Interview Time: Bandstocks.com

Bandstocks.com

An exciting new investment scheme called Bandstocks, which will allow music fans to buy a financial interest in artists’ album releases, has been launched. Bandstocks' founder Andrew Lewis talks to Musicrooms and explains how the business model works.

Bandstocks.com  is a website where fans can invest in an artist by buying £10 investments (called Bandstocks).  Artists use the site to raise a fund to record and market their album.   It’s a very friendly deal for artists: it gives the artists complete creative control and doesn’t involve giving away too many rights.  Details of the artist deal are on the site.

These are real investments, not donations or pre-orders, so if the artist does well, people who buy bandstocks will start to get money back.  Because we are following all the regulations about investments to the letter we have to warn people on the site that they may lose money, but there is in fact a reasonable chance of making a profit if you back the right artists.  More importantly, there is a whole package of rights that you get when you buy a Bandstock that we hope will make people think they have had pretty good value for their tenner anyway – you get a free download of the album included in the price, a credit on the CD and on the site, the right to buy a limited edition signed by the artist and priority booking for gigs.  We will also try to arrange  other perks for Bandstock owners: these might include one-off private gigs, special tracks and merchandise.   

What has motivated you to set-up Bandstocks.com?

A lot of really great artists are not well served by the established record companies.  That is not to say they can’t get deals: very often the record deal is actually the start of the problems.  Quite often bands sign a deal full of optimism and then find out a year of two later that they are not getting the support they expected or the record has come out and not achieved the sales that the record company wanted for it so they get sidelined and eventually dropped which obviously damages the band in lots of ways and quite often results in them splitting up.  

The idea behind Bandstocks is to give artists more control over their destinies and allow them to make records on their own terms without the commercial pressures that apply in record companies.  If a million people want to buy a record funded through Bandstocks, that would be fantastic, and we have the distribution and know-how to cope with that, but if it is a brilliant left field record that maybe only 25,000 people want to buy  (which would  result in being dropped by a major and some of the big indies too)  we would be very proud and happy to be involved with it and because our economic model is different, the artist can earn well at that level and the fans should also be getting at least some of their investment back as well as the other  rights and benefits of owning Bandstocks.

Have you set Bandstocks up because you think record labels are failing UK artists?

They are failing a lot of really talented artists who make great music, but don’t have almost instant commercial success, but I certainly don’t think they are failing all UK artists.  The best of the majors are very good at selling very large quantities of records around the world and this works for the big commercial sellers – although even then the artists pay an increasingly heavy price to be part of that machine.  There are a handful of really good indies who do an amazing job too in a way that is perhaps more respectful to the artists, but most indies are struggling to find enough funding and very often end up looking to the majors to provide it.

So we set up Bandstocks to fund music in a way that is truly independent of the usual commercial considerations and rules.   

Is fan-funded models like this the only alternative to labels?

No, there are already other alternatives.   There are a number of venture capitalists and complicated tax driven funds set up for rich investors which artists  can go to for money.  Big businesses that didn’t start out in the record business (like Live Nation) are also getting involved, but mostly so far at the superstar level.  I am sure there will be many more new models and ideas emerging over the next couple of years.  

What I think is appealing about the Bandstocks model though is that as well as raising finance, it also cements the relationship between fans and artists and because the transaction isn’t just about money, it means that it ought to be possible to continue doing very artist friendly deals whereas most other models are likely to make things worse for artists.  

Artists have always been fan funded in that it is fans who buy the records which generate royalties for the artists and profits for the labels.  Bandstocks just moves the buying process forward a little bit and in return for their early commitment, fans get far more than they get when they buy a CD.  This includes a share of the profits that would otherwise have gone to the record company.

The basic premise of the site is to buy stocks in bands/ artists. Can site users get anything else from their site i.e. could they make money?

You can make money, yes.  If you have a look at the calculator (on the Explore page of the site) you can get an idea how much you stand to earn at your estimated sales level.  We are careful not to sell this as a get rich quick scheme and because we are following all the regulations about selling investments to the letter we are very careful on the site to point out that you might lose money too (although this won’t happen if you invest in frYars, the first artist on the site, because we are guaranteeing that you will at least break even).  

But apart from the money, people who buy Bandstocks will get a download of the album, a name credit on the album and the site, the right to buy a  limited edition signed by the artist and priority booking for gigs, so we hope people will think they have had pretty good value for their tenner whatever the financial return.

If one of our readers has a band and wants to get on Bandstocks how do they go about it?

They can open an artist account at bandstocks.com, create a project and submit it for voting.  We will put it onto the site if we think there is a reasonable chance of it generating enough support to raise a fund and then once it is in the voting section ,it us up to the band’s fans to register enough votes to move the project into the investment stage of the site.  In the investment stage, we make a formal offer to sell £10 Bandstocks to raise a fund for the album.  If we reach the target, the money is spent on recording and marketing according to a budget agreed with the artist.  If we don’t reach the target, the money goes back to the investors and the artist is free to go and sign another deal.

2 years down the line – what do wish to have achieved through the launch of Bandstocks.com?

I would like bandstocks to be seen as a viable alternative to a traditional record deal both for great new bands and established bands whose record deals have come to an end.  I would, in particular, like to help fund some really great records that might otherwise have got lost within the conventional business, and to have lots of happy Bandstock owners reaping the rewards of the artists’ success.

www.bandstocks.com