After bankruptcy, investors take on Sellaband's debts

The crowd-funded music website Sellaband was declared bankrupt and found new investors this week.

Netherlands-based Sellaband pioneered a business model that should revolutionise the music industry. The website brought bands and their fans – dubbed ‘believers’ on Sellaband – together to enable those without a record deal to record albums. Fans could contribute a minimum of 10 euros to the help their favourites launch an album. The money they would be returned to them if the band turned a profit. Effectively, the website allowed fans to become stockholders in their favourite groups.

Bands from all over the world registered with the site since its launch in 2006, and some found plenty of investors to fund their recordings. One of the biggest names affiliated with the website was Public Enemy. The band intended to raise a quarter of a million dollars to record its next album. By the time Sellaband went bankrupt it had collected 71,000 dollars.

New investors

The website’s founders, Johan Vosmeijer and Dagmar Heijmans, have refused to comment on the cause of their company’s bankruptcy, which was declared on Monday. But a new investor was already announced on Wednesday. Court-appointed trustee Paul Schaink said a Munich-based investment group will take over. The new backer has promised to take full responsibility for the company’s financial obligations to artists and ‘believers’. Schaink refused to comment on the nature of further reorganisation, other than that the website would relocate to Germany. Sellaband’s website is currently no longer operational, but it has announced it will reopen for business on Thursday.

Co-founder Pim Betist, who left Sellaband last year but retained a minority interest in the company, was willing to talk about the site’s shortcomings. He said the business model had some major flaws: the site was too wide in scope, there was little money for promotional activities and quality control was virtually non-existent.

Opportunity for some

“Recording an album is expensive these days,” Betist said. “This means little money remains for promotion. It would be better to distribute tracks digitally and concentrate on smart digital promotions.” According to Betist, none of the 50-odd bands that were able to record an album with money raised on Sellaband became a hit thereafter because.

Still, the website did create new opportunities for bands such as So What from The Hague. “Thanks to Sellaband we didn’t need to look for a recording company,” singer cum guitar player Bram Wesdijk said. “We recorded our album with a very good producer in the UK. We play a lot of gigs, and next month our little The Hague band will even be playing in the United States.” Wesdijk said the band’s believers have already turned a profit. “Half of all we make is theirs, but it won’t amount to a lot.”