Is Crowd-Funding the Next Revenue Maker for the Music Business?

By Patrick Nelson | February 18, 2014 | The Mothly Fool – Buried in crowd-funding web site Indiegogo this month is an unusual proposal for those wishing to get in on the occasionally lucrative music business.

Start-up Gideen wants you to contribute to its website development costs via Indiegogo, and in return Gideen will let you choose a song from its pre-launch song database, and give you a third of the future music income of that chosen song for five years.

Your cost is $25 to make the Indiegogo pledge.

Twenty-five bucks for a third of a Madonna song? Madonna reportedly made $125 million in 2013.

Not quite. The database that Gideen wants to build is of undiscovered, developing-level songs, not established music by known-quantity artists. Madonna and her established ilk will be nowhere to be found.

Business model

Gideen’s unique business model is to create a website—using existing seed capital and future Indiegogo contributions, and then populate that website with undiscovered music, which it will then sell a piece of.

It reckons that by doing that, it will provide financially for music creators, and also investors: The investor gets a stake in the future revenue—if any—of the intellectual property.

The fly in the ointment is obviously that the music is unproven, and there may well be a very good reason that it is—there’s no guarantee that it’s any good. Indeed, this could be the failing in the entire business model.

Gideen calls this undiscovered music market a “secondary” market and says it’s estimated to be 70 times the existing primary market … though Gideen doesn’t provide anything to back up that claim. The primary market is the Madonnas and Lady Gagas of this world.

What’s interesting is that you get to choose the musicians, producers, and songwriters that you want to invest in after listening to tracks. So you get to play music mogul, and if you trust your “ears” and reckon you can spot a hit—or better, longevity, the holy grail of the industry—you could conceivably recoup your investment.

read more: http://www.fool.com/investing/general/2014/02/18/is-crowd-funding-the-next-revenue-maker-for-the-mu.aspx

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