SellaBand Bankruptcy Shows Poor Execution; Not A Condemnation Of Fan Funding

from the too-bad,-but... dept

Wed, Feb 24th 2010 4:25am — Mike Masnick

With the news that SellaBand has filed for bankruptcy, we've been seeing some gloating among those who don't believe in direct-to-fan or fan-supported business models for music -- suggesting that Sellaband's failure is an indication that those models don't work. Of course, that's kind of like arguing that the personal computer industry is a failure because Osborne went out of business. Sellaband wasn't the first in the market, but certainly was a pioneer in promoting fan-focused business models. But a lot of Sellaband's troubles came down not to the model, but to actual execution. Every time we'd post about Sellaband, we'd receive a bunch of emails and comments from people who had really bad experiences working with the company.

Unlike the more recent crop of companies in this space, that appear to be a lot more flexible, Sellaband was pretty rigid in its setup. Rather than designing itself as a platform for fan funding, it tried to position itself as a label that also used fan funding -- but that required doing a lot of stuff that labels help with, and one of the complaints with Sellaband was that it wasn't well setup to handle much of that. Separately, unlike other fan funding options, Sellaband used to require a band to raise $50,000 -- which is a lot more than many bands might need. Eventually this changed, but it made things slow going for Sellaband. Furthermore, one of the bigger problems with Sellaband was that it didn't quite have the model right. It did very little to encourage actual connecting with fans, and never did a really good job setting things up so fans had a good reason to buy. Sellaband seemed to assume that people would just support a band for an "investment" in their album. But that mucked up the fan relationship a bit. Fans support a band because they want quality product (music, experience, access) back, not potential monetary returns.

The failure of Sellaband is a failure of execution, but certainly not of the idea that you can create models that allow content creators to build business models by getting fans to support them via more creative business models.

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Filed Under: fan funding
Companies: sellaband

12 Comments

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fogbugzd (profile), 24 Feb 2010 @ 5:35am

Failure is always an option
In the free market, failure is always an option. In fact, the potential for failure is essential for the system to work correctly. Things that are unsuccessful should fail.

Unfortunately, we don't have a free market. Apparently you can get so big that the government considers you "too big to fail." The second best option is to get big enough to be able afford to buy politicians dedicated to protecting your antiquated and inefficient business model.
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Devilish Presley (profile), 24 Feb 2010 @ 5:51am

CwF & Then DIY
Sellaband, and possibly the other companies you mention, just seem to us to be feeding the hunger for a "middleman" by some artists - which surely should be absent from CwF + RtB anyway? Far more attention needs to be paid to the CwF part of the equation. If you make your art and fund it yourself to start with - by playing live for example - once you have CwF's some of them will be engaged enough to come on board and help you, possibly by supplying skills and time not just finance.

Once you have a decent grassroots support network and a good strategy, you can then attract investment to take things to the next level. You don't need these kind of companies any more than the old record labels.
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Free Capitalist (profile), 24 Feb 2010 @ 6:21am

Re: Failure is always an option
Things that are unsuccessful should fail.

That about sums it up right there.

Unfortunately, we don't have a free market.

Another adroit observation IMO. It is most annoying that our major media players incessantly define our system as being "Free Market", diluting the original context and worthy ideal into representing the twisted, mutated remains of a system of mercantilism.

The obsolete network of record labels, and their baffling level of access to legislative power (and the trampling of individual rights this cronyism is bringing about) pretty well illustrates the whole farce.
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Lurker, 24 Feb 2010 @ 7:43am

Sellaband bought by German company
Dutch newssites are reporting a German investor bought the company and its financial obligations.

see http://translate.google.com/translate?hl=en&sl=nl&tl=en&u=http%3A%2F%2Fwww.rtvnoord.nl%2 Fnieuws%2Fnieuws.asp%3Fpid%3D89402
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Joe, 24 Feb 2010 @ 8:12am

Re: CwF & Then DIY
There's value in assisting the CwF model though. Think about how valuable something like MySpace Music is to a lot of artists. Plus, a lot of artists probably have no idea how to set up a server, communication channels, music streaming or anything else. Sure it's possible that fans will help them out with that part, but I don't think bands can or should always expect that to happen.

It doesn't sounds like SellaBand was doing it right, and I'm sure there are a lot of other companies doing it wrong, but that's not the same as saying nobody is doing it right (or providing any value to the band or their fans) or that they're all just middle-men.
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fogbugzd (profile), 24 Feb 2010 @ 8:22am

Re: Re: CwF & Then DIY
There is nothing wrong with being "just middle-men." Middle-men can provide essential services. The problem that the music industry has now is that the middle-men are presenting themselves as the industry, and saying what is good for them is good for musicians.
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Esahc (profile), 24 Feb 2010 @ 8:36am

I have my eye on Kickstarter as a better option for creative people.
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Anonymous Coward, 24 Feb 2010 @ 12:12pm

Another utopian web 2.0 venture bites the dust.

What a surprise.
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Mike Masnick (profile), 24 Feb 2010 @ 12:46pm

Re:
Another utopian web 2.0 venture bites the dust.

Actually, if you followed the details of SellaBand, you would know that it wasn't particularly "web 2.0" which was actually a big part of the problem. It was founded by former record execs, and really acted much like a traditional label. Hence the problems.
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Gary Storm, 25 Feb 2010 @ 5:37pm

Re: Re:
Well actually Mike they didn't even get up to the level of a traditional record label. They did no promotion of artists (or even themselves). They offered next to no support to the artists. They did not organise any physical distribution outside of their own little patch of Europe (ie to have artists albums in American stores for instance, for their American based artists).

Sellaband had the field for music lovers and music writers to meet, interact, and get some funding together. They had contacts with some famous producers. They had lot's of promises that they never kept, and messed up alot of things that they did try to do (ArenaFest for example).

Mandyleigh was the first artist to 'come out' about how crap they were, and now others are following (after the bankruptcy).

With V2, it gets even worse. The T&C's have changed so that any investor get's their money tied up in SAB forever, after 15 days. That's a joke. I guess they want to either kill the whole thing off or just get in the suckers who don't read the T&C's. If you don't agree to the new terms, then after 12 days you are automatically in (as if you agree) and you're money is stuck there forever. So much for Escrow.

I`ll send you the new T&C's for investors by email.
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David O., 2 Mar 2010 @ 2:35pm

Re: Poor Execution
I agree that SellaBand bankruptcy shows poor execution. And yes there are alternatives to Sellaband and there is a relatively short review of them here: Alternatives to Sellaband
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Dewex, 22 Feb 2012 @ 12:21pm

Why would I bother?
I took one look at Sellaband two years ago and thought: it's a bank; they're just looking to accrue large deposits and gain interest until the thresholds are met; they have too much artistic control in production over bands when those thresholds are met; their model does not encourage anything other than the mainstream.

That was then. Now they're more flexible on thresholds, but besides that, the model still doesn't seem that much better.
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