Trade shares in rock bands? It worked for Bowie
Date : 2008 02 27 Category : Web Webware.com
The Alps, one of the bands that Slicethepie members can buy shares in.
(Credit: Slicethepie.com)A lot of people have talked about selling shares in bands as a means to help finance promising musicians and a means to do away with record labels. In Great Britain, a company called Slicethepie.com is enabling fans to trade stock in music acts the way they would a publicly traded company.
The Web start-up has financed 13 bands and generated the equivalent of nearly $80,000 for its 40,000 "scouts," according to a story from Reuters.
"We effectively turn every music fan into a record label," David Cortier-Dutton, the company's CEO told Reuters. "Everyone can invest in new artists on an economically attractive basis."
The story doesn't mention when such a system might come to the U.S. It's certainly an interesting idea. Slicethepie allows members to evaluate acts, and then buy and trade their shares, becoming a mini music mogul, Reuters reported. This is the latest attempt to find an alternative business model for the ailing music industry and provide fans more direct interaction with entertainers.
Last year, Radiohead left its record label and in a ground-breaking move offered the album In Rainbows directly to fans via the Web. The band allowed anyone who wanted the music to pay what they believed it was worth.
Selling shares in a musician is not new. In 1997, David Bowie sold Bowie Bonds, which gave a single buyer (the Prudential Insurance Co.) the rights to future assets derived from Bowie's first 25 albums (287) songs for a total of 10 years. In return Bowie received an upfront payment of $55 million. After 10 years, the rights returned to Bowie.
Bowie, of course, was an established artist, and Slicethepie is focusing on unsigned and still-unknown acts. The way Slicethpie works is that members review a pool of about 7,500 acts. The 20 or so acts with the highest ratings every month "go forward to qualify for funding," Reuters reported.
Only about one or two acts receive enough financial backing to create and release an album. According to Reuters, a band would need to sell 100,000 albums for a major record label to break even. But at Slicethepie.com, a band need sell only 1,000 units for the Web site's members to make money.
Investors receive $1.98 for every album sold, according to Reuters. For example, the wire service used as an example the Arctic Monkeys, a popular U.K. band. Had the group been on Slicethepie and sold 1.1 million copies, then someone making a $40 investment in the band would have received $4,000.
Artists are allowed to opt out and sign with a traditional label provided they pay a 50 percent premium, Reuters reported. Next month, the indie rock band, The Alps, will be the first act from Slicethepie to release an album.