In the latest "The Future of the Music Business" article that I can't seem to avoid linking to and writing about, James Reed in The Boston Globe writes about artists relying on fans to fund the recording of new albums. The article mentions Ellis Paul and Jill Sobule who have both gone to the fans in the last year to raise $90K and $80K respectively for albums.
I don't know why you need $80K to record an album in this age of Garage Band, but Sobule says is it's for publicists and what not. Because, really, why shouldn't the fans pay to tell other people about the music they paid for?
Not mentioned in the article is Josh Freese who paid to record his album himself, but is looking to recoup some of the costs by selling album packages to fans for between $7 and $75K. (The $10K package that includes Disney Land and Freese's Volvo is unsold, as is the $75K package that includes shrooming with Freese, though the $20K miniature golf game with singers from Tool and Devo did sell.) I'm thinking Freese was inspired by the Nine Inch Nails packages from last year. Kottke commenter Jeff Stern says of this model "instead of 1,000 true fans, 1 wealthy fan", a reference to Kevin Kelly's 1,000 True Fans model for artists. (A model that is criticized here, by the way.)
When I was touring with Addison Groove Project, we were selling all of our merch in one package for $75. This deal included 1 t shirt, 1 sweatshirt, 5 CDs, stickers, a beer coozie, a bottle opener, a foam finger, and a trucker hat and represented a savings of about $40. We sold a bunch of them, too.
I've been saying for a while that the future of record labels is not to distribute and promote records, but to manage communities of fans. Artists are proving that they can rely on fans for funding, they can rely on iTunes and other online sellers for distribution, and they can rely on bloggers for coverage. All the real money is in ticket sales and merch, anyway.
Plus 2 bonus articles from Portfolio. Record Labels Get Real (except not really) and a discussion of The Celestial Jukebox.