All of the suggestions or what Philip had been thinking of are pretty "generic" solutions to the "problem". I spent 5 mins on the site, clicking around and my first impression of the Fandalism is the community and Fandalism's tag line is "Use Fandalism to show your work and meet other musicians".
The community is most likely a mix of musicians AND music lovers. So even Fandalism's original goal of serving musicians is what it is, I'm sure there are music lovers who are enjoying the community's work as well.
All of the monetization solutions suggested thus far does not cover both ends of the users.
I'm more of a coder / developer guy but occasionally I like to play the product guy. So here is my suggestion so let me know what you think especially you, Philip, if you are reading:
KickStarter for Musicians. Be the online version of American Idol or British's Got Talent. You have musicians and also they have their audiences on Fandalism.
First mission is to scout or fund the first internet musician superstar. Get the winner into a professional studio, get a few singles out. Backers get singles free, the rest gets to buy the singles fr a price. Fandalism gets a cut of the sales. The rest should be history.
Up vote if you think this will work or comment if you have more to add.
@pud What do you think? If you really want to venture out this way, I'm available for a ride. ;) That would be fun.
I love the idea of American Idol for guitarists/drummers/etc. I really could find the best musicians in the world. That would be fun.
From a business perspective, if I wanted to make money doing that, I could imagine sponsors like guitar companies paying. Fender (maker of the famous Stratocaster guitar, for you non musicians) just filed IPO paperwork and had something like $700M in sales last year.
I'm all for finding the "best musicians in the world", but what really shits me about Idol and similar shows is that they find technically brilliant singers, but they can't write a song if their life depended on it. The same with many brilliant musicians I know - they have the technical chops, but have no basic idea how to structure a song other than chorus-verse or maybe AABA.
There's got to be a market for musicians who know how to write.
She wanted to be a pop star and she became one of the greatest of all time—decades after the height of the pop star era when labels actually had the capability to manufacture them.
Frank Zappa made a career of playing rock music instead of jazz or classical which many people consider a greater art form. It never was really "pop" music but still there are many that criticize him for it.
I'd be very careful to avoid derision on the basis of popularity. That fact that you have distaste for Lady Gaga's genre doesn't mean she's not a valid artist. There's a difference between relying on autotune because you're a talentless hack and an artistic decision.
I'm well aware of Lady Gaga's songwriting ability and talent as a piano player. However, the Gaga persona seems to be her of her own creation, and I'm quite sure that at least for her first album, she wrote most of her own material.
I'm not blaming anyone - the music industry is a strange beast. But the true rarities are people like Gaga (as much as her I dislike her music), who can write and perform their own material well.
This idea is awesome and will make Fandalism something different than just another marketplace. It's also a nice time to show that not only do we not need the RIAA for distribution, we don't need them for promotion. Your site's design is also beautiful enough to do it.
For the record, most artists, including winners (I personally know one of them), say it's a double-edged sword: it gives you exposure, money and a foot in the biz, but in the end it's all about marketing and getting viral rather than concentrating on making music.
Pud - when I look at your site, I see a marketplace for video music lessons. A tonne of people would pay $1.99 to learn a Radiohead song on piano, or get that perfect 'wub wub' sound in Reason. There's similar stuff on YouTube, but it's low quality and unreliable, and discovery is hard. Create a marketplace and you'll attract the best of the best.
Prerecorded video would be perfect at first, but you could happily expand to live, streaming lessons. I'm excited already. What do you think?
That would be really interesting. Khan Academy for music lessons, except it would also be a marketplace, and maybe live video could be part of it.
I could imagine that all recorded videos and tutorials and stuff could be free, because of the community nature of your site, but it also provides 'advertising' if people want to also be teachers. Then you just provide an easy way to do video chats for classes, for cash, and that's where you collect a percentage. This is pretty easy with Google Hangouts, and there are other APIs one can use too.
This way you get to monetize the site without putting up paywalls, or changing the community ethos of the site. I think everyone understands that people deserve to be paid for their time.
That might really work. Every musician has a few tricks up their sleeve. And there are other categories like producer, sound guy, etc, where tricks of the trade are learned only if you're part of a scene somewhere. If you're a kid in your bedroom in suburban Idaho maybe you can get your parents to cough up some dough for some online lessons on how to be a DJ.
