 – Just before they hit the $50K goal start taking the money out so they never reach their goal

    4 – Approach the band privately with an offer for a recording contract knowing that significant “buzz” has been generated

    5 – Release and CD and make $$$$

  21. ventureblogalist

    August 25th, 2006 at 5:02 pm

    Anyone from Sellaband want to comment on why users have to pay prior to hitting 5,000 committments. Wouldn’t it be easier to get people to committ if they did not have to pay until reaching 5,000 committments? The interest on the $10 committments will not outweigh the increase in the number of funded bands/ad dollars by changing the system to not require prepayment.

  22. Rohan Jayasekera

    August 26th, 2006 at 12:43 am

    It might be hard to get the required 5000 supporters. Many bands don’t have that many fans - but do have a set of avid fans who make up in zeal what they lack in numbers. So I wonder whether a better bet would be to structure things so as to encourage the more zealous fans to buy more shares. (Perhaps the rules already permit it, but if so the site doesn’t appear to talk about it.) If, for instance, 1000 of a band’s fans were willing to part with $30 each, with the rest at the usual $10, only 3000 supporters would be needed in all. The $30 fans could get extra perks, such as being listed on the band’s site as “Serious Supporters”. Going even further, Sellaband and the band could do what arts organizations do all the time: offer some sponsorship or similar vanity-at-a-price opportunities that would allow a few better-heeled fans to take some of the financial load. What is appropriate would vary from band to band. I wonder whether the current one-size-fits-all requirement for 5000 supporters who all pay exactly the same amount is unnecessarily limiting.

  23. wil

    August 28th, 2006 at 7:16 am

    I guess these guys beat us to the punch! (but we are in US)
    I have been working on my site for about 2 years or so but not yet ready but almost finished. The idea is kind of similar yet very different. I believe and know we have better business model.

    We will have the site ready by end of this year. I love to get it out today but we do have 8-5 job without angel or VC. We didn’t look for them anyway. We want our site to be supported by users.

    I believe in that model. I will reveal the site name soon : )

  24. Mandocello

    December 14th, 2006 at 3:11 pm

    While 50k may be an overshot to record an album in todays’ marketplace, it wasn’t that long ago when it would only cover the cost of tracking in a pro studio. With the 50k that my band Spellbox will earn on sellaband, we will be able to record, distribute, and tour one hellava record. We can’t wait to hit that mark!
    Thank you Sellaband!

  25. Magnus

    March 1st, 2007 at 4:50 am

    As this post is linked from Wikipedia, I’d just like to make the update that two bands have now reached $50K, and are recording CD’s.

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