Diehard music fans often feel invested in their favorite bands’ success. At SongVest Records, this investment becomes literal: the record label is using an innovative crowdfunding business model to sign artists and help get their music off the ground.
SongVest Records has announced the signing of its first artist, Los Angeles-based rock singer Kate Clover. The record label also launched its second fundraising round (via crowdfunding) on May 11. The first crowdfunding round from last year raised $56,300 from around 60 investors, while the second has already hit $82,400 as of May 27.
Music lovers invest various amounts and in return receive royalties and exclusive access to the artists. Investors can even gain one-on-one interactions with artists and VIP access to parties.
SongVest Records Founder and CEO Sean Peace, who is based in Raleigh, always had an entrepreneurial bug. He worked at SAS for years and developed the idea for SongVest after learning from his songwriter friend that you can buy and sell music as an investor.
Peace started the website SongVest in the late 2000s, where he sold portions of music royalties as memorabilia, but was unable to scale this business. So he formed Royalty Exchange, an online marketplace to buy and sell music royalties, which he eventually sold in 2015.
But he always wanted to go back to the idea underlying SongVest—allowing multiple people to buy royalties. Once the JOBS (Jumpstart Our Business Startups) Act passed in 2012, making it legal to sell securities directly to the general public via crowdfunding, SongVest was reinvented as a way to fund albums.
“Then we kind of had a secondary epiphany and said, Wait a minute,” Peace said. “Why are we chasing all of these artists, trying to get them to allow us to crowdfund their album? Why don’t we just become the record label?”
Thus, Peace pivoted his business again and SongVest Records came to fruition.
“We said, we’ll just crowdfund the record label and allow people to join the record label instead of an album-by-album basis,” Peace said. “We kind of become Willy Wonka. We become the person who can create the chocolate bars. We create the albums because we signed the artists.”
The investors—or “SongVestors”—are unique in that they can actually increase an artist’s prominence and the success of both singer and record label.
“What we potentially can bring that nobody else can bring is our SongVestor community, this group of whether it’s 10-20 thousand, 50 thousand, 100 thousand people that is in essence this ‘street team’ that can help us market your albums above and beyond what any other record label might be able to do,” Peace said.
These SongVestors go far beyond just the artists’ fans and can share the artists with their own social networks to fuel the success of both the artist and the SongVestors, in what Peace said is a competitive advantage over other record labels.
“A lot of artists have a great first album, and then the second album’s not so good,” Peace said. “So we’re just trying to really put everyone on the same page to align them towards our goal of promoting these artists. And hopefully we can broaden it through the crowdfunding investment, continue to broaden the company so that we can continue to grow.”
SongVest Records recently inked its first recording artist, Los Angeles-based, punk-influenced singer Kate Clover. Her debut single Channel Zero is already available for streaming.
With the onset of Covid-19 this year, Peace said Spotify streaming has gone down, likely because of less commuting, but video music playing has increased. Peace hopes to take advantage of everyone being at home with SongVest Records’ new fundraising round.
“Those investors will have a lot of say in where we grow and how we grow,” Peace said. “We don’t know of any other record label that has this kind of fan investment.”