Sellaband, the fledgling music site which allows users to become 'investors' in bands whose music they like, has been given a major fillip by striking a distribution deal with Amazon.

From January, a dedicated section of the Amazon store will be devoted to music produced by acts that have been discovered on Sellaband, with albums selling for £8.99.

The wholesale price Amazon pays for the music - understood to be about £6 per album - will be split equally between Sellaband, the artists and their 'investors', otherwise known as fans.

Sellaband, based in Amsterdam, is effectively a 'user-governed' record label, which allows listeners to determine which music will be recorded and sold by voting for and investing in bands.

Unsigned bands upload their music, and if fans like it, they can buy a stake in the profits of any future album sales for $10 (£4.90).

Once a $50,000 (£24,500) threshold is reached, Sellaband helps the band produce an album. A fan can buy any number of $10 investments, each of which equates to a one five thousandth stake.

When the album is made, the backers each receive a copy, which they can either keep or sell at a 10 per cent profit on their personal Sellaband page. They also receive a cut of future sales on the Sellaband or other sites, as well as of any advertising revenue when the song is streamed.

Pim Betist, one of Sellaband's co-founders, said that the site was "a label of the future" because of the way it handed two parts of the record industry "value chain" over to consumers.

"First, consumers select which artists will make records, so there's a demand even before production begins. Second, they do the marketing, because there's a financial incentive to promote the artists they believe in."

So far 11 bands have reached the $50,000 threshold, and three, including one in Britain, have made albums.

Sellaband, which is funded by an angel investor in Germany who wishes to remain anonymous, plans to make money from album sales and publishing rights, as well as advertising and sponsorship deals, such as one it recently announced with Heineken.

The site has only been selling albums for three months, but already $25,000 (£12,300) has been transferred to artists and fans, a spokesman said.

The three albums Sellaband has already helped to produce - using well-known names such as 'Bassy' Bob Brockman, who has worked with Christina Aguilera - sell for $3.50 (£1.72) on its site, and at the standard iTunes rate of 99 cents per track in the US and 79p per track in the UK.

Mr Betist said that fans had already invested $1.3 million (£640,000) in the 6,000-odd bands that have uploaded music to their site, though that money is being held in escrow until the bands raise enough to make an album, at which point their investors become eligible to see a return.

"If Amazon passed on £6 for an album sale, then £2 of that would go to the fans, £2 to the band, and £2 to us," he said.

Every band that raises $30,000 (£14,750) will also receive an immediate boost of $1,000 (£490) from Amazon.

Sellaband, which was co-founded by Johan Vosmeijer, a former executive at the Sony BMG record label, has 150,000 unique users a month.

Explore Tech & Web

• Personal Tech

• The Web

• Gadgets & Gaming