This could be very cool. I'm quite a good musician myself (varsity educated and all that), but lately I've really been wanting to learn some more solo production techniques (basically I want to make music that sounds like purity ring: http://soundcloud.com/purity-ring) as, despite all my education and experience, I don't really know squat about how to produce a good dance track. I would be really interested in somewhere where I could post a lesson request like "I want to make a beat that sounds like the one from Belispeak" and tag it with say "Ableton, production, purity ring, EDM" and someone answer it. Wouldn't even need to be paid - though perhaps you could do like a reward system: if the person who responds is awesome, you could tip them?
OT but anyway... consider it a validation of the idea.
>"I want to make a beat that sounds like the one from Belispeak"
The type of beat (and the melodic structure) they're using there is lifted wholesale from a subgenre of southern hiphop called "trap music," which takes its name from its preoccupation with methamphetamine retail.
The key is to take the classic 808 and 909 drum machines (ableton has emulations built in or you can get samples from anywhere) and put the right kind of rolls on the percussion sounds, you could try triggering them in some more unusual ways, perhaps with an arpeggiator. The "pop" sound stems from the layers of vocal processing. Tbh there's nothing terribly complicated going on production wise in their tracks, unfortunately that sound comes from having good musical ideas and the ability to execute them without fuss. That's not something you can really get from tutorial videos, but I guess your formal education will help.
I love that idea of a reward/bounty system. For example multiple musicians could try to make short tutorials and the bounty is shared among the top 3 voted submissions. That teach-me-anything and get a bounty system could work for quite a few other areas as well.
Judging by the success of games like Rock Band, everyone wants to play music. Traditional music tuition isn't suited to most people, since you start with pretty dull material, and you don't get results until you've been at it for a while. Most people will give up unless they feel progress straight away (I've spent my life doing this).
When a musician friend helps you learn a song, you get an instant rush of gratification. That's what all learning should be like. It fits the $2 impulsive-app-purchase model pretty well, and it works for any skill level.
>A tonne of people would pay $1.99 to learn a Radiohead song on piano //
Sounds like a rights management nightmare as the location of delivery (assuming the location of production is the US) is likely to have particular rights groups that you have to handle. In the UK you'd need to get rights from the PRS, the artist (if you play a clip) the production company for trademarks and what have you and probably a few others.
Just a suggestion to look in to IP rights issues before you get too far along with things.
Not to mention that he would need a deal with the collection societies in each territory he wants to have business in, e.g. to serve UK users he needs a deal with PRS, in the US he needs to deal with ASCAP, BMI and SESAC, in Germany with GEMA and so forth. He would need to block the service in any territory where he doesn't have a deal with whoever is representing the publisher of the work in the given territory.
Rather than focus on any single narrow field, why not add Q&A sections. Start with one section (like "how do I play song x?") and gradually add others ("equipment tuning", "computer generated music", "business questions", "technical stuff for narrow audience x" etc.)
With 400k users, you have the community to turn this into a Stack Overflow for musicians.
A few months ago I did a post where I promoted a page I made for my dad Nick Dooley which was basically to test whether a simple "online busking" model has legs.
The results were that about 4000 people downloaded the 1st track, about half that the second and roughly 350 each for the last two (I didn't do enough analysis to know if those last 350 or so people were the same ones or not).
Out of those, about 20 people gaves some "bucks" and 9 people subscribed to the mailing list.
I would say your best bet is to allow people to pay artists on the site via a "virtual guitar case" and take a small percentage of each transaction.
If you have 404,772 users and promote one per day and drive 4000 people to that page per day, and your average musician drives $40 worth of revenue per day, you know. You make some money. Then you just increase the traffic and away you go.
How about you let musicians sell either through you directly (a la itunes or amazon) on their sites or post itunes links? You could take a cut for the former (less than itunes) and get them to release unencumbered music.
A social network dedicated for musicians can't yield any blame on you. Musicians need visibility. You would provide it for free and take a small cut on the one who get traction and earn money from it. It sounds to me like a fair deal.
This is a kickstarter like model specialized for musicians.
This. Also, allow them to sell the rights for commercial reuse. Although I don't think it should sound like charity or donation. Musicians should be able to set a price for a 'virtual ticket' that will allow you to download their music via any means, without the guilt.
For now I'd focus 100% on improving the product. You're building a social network of sorts, which means the network effect is your big hurdle. You're in a land rush. Forget about anything other than winning that land rush right now. Build a network so populous and engaged that even if someone builds a better site (and if your growth keeps going, they will) it won't matter.
