Sellaband started in August 2006 as an Internet-based recording “label” alternative to traditional record companies. Founder Pim Betist thought the music industry was overlooking talented artists. He wanted to figure out a way to offer these artists exposure and, if they were good enough, provide them with the opportunity to record their music. He thought, why not let the fans decide which bands should succeed? Pim partnered with two music industry veterans, Johan Vosmeijer and Dagmar Heijmans, to turn his idea into reality.

Sellaband’s brand concept is intriguing. Artists upload their music and profile on the Sellaband website. Fans (Sellaband calls them “believers”) find artists they like and invest US$ 10 to buy one of 5,000 “parts” of the artist’s music. Once the artist sells 5,000 parts (US$ 50,000), the money is used to professionally record an album. The artist’s believers receive a limited edition CD. The individual songs on the album are sold as downloads, with the artist, believers and Sellaband splitting the profits.

Essentially, Sellaband turns the entire music industry model on its head. By bringing together artists and fans and allowing the fans to choose the music they like, the company has leveraged an emerging trend called “crowdsourcing.” By then allowing fans to actually finance bands, Sellaband has pushed crowdsourcing into new territory—now it becomes “crowdfunding” or “crowdrewarding,” according to Springwise.com, a website that reports on new business ideas.

Sellaband tells its believers, “You are the record company.” Once the artist reaches the US$ 50,000 goal and makes the CD, “…you and your artist have been in complete control of the whole music industry value chain. From selecting the talent to promoting and selling the music. From then on you and the Artist are truly in business together. …All without the interference of the traditional music industry, thereby maintaining complete artistic freedom.”

Not everyone buys the idea. Writing in The Guardian (March 15, 2007), Eamonn Forde warns “…the shortcoming for Sellaband acts is that they simply can’t tap into the marketing expertise, muscle and (crucially) budget that a label could offer them.” Music industry expert Pete Strobl adds, “…it is unlikely that promotion of Sellaband albums could be accomplished at a magnitude sufficient to compete at a level comparable to the still extant major labels” (PeteStrobl.com, July 28, 2008).

Nevertheless, artists who would otherwise remain anonymous are using Sellaband to get noticed. Nemesea, the first band to reach the US$ 50,000 goal and record an album, told David Cohn (NewAssignment.net, April 15, 2007): “…this is THE opportunity to make a really good CD with professional people and with a big budget. … Let’s face it. You never get to work with those kind of people unless a major label with a huge budget signs you.”

Sellaband does seem to be on the verge of achieving critical mass. Eliot Van Buskirk, writing in a WIRED blog (August 15, 2008), reports: “…Sellaband has financed 23 albums… So far, ten albums have been completed and are available for purchase, and approximately 30,000 ‘believers’ have invested over $2 million in Sellaband artists.” Currently, Sellaband says 27 artists from 12 countries have each raised the US$ 50,000 required to make an album, and more than US$ 2.2 million has been invested in unsigned artists.

Sellaband is attracting both partners and cash. The company announced a partnership with Amazon UK in 2007 and, in April 2008, Sellaband got a US$ 5 million commitment from Prime Technology Ventures. The funding is helping Sellaband expand from its European base into the United States, a strategic move that will open up a new, potentially lucrative market.

Sellaband has been smart enough to market its service as a true music brand. The company ran a 2008 tour that took bands to Amsterdam, London and two US destinations. One of the tour sponsors was Heineken. Sellaband celebrated its second birthday last August with “Sellabration ’08,” a concert held in Amsterdam that featured some of its leading artists. Sellaband hired a PR firm to promote its presence in the United Kingdom, where it sponsored a “London Showcase,” complete with a press briefing and publicity surrounding the event.

Sellaband’s unique approach is making the recording industry sit up and take notice. An unnamed senior manager at Universal Music Group reportedly said, “People are going to be watching it to see if the principle works and could well be adopting a similar model if it does. But it would mean a rejig of our entire business and that’s not something that can be done lightly” (“Sellaband Success Prompts Industry Rethink,” Iain Thompson, Vnunet.com, Oct. 10, 2007).

While the recording industry watches and waits, Sellaband continues to attract new artists and new believers. All of them seem very happy to circumvent established industry practices and participate in a music business of their very own.

Barry Silverstein has been a frequent brandchannel contributor since 2007. He has thirty years of advertising and marketing experience and is currently a freelance writer and marketing consultant. He founded and ran his own direct marketing agency and held executive positions with Epsilon, a leading database marketing firm and Arnold, a major ad agency. Silverstein is the author of three marketing books, including the McGraw-Hill book, The Breakaway Brand, which he co-authored with Arnold CEO Fran Kelly.