I've been a huge fan of SellaBand for the past couple of years, but I've never tried to get any of the bands I work with to use their service because none of them can raise the required $50K to produce a record. While I've always thought that was too much money considering recording, editing, and mastering have all come down significantly during the last decade, I'm still a big fan of their concept anyway.
However, there's a relatively new service I've been meaning to write about called, Kickstarter which also provides a way for bands to raise money from their fans but with a few advantages: 1) there is no minimum amount an artist must raise, so the artist can determine how much; 2) artists can upload video pitches about their project and needs (see below); 3) artists can express their appreciation by providing gifts for different levels of donations, and some have been highly creative like Five Times August's camping trip for $5K - reminds me of some of the examples Michael Masnick has presented.
All-in-all Kickstarter is a great service for bands, and fans benefit too, as they get to be apart of the recording process and support their favorite artists at the same time.
Here are three examples (we liked them so much that we donated to all three - good luck guys!):
http://www.indiemusictech.com/music_marketing_for_indie/2009/08/sellaband-vs-kickstarter-fan-driven-fundraising-for-artists.html
