stories filed under: "incorporate"
by Mike Masnick
Thu, Nov 6th 2008 9:55am
Reader Mike Z. points us to an interesting experiment by the band Francis and the Lights. Rather than going out and signing a record label deal, where the record label basically gets near total control over the band and its works, the band has incorporated itself into a company and raised $100,000 from The Normative Music Company as an investment. As the folks at Normative note, this structure is much more like a startup going out and raising angel or venture capital. It also makes a lot more sense. The label structure often takes way too much control away from a band. A model more similar to the venture capital model has some very compelling aspects to it. What's unclear from the article, though, is how the investment is structured. Unlike a startup, it seems unlikely that the band will be acquired (or go public). I'm guessing there must be some sort of "dividend" structure, where the band is expected to pay out a percentage of earnings to the investor. Who knows if it will work for this particular band, but it definitely seems like a model worth watching. Hopefully we'll see some more bands test it out as well.