If the server bill gets too high, toss in the least amount of Adwords you can to pay for it. Or just ask your users to donate. Or come up with some premium features that are just compelling enough to keep the lights on. Or raise money from angels. Again, keep the lights on while you improve the product and grow your userbase.
Focus on engagement. Sign ups are almost meaningless if the users bounce and never return. The reason Facebook is so amazing is not just that they have a billion users, it's that they have 80% of them checking the site 5x per week (or whatever).
See how many users you can get into the habit of coming back to your site on a regular basis. That's the number that ultimately will drive everything: revenue, long term network effects, etc.
BTW, there's no reason in hell it should cost you $2500/mo already. Obviously you can afford it to some extent but that's just a waste of money. You should be able to run it for < $500/mo easily.
'Engagement' is overrated. Some sites , e.g Google and Wikipedia probably have super high bounce rates, because they solve your problem on the first page you see. What if people start entering his site mainly from band pages, get all the necessary info and leave? That wouldn't be a bad thing for users.
Actually, that would be a bad thing for his site. If he gets one-time visitors, he will need to keep growing to offset the churn rate. That means he'll probably need to rely a lot on search engine traffic, and for the viral growth to continue. If both go away, his site is dead.
I think it is sad that this is probably the correct answer.
I would love to refute it and say "no, you need to monetize it, don't just get users and hope". However, recent history has shown that gaining traction and losing money every month is enough to earn yourself a heavy payout later.
Great blog post. It was refreshingly honest in its approach to the HN community. HN gets a lot of the "How do I get started fishing?" type posts. I very much enjoyed reading this "Okay, I have my hook set on something big. How do I pull it into the boat?"
I would recommend doing a lot of little things in different directions that can be measured then focusing on the ideas that show the most promise.
Pick the low-hanging fruit first, like ad sense. Keep the ad box small and unobtrusive. You could set it up in a day and see how it performs. You can always remove it later.
A simple mobile app that you could give away for free shouldn't take long to write. That will get you something installed on lots of devices that you could then use as a foothold for upgrades and premium features down the road.
Finally, find ways to reach out to your users and really tap into what they want from the site. Build ways into your site to get that reach and to take metrics of everything they're doing. In real terms, I'm talking integrated surveys, A/B testing of interfaces and features, and ways for you to increase the channels of communication between you and your users. Your users will help you figure out which way you could go with this thing.
Think stock market for music meets Kickstarter. As you mentioned, most musicians are strapped for cash. Most also have plans for bigger and better things, need new equipment, and want to get the word out about their music.
Let each musician set a value on their musical worth (market cap). Let friends, family, and fans contribute to the musician for a percentage stake in that musician's future/company. You take a cut of the money contributed sort of like a brokerage/transaction fee. They own a share of that musician. If I own 10 percent of John Doe and John gets a record deal for 1M, then I earn $100,000. Sure most people never make it, but it could be a fun way to spice up interest in a musician and help out at the same time. Plus the added bonus if that person really does make it big.
I have thought about this one for awhile but don't have the technical expertise to put it together yet. I might end up kicking myself for putting it out there, but if it worked, it could be really cool. Good luck.
I think that Mr. Pud is in a great position to do something like this. It requires intricate, thorough exploration and thought and likely a lot of legal help, but it's interesting how often I hear an indie musician and think, "God if I could buy stock in that musician, because he/she's going to the top..." and sometimes they do.
That would've been totally illegal except that the JOBS Act just passed into law. Now...maybe.
There's a pretty good recent scifi book about this sort of thing, called The Unincorporated Man. Basic premise was that everybody is partly owned by other people. Own 10% of someone's shares and you get 10% of their income. Everybody's ambition is to get hold of 51% of their own shares.
I don't think this is at all out there. As a matter of fact, I'm working on something similar, but for a different vertical (which is why I don't think it's out there). Are you familiar with any other equity or revenue-futures markets of this nature? CrowdCube in the UK is the only thing that I've been able to come up with. Slated out of LA is similar, but it's not a real market, just an introduction and tracking service, like AngelList.
I had not previously checked out CrowdCube or Slated but these do seem to be promising models that could certainly be replicated in other realms. If you feel like chatting more, I'd love to hear more about what you have in the works and would be glad to share some more ideas in private. Feel free to shoot me an email.
