Almost a year ago, Stefan Kolle of Futurelab (who syndicate many of my blog postings) suggested that I blog about Sellaband, a new model for financing the recordings of new artists that relies on lots of small investments from fans — or in the Web 2.0 jargon, raising funds through "crowdsourcing". In the end, Stefan himself wrote about Sellaband, but I held my fire. Now that Sellaband is approaching its first anniversary we have a better idea of how the model works in practice. Prompted by a discussion over coffee last week and this Sunday Times article [thanks, Babs_05], here are my thoughts.
First, for a brief introduction to Sellaband, you can read the full account of how it works on their website, but Digital Music News provided this summary:
The artist makes their own profile on Sellaband.com including pictures, a bio and a maximum of 3 demo-songs. There is no charge to the Artist. The profile is meant to appeal to potential "Believers" who are invited to give money in $10 increments ("Parts") to pay for the production of a complete album. Anyone who wants to support the project can buy one or more Parts for $10. Once $50,000 is raised Sellaband will provide an experienced A&R person to guide the recording process. Of the $50,000, $30,000 is used for recording the CD. The A&R manager will book the producer, studio and mastering facility. The rest of the budget will be used for manufacturing, packaging and sending up to 5,000 CDs for the Artist's Believers. [This division of funds is shown in the graphic above.] At any time before the Artist reaches the goal of $50,000, the Artist can leave the service and shut down his profile page, and the Believers' money will be returned to them.
One of the criticisms that's sometimes levelled at the recording industry is that they've hollowed out the people that really care about the music and all that's left is the accountancy skills and some questionable promotional tactics. Sellaband was created by ex-recording industry executives, but they are delegating their responsibility for part of the A&R process: if it's the fans/Believers that determine which artists get recording deals, then the A&R has less of his/her personal judgement on the line. You could argue that Sellaband is taking the criticisms of record labels at face value and behaving more like a bank.
As with many crowdsourcing initiatives, the key is in the balance of who puts what in and who gets what out. Putting up money for recording, producing and distributing an album of music is a risk business. More often than not, the returns do not refund the investment. A few months ago Eamonn Forde looked at Sellaband from this perspective and concluded that their model, which he termed low investment/high risk, meant that the artists would lack the marketing muscle needed to break the artists into mainstream attention.
There's always the possibility that the Believers will somehow be able to make up this shortfall by backing their financial investment with spreading the word on blogs, social networks and other word-of-mouth channels. In the Sellaband model, they earn commission on any sales they generate. But I suspect Eamonn would greet that notion with a sceptic's arched eyebrow. The first handful of Sellaband-funded artists will get a bit of extra exposure just by virtue of their involvement in a new model, but that will not last long.
I'm interested in another set of Sellaband numbers: how much they've received, and how much they've paid out. According to the 'breaking news' on the home page, Sellaband is today within $10,000 of raising their first $1 million. How much have they paid out? According to their newsletter, seven bands or artists have reached the magical $50,000 figure where they get to access their funds. But I'm guessing the whole $50k doesn't get paid out at once, so Sellaband has probably paid out less than $350,000. Leaving them with a balance of upwards of $650,000 in cash, which apparently sits in an escrow account, but surely must be earning a tidy bit of interest for the company (Believers can get their money back, but not with interest, as I understand it).
I've seen one or two people scrutinise Sellaband's side of the equation when an artist reaches the $50k threshold (they have exclusive rights over the recordings for 12 months, and 40% of the publishing income), but what about the more common cases where artists don't reach the threshold? It seems Sellaband could win either way. Which is fine for them if it does not come at the expense of disenchanted Believers (unbelievers?).
If I were an artist, I think I would be lobbying for more flexibility in the Sellaband standard contract terms. What's so magical about the 60% of $50,000 for recording an album? If I know I can record my album cheaper (because I don't need a string section and lots of backing vocalists), why can't I reduce the threshold required to access funds, or at least be able to vire some of the recording budget into the marketing budget?
The key competence that Sellaband relies on is being able to attract fans/Believers better than artists can do on their own. Established bands like Marillion have already shown that they can raise funds from their fanbase to finance recordings, without going through an intermediary, and I was one of several who paid for copies of Philip Jeays' latest album before it was pressed to help with his cashflow (no, I'm not on commission).
So as with all crowdsourcing ventures, Sellaband needs to keep the crowd on side. Indeed, it needs to keep growing the crowd. Their community features and events like their Sellabration shows that they're pretty good at the 'hygiene factors'. But it will be interesting to see how many Believers re-commit to further investment and how many new Believers are attracted, once the novelty of the model has worn off and the honeymoon period of publicity is over. To pass judgement on that, we may need to wait for Sellaband's second anniversary.
Recent Comments