Amazon does a deal to "crowdsource" music

Mathew Ingram, December 18, 2007 at 1:30 PM EST

As musicians and record labels alike try to come up with new ways of reaching fans and new business models, one of the most unusual experiments is a site called Sellaband. Based in Amsterdam, the service takes what some have called a "crowdsourcing" approach to the music business: musicians and bands upload songs, which fans can pay to download, and the money they pay goes into a fund that can be used to record an album.

On Tuesday, online-retailing giant Amazon announced a deal with the service that will see Sellaband open an official Amazon store, as well as an affiliate arrangement in which other Amazon sellers can direct music lovers to the service and get a promotional fee. Amazon will also promote Sellaband within its community of active reviewers, known as The Vine.

Sellaband lets fans listen to a band or musician's tracks for free, but if they want to support the artist then they pay $10 for what amounts to a share of a future album. Once the artist raises $50,000 Sellaband arranges for a professional engineer and studio to do the recording in, and all the other arrangements a band might need.

Most importantly, the funds that are raised through the sale of the album aren't just split between Sellaband and the artist -- the fans who paid to download the music get a share of the proceeds as well, and a free copy of the album (which they can then sell if they wish to). The service makes money from advertising, as well as interest on the money that is being raised for its members.

The site says it has more than 4,000 bands signed up, 11 of which have hit the $50,000 level, and three have made albums. "The advantage for fans is that they feel part of the activity," Sellaband co-founder Johan Vosmeijer told The Guardian's Jemima Kiss. "There are direct friendships between the bands and their fans, and they even organize their own festivals."

Vosmeijer is a former Sony BMG executive who says the major record labels are afraid to experiment with new business models. "Record companies are afraid to embrace new technologies and new opportunities because they don't know what to do with the web," he told The Guardian.