Crowdsourcing

Sellaband – Update

Yesterday I received an email from Johann Vosmeijer, Sellaband's managing director. Props to Johann for a timely, thoughtful response to the concerns about his company that I, among many others, have been expressing. I'm posting his letter to me in its entirety below the jump, but here are a few of the most salient points:

1) First and foremost, Sellaband guarantees that the artist will receive the rights to his or her masters after the 12-month period expires. I had found Sellaband's language ambiguous on this point, and this greatly clarifies matters. Johan says his lawyers will "double-check" the specious phrasing. I'm happy to hear it. In fact, if I were a Sellaband artist, I'd insist on it.

2) Money invested by believers is put into an escrow account until the band reaches the $50,000 mark. In other words, Sellaband can't touch it.

3) Only the A&R person is assigned to the band. He or she will help the artists decide who they want to use as a producer, what studio they want to rent, who should mix the tracks, etc.

4) Johan justifies the 40 percent Sellaband takes of an artist's publishing income as a necessary expedient to keep Sellaband "free of charge for any artist to use," and points out this is an understandable trade off to make in exchange for artists and believers receiving two-thirds of the site's ad revenue. I'm still leery of this deal, frankly (it seems like a way to cheaply scoop up the publishing rights to a lot of compositions), but I'll take Johan at his word when he says that Sellaband will work as hard as any traditional publisher to exploit its catalogue. In that light, 40 percent doesn't seem so onerous. For those following the debate, I recommend reading Johan's letter, below:

Sellaband - Crowdfunding Music

Marshall Kirkpatrick has an interesting post in today's TechCrunch. It's about a new music company-slash-social networking site called Sellaband. Like Myspace, bands can create a profile page, complete with downloadable recordings, photos and biographical material. Unlike Myspace, the bands don't want your friendship; they want you to believe, which is to say, they want your money. From TechCrunch:

The way it works is this: bands ... 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.

Kirkpatrick likes the model, and so do I. It's a pretty ingenious use of crowdsourcing to hunt out, record, and sell new music. (It's worth pointing out that labels and management companies already rely on a form of crowdsourcing to promote their artists. It's called the fan club, or "street team." I discuss this, briefly, in an article about the future of the music industry in this month's Wired.) And in the finest crowdsourcing fashion, Sellaband isn't just putting the crowd to the task of raising money (which is what the UK film production house Brave New World is attempting with its feature, A Swarm of Angels), it employs the crowd's inherent tendency to act as a filter, its knack for divining talent, or at least, mass appeal. Finally, a "believer" has a vested interest in promoting the artist in which he or she has invested, as every believer receives a share of the profits from Sellaband ad revenue and CD sales. That sure beats the dubious shwag most "street team" members currently receive in return for hanging flyers and performing guerrilla maneuvers in their local record stores.

But if it's brilliant in its broad strokes, the fine print leaves much to be desired. For one, raising $50,000 from Sellaband's target demographic could prove frustratingly elusive. One band, a goth act from the Netherlands called Nemesea, has brought in $4,540. Not bad considering the site only launched 10 days ago. On the other hand, Nemesea's the only band to hit four figures. Kirkpatrick, in the TechCrunch post, suggests installing a micropayment system that could accept investments from mobile phones. Interesting thought, but I imagine the Sellaband accounting department would bridle at the thought of further complicating an already byzantine reporting formula (ad revenue is split between the company, all its artists and all their "believers.")

But I'm more worried about what might happen to Sellaband's artists if they can raise the 50 G's. First off, Sellaband "will provide an experienced A&R person" as well as a "top producer" to work with the band.  Given that $30,000 of the $50,000 raised goes toward paying these people, the musicians might want to help decide who they work with. Worse, the contractual language is ominous. Sellaband owns the rights to the album master for 12 months, at which point the artist "can get the full rights back." Hmmm. Does "can" mean "for the right amount of dough?" That would be my guess. If I were representing that artist, I'd be a lot more comfortable with the phrase "automatically reverts to the artist." And Sellaband and its staff retain 40 percent of the publishing copyright in perpetuity. That's a sour deal considering Sellaband pays you nothing except a cut of its ad revenue.

Some will say this is a better deal than you'd get through a major label and publishing house, but remember, Sellaband isn't providing the services of a label or publisher, except to match you up with A&R and production expertise you may or may not want. The primary functions of the label – to pay your expenses and promote your music – have been crowdsourced.