Amazon partners with Sellaband, the bank for music fans

Amazon is partnering with music community startup SellaBand to offer aspiring young bands a leg up the slippery pole of fame and fortune. Under the deal, SellaBand will have a dedicated music store on Amazon as well as an affiliate sales deal and promotion to the 50 most active reviewers on The Vine, retail website’s reviewers’ programme. Revenues will be shared equally between the artists, Sellaband and the fans.

Germany-based Sellaband, which launched in August 2006, has 6,000 bands and offers a model of free legal distribution of new music by enabling a direct relationship between developing artists and their fans. The site enables fans (”believers”) to buy $10 shares in unsigned bands to fund the professional recording and distribution of an album – including A&R, marketing and publishing. In a phrase, it’s a more overtly music-focused MySpace.

But I bet you’re wondering what Sellaband does with all that cash while the band is waiting to get more fans? In fact, Sellaband is more like a bank, since it makes interest on the money invested in the site’s bands.

So how does it actually work? Fans can listen to tracks for free, but support bands by pledging money. Once the unsigned band has made $50,000 (or 5,000 fans pledging 10 bucks each) they get a professional CD cut. Artists get 1/3 of all advertising revenue from their profile, and 60% of proceeds from eventual album sales. They also get all rights back to their music a year after the album comes out. To date, 11 bands have reached the $50,000 threshold and three have released albums. Furthermore, the idea is that this crowd-sourcing takes away a lot of the risk associated with new music and offers a new way for bands to a) get the big record deal eventually or b) retain control of their future, via rights ownership. To me the smart thing would be to get an album out tour it, retain the rights then start your own download program after a year, a la Radiohead.
Partnering with Amazon gives Sellaband artists greater reach, and Amazon will be adding credits to a band’s account once they reach $30,000 and offering extra promotion for the band once they reach $35,000. SellaBand works with digital distributor The Orchard, one of the suppliers for the iTunes Store, and, under the new deal, through Amazon.

The people behind Sellaband are Pim Betist, Johan Vosmeijer and Dagmar Heijmans. Vosmeijer ran the labels Epic and Columbia for Sony Music in the Benelux region and recently launched Red Ink, a boutique label for SONY BMG. Heijmans is ex-EMI.

More: Previous TechCrunch US coverage.