From a business perspective, if I wanted to make money doing that, I could imagine sponsors like guitar companies paying. Fender (maker of the famous Stratocaster guitar, for you non musicians) just filed IPO paperwork and had something like $700M in sales last year.
There's got to be a market for musicians who know how to write.
That beauty transformed into this: http://www.youtube.com/watch?v=hY-vXcmpZIw
Please, don't blame the musicians.
Frank Zappa made a career of playing rock music instead of jazz or classical which many people consider a greater art form. It never was really "pop" music but still there are many that criticize him for it.
I'd be very careful to avoid derision on the basis of popularity. That fact that you have distaste for Lady Gaga's genre doesn't mean she's not a valid artist. There's a difference between relying on autotune because you're a talentless hack and an artistic decision.
I'm not blaming anyone - the music industry is a strange beast. But the true rarities are people like Gaga (as much as her I dislike her music), who can write and perform their own material well.
For the record, most artists, including winners (I personally know one of them), say it's a double-edged sword: it gives you exposure, money and a foot in the biz, but in the end it's all about marketing and getting viral rather than concentrating on making music.
www.wearelistening.org
The community is most likely a mix of musicians AND music lovers. So even Fandalism's original goal of serving musicians is what it is, I'm sure there are music lovers who are enjoying the community's work as well.
All of the monetization solutions suggested thus far does not cover both ends of the users.
I'm more of a coder / developer guy but occasionally I like to play the product guy. So here is my suggestion so let me know what you think especially you, Philip, if you are reading:
KickStarter for Musicians. Be the online version of American Idol or British's Got Talent. You have musicians and also they have their audiences on Fandalism.
First mission is to scout or fund the first internet musician superstar. Get the winner into a professional studio, get a few singles out. Backers get singles free, the rest gets to buy the singles fr a price. Fandalism gets a cut of the sales. The rest should be history.
Up vote if you think this will work or comment if you have more to add.
@pud What do you think? If you really want to venture out this way, I'm available for a ride. ;) That would be fun.