It’s not a good time to be a music industry exec. Digitisation of the sector with MP3s and attending high rates of piracy have sent record labels into a spin, and their stocks plummeting.

In the last decade there has been a wholesale rethink about the way bands are funded and marketed. Some established acts give their albums away for free or on a ‘pay what you want’ basis because they make so little from record sales.

Much better to rake it in on live concerts and merchandise; these are now seen as the best ways to make money from music.

But that’s not good news for young acts who’d struggle to fill a big venue or sell lots of t-shirts. They’re finding out it’s not enough to be talented in this game; you need a mean marketing machine behind you.

Enter stage left Andrew Lewis, a record label bigwig who thinks he’s solved the problem: turn adoring fans into savvy business angels by giving them the opportunity to back their cherished bands with cold hard cash.

Bandstocks.com follows similar principles to standard venture capital investments. You back your favourite band or bands with investments of £10 or more (rising in £10 increments) until a collective figure is reached, say £100,000.

The money is used to create an album, do some marketing and distribute it. If the target isn’t reached you get your money back, but if the band becomes wildly popular you get a slice of the proceeds. You also get a copy of the album and a mention on the CD sleeve.

Lewis reckons he needs 10 acts to reach their target investment to make his website work in its first year. His idea enjoys involvement of several big record labels and backing from Steve Pankhurst – the guy behind friendsreunited.com.

It’s a risky project, but with four years’ worth of development time and some big names behind it, it stands a pretty good change of changing the capricious winds of the music industry.

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By Dan Matthews  on   Aug 27,2008

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Keywords

music    bands    start-up    investment    money    marketing   

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