Anyone recorded an album with venture capital? Please tell me all!

August 18, 2011 8:39 AM

I'm in a band, and we're being courted by a fairly senior guy in the music industry. He's suggesting that rather than signing ourselves away to a major, we fund the first 18 months (so album recording, tour, publicity etc) we get funding from venture capitalists. Does anyone have any experience with this, or have any links for further reading on this? The music industry can be an unforgiving environment, and I want to know as much as possible independently to our potential manager...
posted by anonymous to work & money (13 answers total)

I read Bob Lefsetz. He opines on this subject on his blog. He is very critical of the majors and is pushing the "new" music industry. Worth reading. Not sure if this is what you are looking for, but he knows the business. He also will answer emails if you send him one that interests him.
posted by JohnnyGunn at 8:45 AM on August 18, 2011

yeah...the money that the major labels fronts you (for recording, etc) is a LOAN, and the rates are usually atrocious.
posted by sexyrobot at 8:48 AM on August 18, 2011

No personal experience, but here's Steve Albini on how getting a major label deal is basically a great way to sell yourself into debt. VC's might be a better option.
posted by Gilbert at 8:53 AM on August 18, 2011 [1 favorite]

VC vs major label is a false binary. There are lots of other alternatives.

The most implausible aspect of this idea is that venture capitalists would invest in an insane longshot like a band. But if he can find investors, great - the question is their expected return, and how long it would take you to pay off this loan. (And the amount of the interest.)

I work in the music industry, and apart from "crowdsourced" funding tactics like Kickstarter, I have never heard of a VC-album scheme.
posted by Marquis at 9:05 AM on August 18, 2011 [2 favorites]

you might want to read some of amanda palmer's blog and assorted interviews. she talks a lot about the big studio system, the new media industry, and what you can expect from both.
posted by nadawi at 9:05 AM on August 18, 2011 [2 favorites]

Sxip Shirey just funded his second album via Kickstarter, for what that's worth. For the first one I think he just needed help with the production (maybe?), and only asked for, like, five grand, but just recently he asked for (and received) $20,000 for another album. And when I say "asked for" I mean he asked his fans, via Kickstarter.

$20K is not so huge compared to what a major label might pay, I guess (that's like half a minute of a Ke$ha video) but it was all he needed to record and produce an album, and he has it all right now up front. The only thing he owes is a bunch of CDs.
posted by Squid Voltaire at 4:00 PM on August 18, 2011

VC funding bands is an interesting idea, but rarely executed. I've only *heard* of the concept, but I don't know any musicians or even entertainers that have VC funding. I'm rather familiar with VCs in the tech start-up world, so it tickles me as an amateur musician (played in bands, weekend warrior tours, local gigs, small time recording, etc) but a professional developer that the idea of VC has slowly been spreading into the band world.

But it's pretty common that signing to a Major really puts you in the deep end (the bad kind). It's obviously been more common to go the DIY or independent label route, but that's also tough. Kickstarter as mentioned by others has worked out really well.

However, there have been bands/musicians savvy in the tech world to blend their talents. So as a band, they'd also release a web/mobile app or sell an experience along with their music -- that has VC backing. I'm not sure if that is an option. But purely a straightforward musical band, I've never heard of one funded by VC. But perhaps maybe can have several campaigns going on at the same time: going the kickstarter route but also pitching to some alternative investors and finding other sources of funding.

Good luck!
posted by xtine at 4:23 PM on August 18, 2011

Anything is better than a major label.

Anything.
posted by -t at 4:46 PM on August 18, 2011

VCs will rape you just as bad as a label. That's their business. Self-funding/kickstarter/fans is the way to go.
posted by unSane at 8:15 PM on August 18, 2011

You really need to be looking at funding your album through your fans.

PledgeMusic is the market leader for this service, and you should really contact them. (Ob. Disclosure ... I work with them)

Check out the site and FAQ's ... MeMail me if you want further info.

J
posted by jannw at 2:43 AM on August 19, 2011

oh ... and also ... the PledgeMusic wikipedia page gives a good 1 page overview of the platform.
posted by jannw at 2:47 AM on August 19, 2011

There was a band that did this on Dragons' Den - a BBC TV show. Not sure of your location, so if you're not familiar with the format it's a panel of rich VCs who have businesses pitched to them to try and receive an investment.

The band Hanfatter received £75 000 investment from Peter Jones - you can read about them on wikipedia here. There is another article here. Most interesting perhaps is this Guardian music blog about the band and other VCs in the music industry.
posted by multivalent at 4:23 AM on August 19, 2011

*Hamfatter even - it's still a stupid name even when typed correctly.
posted by multivalent at 4:25 AM on August 19, 2011