A band received a pretty unconventional record deal last week and I feel partly responsible. OK, so technically speaking I am just 0.04% responsible for getting Dutch rockers Nemesea into the recording studio to work on a CD. Yes, fractions that slim deserve a little more coloring within the lines.
Nemesea became the first band on SellaBand.com to raise the $50,000 required by the site to get an artist working with an A&R veteran and seasoned producer to cut a full-length CD. Once a band signs up to the site, 5,000 "parts" become available at $10 apiece. Over the summer, I was smitten by Nemesea's marketable sound -- if you like Evanescence, this is right up your alley with soothing female vocals piercing through a wall of synths and heavy guitars -- and snapped up two parts for $20 and a small transaction fee.
Sellaband isn't perfect. Some artists may argue that the deal with Sellaband is too restrictive (for instance, the site keeps 30% of the publishing income). Some music fans may be initially turned on by financial participation only to turn lukewarm after discovering that it is somewhat limited and that the hurdle is high to the magical $50,000 mark. As it stands, the artist closest to hitting Nemesea's milestone is just a fifth of the way there.
Jamming in the virtual, viral garage
The trend is undeniable. If you spent your weekend afternoons playing in a garage band, only to be denied that major record deal, the Internet is finally delivering on the opportunities. The dynamics are changing. Even at axe-peddling GuitarCenter (NASDAQ:GTRC), more floor space seems to be devoted to home recording gear than ever before. Recording music through your computer is a major component of Apple Computer's (NASDAQ:AAPL) iLife productivity software package, too.
Oddly enough, it's not Apple or even the major studios that are the gateways to unsigned exposure. Yes, even the music gear retailers also come up empty. One does have to give Guitar Center a nod for its Guitarmageddon talent search, but you just don't see that merchant-backed hub of unsigned digital activity that one would expect from the parent company of GuitarCenter.com and MusiciansFriend.com.
The true innovators and enablers are coming from unlikely places. Sellaband is there, for sure. You also have the clever BurnLounge that allows individuals to dream of becoming major moguls by opening up their own digital downloading stores.
However, the real push has come from social networking sites like News Corp.'s (NYSE:NWS) MySpace where bands have been lining up virtual "friends" for a couple of years now and enlisting them as new economy street teams to help promote their music.
Where the bands aren't
Unsigned music streaming sites have usually been bootstrapped efforts by unlikely entrepreneurs with their hearts in the right place. The problem is that the heart is often too far away from the pocketbook. MP3.com is one of the few exceptions of a haven that received a large influx of cash -- and even went public -- but ultimately flew too close to the sun when it made a bet that it could get away with serving as a digital locker for commercial CDs.
At its peak, MP3.com was delivering four million streams a day. CNET Networks (NASDAQ:CNET) wound up buying the domain but decided to initially use it as a portal for directing users to commercial downloading services.
It's odd, isn't it? Apple has always championed itself as the choice for creative thinkers, yet its iTunes store only sells downloads of third-party major and indie labels. A music subscription service like Napster (NASDAQ:NAPS) that bears the name -- yet no corporate connection -- to the renegade peer-to-peer file swapping site, also keeps its offerings mostly on the mainstream. Google (NASDAQ:GOOG) has been the ultimate cottage industry elixir -- it is even the company serving up the ads on Sellaband -- yet it has been slow in rolling out a music interface of its own.
Wouldn't it be a hoot if Microsoft (NASDAQ:MSFT) becomes the major portal to lead the way for the unsigned? The same fuddy-duddy giant hoping to pitch brown Zune players later this month?
Don't laugh too loud. Right now, Zune is teaming up with MP3.com for a battle of the bands that will find winning artists flown out to San Francisco for a webcast concert. Will the eventual Zune store also provide an enterprising gateway for the unsigned? Will it be enough to beat Snocap to the punch with what's going on at MySpace?
Yes, the tide is starting to turn for the undiscovered artisans out there. The opportunities are there, from sea to shining Nemesea.
Digital music is a high growth industry that is often explored as part of the Rule Breakers newsletter service, and CNET is a stock pick there. Microsoft is an Inside Value newsletter service recommendation.
Longtime Fool contributor Rick Munarriz still keeps his synthesizers nearby though he's far more active on the computer keyboard these days. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
