(CNN) -- It appeals to the venture capitalist in all of us, whether we be a stock broker, a ruthless talent scout or a proud patron of the arts.
Charlotte Froom of The Like, a band that used the Internet to market its first three albums.
During the past two years, a few enterprising Web ventures have invited music-lovers to discover new talent and invest in stocks in their favorite artists. But before dreaming about making a fortune, it pays to be a fan.
One of the first of these start-ups was Sellaband, founded in 2006 by "fans, first and foremost -- music-lovers at heart," according to Dutch CEO Johan Vosmeijer. Sellaband uses the model of the themed social networking site to rally funds in order to finance an album.
On its Web site, Sellaband says this is how it works: "Artists upload their music and profile. Fans find artists they like and believe in. $10 (plus transaction costs) buys them a piece of the action. $50,000 gets the artist in the studio. Fans get an exclusive CD sent to their homes. Artists make their dream come true."
Every $50,000 quality-controlled artist is introduced to an A&R (artist and repertoire) consultant, a producer and a recording studio. All income derived from advertising and music sales on the site is split evenly between the musician, the investors and Sellaband, while the company also makes money from publishing and interest on the stocks.
But Sellaband's main draw is its friendly grass-roots structure and management, which is focused on promoting and producing unnoticed or underexposed bands, with 25 artists having sourced the full recording budget and 17 fan-funded albums released so far.
"We have a 19-year-old French chanteuse on our roster of Recording Artists, as well as a dangerous Heavy Metal three-piece from Japan -- and everything in between!" Vosmeijer enthuses.
Sellaband's evangelistic attitude not only encourages artists to actively promote themselves, it calls on investing "Believers" to spread the word, making the enterprise clearly artist-oriented and fan-based.
Nonetheless, Vosmeijer expects Sellaband to break even in autumn of 2009, after three years of operation.
Sharing the artists
The strategy of "crowdfunding" -- whereby funds for a project are raised directly through individual donations from the public -- is based on the concept of "crowdsourcing" -- outsourcing tasks to the public, instead of using in-house employees.
Already in 2003, the Web site ArtistShare gave fans the opportunity to fund projects by established artists in exchange for behind-the-scenes access to the creative process and other insider exclusives.
"Our mission is to ensure the creation of new art and music, despite any destructive technology that might come along -- file sharing, digital downloading, anything that will undermine an entire industry," Brian Camelio, ArtistShare's founder and CEO, says on ArtistShare's Web site.
"We believe the true value of an artist is their creative process, their creativity, not the end result."
Slicing the pie
But what about all the artists who aren't even yet known to the general public?
"There are some 10 million artists who have already built fan networks online," says entrepreneur David Courtier-Dutton, who founded Slicethepie in June 2007. "I saw the emergence of social networks and wanted to unlock that potential."
Slicethepie operates according to a stock-market system of scouting, buying and trading.
How it works: Artists upload their profile and three songs to an Arena; their music is then reviewed by paid amateur Scouts; fans may buy Backstage Passes giving them exclusive access to an artist; fans may buy Contracts entitling them to a return on the artist's sales over a two-year period; the Contracts become fully tradable on the Slicethepie Exchange.
Once the album is released, Slicethepie receives a 2-pound sterling ($3.66) royalty on every album sale. And with more than 7,000 artists signed by January 2008, Slicethepie released its first fan-funded album (The Alps' "Something I Might Regret") this March.
And because these guys take their business seriously, Slicethepie focuses solely on smart fan filtering and sound professional financing, delegating the rest to their specialized partners.
"We sit anywhere in the industry," says Courtier-Dutton. "We partner with labels, social networking sites and online businesses, and leave the rest to marketing agencies, tour managers, etc."
World without music moguls
Back in 2005, the online game Fantasy Music League first challenged participants to role-play music-label mogul for the chance to win cash and prizes. No wonder the game is now obsolete, as major labels are progressively losing their grip on the increasingly online industry.
"Most of the traditional labels continue to treat the Internet as a threat and not see it as an opportunity," Vosmeijer says. "They are afraid to change and keep holding on to that little bit of power they still think they have."
"It's the fans who make you, and not someone saying we're going to sign so-and-so, because we think he'll make us take a punt," says Sellaband recording artist Francis Rodino on Sellaband's Web site.
Fellow artist Julia Johnson adds on the Web site: "There's no sitting down and saying, we will package you like this."
"Most bands make no money for major labels; a few superstars cover the losses for the others," says Courtier-Dutton, whose Slicethepie repertoire promises to be an all-star team.
The appropriately named NoMoguls, launched by music lawyer Andrew Lewis in 2008, is the latest addition in the fans-for-bands family of music stock-broker Web sites. Although written in legalese and very UK-oriented, the site also proposes an interesting twist on the distribution of its artists' albums -- vinyl.
We'll see how well the online music industry 2.0 meets analogue media, as NoMoguls is due to release its first two fan-funded albums in early 2009.
Meanwhile, not all artists with social-networking fans are embracing the online surge in band stocks.
"Is it really a solution if an artist is chosen by the number of votes, or by the sum invested in him?" retorts Pierre Fa, of the French indie band Peppermoon.
"If it's the largest number that decides, then an unknown Céline Dion will get the album much more surely than an unknown Björk. Are the bands who drum up the most votes the best musicians? As long as the only criteria for selection is a number, this process cannot be valid."
He regrets the days when the public discovered an album only at the moment of its release, as a true surprise.
"Now, we have to expose our mock-ups, our work phases, and that takes away from the freshness of the songs," he says. "It is nice to share this with the fans, but at the same time, it sort of takes away the magic, don't you think?"
Whether an embittered band-member or a lucid luddite, Fa is true to the old-fashioned way of doing business -- from the heart.
"People who just want to make money don't stick around in the music industry," he says. "The small independent labels who are fighting to survive in 2008 are the ones who are truly passionate about what they do, because that's the only way it can be done."