Making a professional-sounding recording can be expensive, particularly for ensembles (like rock bands) who want to capture at least some semblance of a live performance.
Sure, you can get an decent recording with a portable stereo recorder, or a couple of inexpensive mics panned left and right and plugged directly into the mixer, but most artists want their music to sound as good as it possibly can--as good as any other artist played on the radio. That takes an array of microphones and other audio gear and somebody who knows what they're doing. In other words, money.
In the post-label world, who funds these recordings? Peter Spellman, director of career development at the Berklee School of Music, explores three fan-funded (or "crowdfunding") options in a blog posting on KnowTheMusicBiz.com.
ArtistShare, which has been around since 2002, allows fans to contribute to particular artists and receive exclusive tidbits, such as in-progress recordings.
SellaBand works more like a small-scale venture capitalist for bands: fans can "invest" $10 apiece, and when an artist reaches $50,000, Sellaband will hook them up with industry professionals, including producers and studios, to record and market an album. Revenue comes from advertisements shown next to free downloads, as well as sales of the finished album, and are split three ways between SellaBand, the "investors," and the artist.
U.K.-based Slicethepie not only allows fans to invest, but essentially asks them to do artist discovery. Fans are compensated a few cents for listening to acts and writing reviews, and bands who score the best end up in a showcase, where labels might find them and offer them a deal.
Fans can also earn money by betting on the success of artists in a stock market. The winner of the showcase gets 15,000 pounds from the organization to fund a recording, while Slicethepie receives some royalties from sales of the album. (I'm always a bit wary of showcase-type models--often bands must pay up front to participate, labels and radio stations ignore them completely, and the only party who benefits is the organizer. In this case, the entry fee for each song appears to be around 20 pounds, although the FAQ isn't entirely clear on this, and entry fees are currently being waived. Still, proceed with caution.)
Whether or not any of these particular organizations actually ends up funding the next Radiohead, it's interesting to see all this business innovation occurring outside the bounds of the traditional label system.