Investment that could make bank account sing

By Jennifer Hill

LONDON (Reuters) - The digital revolution might be making it harder for record labels and retailers to make money out of music, but the decline in album sales has spawned a new type of investment that is attracting fans and City types alike.

Slicethepie.com has financed 13 bands, earned 40,000 "scouts" more than 40,000 pounds and landed hundreds of investors some rosy returns since its launch seven months ago.

"The problem the industry is struggling with is that the cost of producing new artists is phenomenally high," the company's founder and chief executive David Cortier-Dutton, tells Reuters.

"With music sales dropping -- physically, that is, and digital sales not making up (for that) -- it means the industry has to find a way to make music at a much lower cost.

"We effectively turn every music fan into a record label. Everyone can invest in new artists on an economically attractive basis."

Members, he says, include avid music fans who simply want to make some beer money from reviewing new artists, people whose main desire is to get close to the bands, City types looking to diversify their investments and others still who want to do the whole thing: discover new music, invest and make money out of their position.

The site adopts a "wisdom of crowds" philosophy. Some 7,500 artists have signed up to be independently and anonymously reviewed by members and, every month, the 20 with the top ratings go forward to try to qualify for funding.

Typically, one or two receive the required level of backing from investors who want to buy "contracts" in them, generally costing 50 pence each -- and secure 15,000 pounds to record and release an album.