Build another site aimed at musicians with an clear revenue stream from the start (i.e. the Zappos of Music or the Groupon of Music) and use Fandalism site as a free traffic source/advertising platform.
Continue to grow Fandalism as a social network which in effect will grow your revenue site.
- Use your platform among musicians to build a music festival and again use Fandalism as a free traffic source (and it's users as free promoters) to build a large reputable production (a la Coachella, Bonnaroo, SXSW). Live like a rock star.
This is an interesting idea. On one hand, I think my users like the Fandalism brand so I'd want to launch new stuff on Fandalism.com. On the other hand, you have a good point. Maybe I should keep Fandalism.com (the site) pure and launch experimental businesses on different domains.
Going through all the comments, there are some great ideas. We are bulding a community website for entrepreneurs/startups and could probably use some of these ideas ourselves.
Here are a few more:
- Allow musicians to offer "live" concerts to their fans or to a worldwide audience, using the free Google+ hangouts or air feature. I think they just released an API. The most popular ones can be sponsored or you could just run ads on the Youtube videos and share revenues with the musicians.
- Setup a buy/sell section on the site (or on a separate subdomain or website) for used music instruments, accessories, books, sheet music etc. and either charge a small fee for listing or a transaction fee. If you don't want to run an ecommerce site, just let them list their stuff on Ebay or Amazon, but allow links to it from their profiles. These could be affiliate links and you could split the revenues with them (with full disclosure on the site).
- Have targeted email newsletters, for different interest areas. Sell advertising within the newsletters (it won't clutter your site).
I totally agree with this last point. I help run a small sailing website. We have no ads on our site, but we send out regular email newsletters that contain ads. These ads more than pay for the site itself, and we can easily switch advertisers between the newsletters. It's been a lot easier than I thought to target advertisers, because we have a load of data on how many people have subscribed and click-through rates etc. We typically sell the adverts in blocks of 3 or 6 months, where we send out 2 newsletters per month.
The most clicked-on links in that email newsletter is a list of the recent posts made to the classified section on our website. It's free to post an advert up on the classified section of something you're trying to sell, but you need to be a member of the site to do that. The newsletter acts as a reminder - so people can regularly see what's been recently posted, as they probably haven't visited that part of the website recently.
Do your project ideas (big and small) just come to you or do you have a process?
And any thoughts on doing a small post on a day/week in the life of Pud? Like how much time you spend on projects (planning, coding, designing), and whatever else you do like jamming. You clearly know at least a little about time management and/or avoiding procrastination.
Here's an idea that I'd like you to try first.
Pay what you want subscriptions. Offer a subscription service that is completely voluntary. Do not label it a donation system. It is simply a subscription service. People will pay an amount of their own choosing to support the site. Offer monthly and yearly subscription packages. See what happens. I bet you will get a significant conversion rate to paid members, all whom enjoy and want to continue using your service.
Advertising is an idea, but the problem is, that you likely don't want random ads, selling phone sex, or other products a musician does not want.
I bit to late. I would have said "Come to Germany", one to three month ago, "join me at Frankfurt Music Fair, and we hustle around to hunt targeted advertisements, by shaking hand with the right people".
The other idea is to expand the business into a premium membership for live acts. I know that people are willing to pay for listening live to shoutcast streams. Managing shoutcast severs for musicians is one of the many small parts of my income. A good musician can earn about $50 in average per hour, by sitting in underpants in front of his computer, because people love paying tip!
All you need is a premium membership (accept pp and cc from listeners, payout with paypal), an own geoip shoutcast relay network, and charge some percent.
Last is your cost structure. You hobby costs $2,500/month. Thats a lot of money for the cloud trap. Own hosting or even co locating could be much cheaper in the long run. But you need some more admin work.
That's an interesting idea. Kind of like how you can pay Ebay to give your posting a yellow background, making it more noticeable.
There's something slightly icky about charging my users for visibility though. Who I consider "starving artists" (even though plenty are probably doing fine...). There's something nice about Fandalism currently being a level playing field for everyone.
By the way, Fandalism uses a version of the Hacker News algorithm to determine which posts get featured.
That all makes sense. It may not work in this case, but in general I like businesses where the customer is clear. I tend to think there's always a tension when the user, the musicians, aren't also the customer, guitar companies for example. Obviously a hurdle that has been overcome countless times before.
Pud, don't forget there are 2 sides to profit. Income and costs. Monetisation is important and there have been loads of ideas here. However, can you drive down costs? Have you investigated a dedicated server instead of EC2?
