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Tribute Bands and The Secret Profits

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Peter Dazeley| Photographer's Choice | Getty Images

It's been a rough decade for music.

Unless you're in a tribute band.

Go to almost any park this Labor Day weekend and you might run into a band covering some of the most famous songs in rock 'n' roll. Tribute bands have multiplied, as original bands have stopped touring, or started charging too much for tickets. "The time is right for tribute bands right now," say Swan Montgomery, lead singer of Led Zepagain, a veteran cover band for Led Zeppelin songs. Montgomery, a native of Ireland, came to the U.S. in the '80s on a record deal with Capitol Records. "Didn't work out," the singer says. "Was asked to join a tribute band, thought it was funny at the time."

He's laughing all right. All the way to the bank.

Led Zepagain was discovered a few years ago by Michael Vail Blum, a veteran record producer who stumbled into a club one night and was shocked to see it packed for a tribute band. "I thought to myself, there's a whole market here."

When Blum found out the band didn't have its own CDs—figuring fans would only want to buy the original band's material—he said, "Why are you doing that? Why don't you hand them (your own) CD and take their money?" Blum started recording some of the bands through his Titan Music, and the songs ended up on iTunes .

That's when things took off.

At the time, the real Led Zeppelin wasn't providing digital downloads of its music, so Led Zepagain's Steve Zukowsky says their own recordings "started flying...like ten thousand (downloads) a month."

In all, the band estimates it sold 500,000 downloads on iTunes, or $495,000 worth of music, before the real Led Zeppelin went online.

Even now with the real Robert Plant and Jimmy Page on iTunes, people still buy Led Zepagain downloads.

During an interview with record producer Michael Vail Blum I asked him how he's hoping to grow this business. I also asked,"Why would someone by a CD of a tribute band when they can go buy the real thing?"

While this is good money, it's not fantastic.

Members of Led Zepagain haven't given up their day jobs, saying the tribute band business provides about half their income.

Swan Montgomery, the "Robert Plant" of the band, still records his own original music and also works as a sound engineer.

Steve Zukowsky, aka "Jimmy Page", works by day in fraud investigation for Stamps.com.

Here's part of my interview with them, in which they tell me about the time they learned Jimmy Page was in the audience one night.

You're probably wondering, is this legal?

Check the next blogpostfor more on that.

Questions? Comments? Funny Stories? Email funnybusiness@cnbc.com