Sellaband — a crowdfunding service that helped musicians raise money from members to record CDs — is bankrupt, according to a co-founder and minority investor in the company, who says it ran out of money. The service has reportedly filed for court protection in the Netherlands.

Sellaband, the “crowdfunding” site for musicians, is bankrupt, according to one of its co-founders and a minority investor in the company, Pim Betist. He told a Dutch newspaper that the service, which allowed members to invest in artists by buying shares in future recordings, “made some bad choices” and is now out of money. Betist, who left Sellaband to start a new venture called AfricaUnlimited, said that too much money was spent on the production and shipping of compact discs for the artists represented by the service. Betist also told the newspaper that Sellaband had no quality control on the artists it allowed to raise money through the service.

A Dutch court has apparently approved the company’s bankruptcy filing, according to a report by The Next Web. Members of the site have been discussing the bankruptcy and its implications on a number of message boards, including one maintained by Sellaband itself on the Get Satisfaction support site. While an artist was raising funds to pay for recording a CD, the service kept those funds in an escrow account and retained the interest on the donations. It’s not clear what will happen to those funds now.

Sellaband was founded in 2006 and in 2008 raised $5 million from Prime Technology Ventures. It also did a sales and marketing deal with Amazon in 2007 to give its artists additional profile. The site (which currently says it’s “down for maintenance”) pitched itself as an alternative to the major record labels, by allowing any artist to appeal to members for funding. Once an artist had raised $50,000 through the sale of “parts” or shares, the service would help find a recording studio, producer, etc. to help with the production of the CD. Members who donated would get a copy of the CD and other benefits.

A similar crowdfunding site called Kickstarter launched last year, backed in part by Andy Baio of Waxy.org, founder of the event-planning site Upcoming (which was sold to Yahoo in 2005). Unlike Sellaband, however, Kickstarter is designed to allow artists and entrepreneurs of all kinds to raise money for a variety of projects or businesses, Baio explained in a blog post after the launch.

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  1. Sellaband was a brave pioneer with a flawed model. It didn’t allow for much transparency or flexibility. They’ve paved the way for new entrants – like us at RocketHub.com

  2. I`m not surprised. What you don’t know is that they were nearly bankrupt two years ago…. and were only saved when they got that investment money (what was it, $5 million?).

    No-one will invest in a new entity if they know anything of Sellaband’s history. It will need a complete name-change and also country change.

    Sellaband were run very badly in too many ways. A shame as it’s a great idea. Now maybe you know a little of what it’s been like for Mandyleigh Storm (my wife) and most probably alot of the other artists… http://www.mandyleigh.com/sellaband/

    Now we know why they couldn’t be arsed responding to her (still haven’t replied) and other artists lately.

  3. I saw a comment about Sellaband last month on http://www.crowdfundingcentral.com. There will be a mad rush to crowdfunding but significant obstacles exist in this immature market. There will be a whole raft of innovation, digestion and maturity before we see real winners emerge. Best to have a strategy in place and not put all your eggs in one basket.

  4. “Crowdfunding” record label declares bankruptcy « IP, Innovation and Culture Wednesday, February 24, 2010

    [...] record label declares bankruptcy February 24, 2010 — James Gannon Mathew Ingram reported today on the demise of Dutch record label Sellaband. Although stories of recording studios [...]

  5. Oh how the people turn! You should be ashamed of yourselves!

  6. Sellaband’s problems was that the emphasis was on the money. Not only was it on the money but investors were treated like stock investors with barely any promise of return.

    I’ve participated in crowd-funding projects before on sellaband and on artistshare. And artistshare takes an entirely different approach. It’s not about the investment, it is all about the relationship.

    My two cents, I prefer the relationship.

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