I've quite literally done that before. It worked out OK, but there was never enough capital to market the band properly and we ended up with about 800 CDs that still sit in my friend's closet.
The good part about it is that each member gets an equity stake, and people who are not performers, but also help out the band (guy at merch table, managers, website guy, recording engineer, etc) can get equity stakes as well. That way, everyone is invested in making the best product possible, and sees a tangible return when things start selling.
The bad part was that it was hard to explain retained capital to a drummer. As soon as the band started to turn a profit, people wanted their money out of it. It was impossible to convince them that the money would be better spent marketing the band so that they could sell even more albums/t-shirts.
Interesting. I've been in a band before, but never tried to get signed or anything serious.
I'd guess, though, that labels have all sorts of resources to make bands popular that a band "startup" would have trouble tapping into. Do you think this is correct? Or is it just perceived...
There were some parts that were difficult, mostly finding vendors. It wasn't exactly easy to figure out who offered the best/cheapest shirts/stickers/cd pressing.
Other than that, if you hire an experienced PR person and booking agent, it is pretty much the same as a record label.
The good part about it is that each member gets an equity stake, and people who are not performers, but also help out the band (guy at merch table, managers, website guy, recording engineer, etc) can get equity stakes as well. That way, everyone is invested in making the best product possible, and sees a tangible return when things start selling.
The bad part was that it was hard to explain retained capital to a drummer. As soon as the band started to turn a profit, people wanted their money out of it. It was impossible to convince them that the money would be better spent marketing the band so that they could sell even more albums/t-shirts.