At $2,500/month in costs, even if he drives it down to $1/month, the site still isnt generating any money. Generating money is the problem, not cutting costs. At least that's the problem at hand, at the moment.
As a touring (folk!) musician, here's what I'd love to add to the platforms that BandCamp and CD baby already provide;
1. A salesforce for managing fan and venue relationships; I'd love it to be easier to build simple lists of invitations for events by location. Facebook events on their own don't cut it.
It would also be great to have some simple reminders and calendaring with mapping integration to manage booking. When did I last nag that venue? Who from our band is available on that day? What other venues are within 300 km?
2. Digital autographs! Autographs are kinda lame - but people still like them, and it makes a connection. I'd love to be able to write something on a piece of paper, snap a photo of it with my iphone, and have an app extract the message and signature - then put it on top of a promo photo before sending it to someone in a form they can use on their facebook page (ideally with links back to our band page).
3. An online platform for music lessons. Many musicians now make an income from remote instrument lessons via skype - especially in niche music categories. Skype and google chat and so on all optimise audio codecs for speech - not music, so there's one thing that could be different. But how useful would it also be to have a collabedit-like guitar, mandolin, violin, piano .. etc? The teacher could share hints and notes with the student. The teacher might also be able to select from some pre-saved sets of tunes or songs, or chord charts and so on.
If Pud just started out with one high margin product (T-Shirts?), and focused on getting a really good system in place to print/sell/ship them it could make a ton of money.
The issue he will have though is inventory management. T-shirts have a (sort of) high fixed cost and you have to sell a bunch of shirts to break even. He would need to collect a deposit from the bands to make sure they were in it to sell the merchandise.
most of the ideas posted by you are revenue models through advertising (where the real value of the user base is not extracted) or with more cumbersome product ecommerce tied with shipping which you don't want to do.
I bet you have these other ideas too - just wanted to point out that if it is an expensive hobby why not keep it as close to heart while making money too:
1. Sell amateur music and published albums of artists on the site.
2. Get musicians collaborate to create a Virtual Learning Environment
3. Let musicians get a private space to blog and evangelize their music to the visitors of the site for a fee. Support reviews, rating etc
4. Let musicians collaborate and organize music tours through the portal.
5. Let fans connect to their favorite musicians - ask questions, get autographs or learn music for a fee
Some (random) thoughts / ideas. They might or might not hit what you're looking for but they're some types of connections that came to mind when surfing the site:
- On first sight, I get the impression that it's a profile site. The musician in me wants to find others like me, or that complement what I'm doing to connect, relate, share music with, maybe collaborate with..
- Events - Maybe music related events (learning, or looking for performers) could be something to provide. A place to find gigs?
- See if there's a way you can help musicians find and take their next step. This could have some sort of value, as nebulous as it sounds. Kind of like Mixergy.
- Group buy deals that you can target to your team. You get to keep a cut of the deals.
- Adding musician tools that would be valuable. I don't want to go all cdbaby, but maybe there's something there to help musicians learn about and manage the business side of their music. I'm not sure if that means courses, a subscription, etc.
- If you can replace existing services musicians pay for, they will probably be open to paying you instead. An example of this might be voicemail, or domain hosting (very basic and cookie cut with their own email address.
I like all these ideas and want to do all of them in one form or another. Most of them I'd want to make free (like the learning stuff). But.. events... that could be a fun one. Specifically, I envision a huge trade show like CES but for musicians. There's currently one called "NAMM" but it's not open to the public. It would be a lot of hard work but I think would be fun. Ideally it would be free or cheap for musicians, and money would be made via sponsors and selling booth/demo space.
You potentially have the ultimate meetup for musicians... Music is as much about creating as connecting.
Some more ideas from the music consumer perspective:
1) I've been listening to music on the site for an hour and I've been struck with how much soulful music there is here... Any thought in helping them publish to iTunes and taking a small cut?
2) If love to be able to make a playlist by genre and share it.
3) Maybe there's a way I can give micro payments for all the stuff I like? Another angle for consumers to maybe sign up for a membership to vote with their wallet to the artists you listen to in a month..and my 10/mo is split among the number of listeners I liked in a month?
4) Could there be sponsors for learning materials?
5) What about a digital music streaming service for businesses? Good music, all original, businesses routinely pay $20-40/month and up for this kind. Put the music into genres, let the community rate it and let it self-rank into playlists.
