It is an impressive turnout for a school night. A couple of hundred pimply teens, braces glinting as they sing, jump up and down in a club on Brick Lane, high on cans of Tango. Those to whom puberty hasn’t yet given an advantage strain to see from behind those it has stretched too fast. All lip-sync verbatim. But the band on stage has never appeared on Saturday morning television or been on a radio playlist.

ChartJackers are a new boy band exclusively crowd-sourced from YouTube. They met and agreed their project online. Their new single, I’ve Got Nothing, was sewn together from fans’ wallposts. The melody was conjured by an online competition. The producer answered a video ad, and they plan to self-publicise.

The frontman Charlie McDonnell (alias charlieissocoollike) is one of several online artists turning their backs on record companies. He distributes music through DFTBA (“Don’t Forget to Be Awesome”) Records, a partnership established by Hank Green and Alan Lastufka, who also met on YouTube.

DFTBA artists pay nothing upfront, but the company negotiates a royalty with iTunes and keeps a small percentage to cover costs. It pays artists up to 600 per cent more than do major labels. The publicity budget is nil. “If our artists aren’t spending time interacting with and growing their community online,” Green says, “then their sales will suffer.”

O’Connell is the king of the bedroom circuit, with videos entitled A song about acne and My mum makes me eat marshmallows. The 19-year-old is the third most subscribed British user to date, ahead of BBC Worldwide and The X Factor, with almost nine million views. He is the most famous person you’ve never heard of.

“This is the second gig I’ve ever played,” McDonnell says. “As an artist normally you have to make your way through the ranks but now I’m straight in front of people.”

The average signed band is about £1 million in debt before they’ve released a single track, and only 10 per cent of these make their labels any money. With almost no overheads, crowd-sourcing seems a tempting option.

It is also free. ChartJackers’ mentor Chesney Hawkes made his pop career in the early 1990s, maintaining a loyal base through the fan-club method. Today, instead of photocopied fanzines, online followers have a more intimate relationship with artists. “Back in those days just the thought of having that many people at the touch of a button would have made those record companies drool,” he says.

Internet crowd-sourcing has inspired both new and established acts. The YouTube Symphony Orchestra, assembled from video auditions, played its first concert in Carnegie Hall in New York in April. Earlier this year, Bloc Party created the music video for their single Ares from fans’ mobile phone footage. Tommy Lee is gathering a new band through the website the Public Enemy, which invites people to audition by submitting videos.

The Dutch website sellaband.com invites bands to harvest funding by impressing potential fans into becoming their patrons. They say that around $3.5 million (£2.1 million) has been contributed to 35 bands over the past two years. In return, fans receive exclusive downloads and merchandise if their investment pays off.

“Record companies no longer have pockets deep enough to fund and make recordings,” says Adam Sieff, a spokesman for sellaband. “You could say that fans have always funded artists, whether before the event or after the event.”

The hip-hop act Public Enemy were the first established act to ditch the traditional record company route. In their first three weeks at sellaband they already had more than 800 fans paying $25 a pop. “They really give artists a viable alternative to working with a record label,” the frontman Chuck D says. “This project as as much revolutionary as it is experimental.”

It seems crowd-sourcing has yet to cast a shadow over the traditional music industry. Millions tune in to The X Factor to watch unknowns win a record contract because it is still the music industry’s Holy Grail, as ChartJackers are discovering.

I’ve Got Nothing was released on Monday. Traditionally, the average artist needs to shift about 50,000 units to hit No 1, but this week it vies with Sugababes and Spandau Ballet, both of whom have breezed on to commercial radio playlists. Despite e-mails and even picketing outside studios, ChartJackers have gained no airplay. Their success or otherwise will test whether artists still need offline publicity.

Eamonn Forde, the digital editor of Music Week, says they do. “To go into the world without management — I can’t express how ridiculous that is,” he says. “Without it you are doomed.”

Even if they make any money, when the investors, songwriters, producers, distributors and video-makers are a bunch of online aliases, who owns the royalties? ChartJackers have sidestepped the issue by donating theirs to Children in Need.

YouTube celebrities are by their very nature ephemeral. Forde says artists who do not make the jump on to the dry land are sure to drown. “It’s not some massive conspiracy formed by record companies,” he says. “But if you hand over all the say to the viewers of YouTube, they will decide it’s cool and funny for a few days but then they will be bored. ”

But tonight ChartJackers are enjoying their moment of fame, which by the next morning finds itself multiplied in mobile uploads on Facebook, Bebo, MySpace and YouTube.

“How much is the single?” asks a young tremolo.

“Oh,” McDonnell says, “errr ... 79p?” He thriftily points out this is the cost of two Mars bars. Only teenagers don’t put sweets on their parents’ credit cards.

I’ve Got Nothing is available at tinyurl.com/CJBuySong

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