I love this. These guys had the same idea I had except that they're focused purely on music. (Not taking any credit away from them of course -- these things need more than just ideas.)
Now let me ask the obvious question: why does it take a start-up to recognise this as an opportunity? Why hasn't a single music major tried this? After all, the very nature of this model is that growth is enabled by consumers not top-down by organisations, and this means that a music major would need to make fairly small upfront investments (cash, people, whatever...). I bring this up because one oft-cited reason for large corporations not being entrepreneurial is the risks involved. That reason wouldn't apply here because of the low upfront risk?
Anyway, here's the link to the article and an excerpt:
Startup digital music company BurnLounge wants to democratize the music retail business.
The point, [Stephen Murray, BurnLounge president of entertainment and co-founder] says, is to create a market for lesser-known music by employing the community aspect of music discovery that the digital format allows.
"Hardcore music fans, that is our core demographic," Murray says. "They love music so much, and the idea of being able to tell their friends about the music they think is good and be able to sell it to them as a side job is really cool to them."