6) Spawn an online radio station exclusively for the music on the site.
I've been around online music and radio for a while..had lots of potential ideas, just didn't have the content. if you want to bounce ideas if love to.
Forgive any typos or grammar, writing from my phone. :)
Why not a virtual trade show? Let equipment manufacturers sponsor a forum section and require that they participate on the forum to answer questions from users. It's not an in-your-face ad, but gives the mfr exposure and an opportunity to demonstrate their customer service skills (and maybe offer discounts to subscribers?), and you get money. Done right, it would be a fair exchange of value that benefits your users.
Going along with the idea of helping musicians find gigs, make the venues pay a membership fee to get connected with musicians. I would think venues more likely to be able to pay for a service over an aspiring musician. Also, I enjoy seeing such an honest response from someone in charge of a business :)
I think the supply/demand is backwards here. Most amateur musicians gig for free. Many actually pay to perform (by pre-paying the venue for x number of tickets, then hoping to recoup costs by selling those tickets on their own directly to fans).
Big touring acts pay to play too, by renting out the venue.
If was doing anything related to music, I would be doing everything I could to build a spotify with a transparent business model that made it easy as possible to get artists music in front of monetizable fans as much possible (both through direct sales and indirect revenue, concert tickets, merchandise etc)
I love spotify, but they have had to make severe concessions to labels and it doesnt look like it will be possible for them to build an app that completely disintermediates labels, I think its inevitable someone will though.
I think this is the best idea so far. It's clear that the ethos of the site is about musicians supporting and learning from each other. At this scale, voluntary contributions would easily make the thing self-sustaining, and it would help keep the focus on the community.
Agreed that premium probably won't net you all that much. I would guesstimate that to make enough to cover your costs with ads, you'd end up putting more ads up than your aesthetic sense would prefer.
I have no experience going this route, but what about helping the artists to make money off of their music and taking a share along the way. Something akin to etsy perhaps. You'd go from 400k musicians to ~4M musician's friends who are interested in supporting them.
You mentioned Etsy. I don't think selling music would work (for reasons I've outlined in another HN comment here) but oddly there are several people on Fandalism who make their own instruments and have contacted me about helping them sell them. Custom guitars and so on. I wonder if there are enough of them to warrant building an Etsy-like platform for them.
You mentioned music distribution tools. Currently it's a huge pain in ass getting your music on iTunes or Amazon. There are services that help with this but it's still a pain in the ass (you need to register for an RIAA permit, get a barcode for your music.. srsly it's ridiculous).
It would be fun if I just made a simple "Get your music on iTunes for $20 per song."
1) The site is setup for individual musicians, not bands or acts. I'm really targeting the high school kid who sits on his bed and plays lightening-fast guitar solos. He doesn't have anything to sell.
2) If I promised that kid he'd make significant (to him) $$ selling his music, I'd probably be lying.
3) Most musicians aren't going to make money selling their music. But they get a high out of having lots of people listen to it. So I'd rather just let people give it away for free and optimize for generating lots of plays, which would make them happy. Vs helping them sell it only to be disappointed.
I have an idea that probably doesn't have much revenue generating potential but it could be a cool new feature (to me at least). I spent about 20 seconds on the website so sorry if you already have this, but I didn't notice it. The users could have the ability to do interactive jam sessions, even if they are miles apart. Maybe something like a high fidelity audio only version of Google Hangouts.Each participant would need some headphones and a resonable quality microphone. I guess if you were looking for a way to squeeze some money out of this, perhaps you could sell recorded copies of the jam sessions to the participans or anyone else willing to pay for them I guess. Sorta like a demo mixing service :P I bet a lot of bands could get their start this way. You'd be removing any limitations of proximity between musicians. Can you imagine if every member of the Beatles had been born in different parts of the world?
I think any musician that's serious about playing music has at least one decent microphone and some sort of recording setup (M-audio stuff is a low-cost way to get into recording). Hearing yourself play is also invaluable towards learning.
The second issue is real and since I know nothing about how to solve it perhaps the idea is dead in the water for now. But anthonyb's suggestion of recording all the tracks separately and allowing the musicians to mix them in post might be one way of going around this.
You could sort of go the kick starter route... Raise money for bands, take a small percentage... Raise money for musicians to sign their own label? Raise money for something bands do like maybe equipment? Take small percentages. Do a craigslist for musicians. Sell things like Ebay.