During a recent concert at Joe’s Pub in New York, Jill Sobule became distracted by a problem with her guitar. She adjusted the sound several times, pushing the pedal with her Chuck Taylor sneakers. Then she looked up at the crowd. “For a moment, I forgot I was in front of people,” she said.

The audience laughed. Sobule played a few more chords and then stopped. “Should we go on to another song, or should I finish this one up?” she asked.

It might seem strange for a musician to solicit feedback right in the middle of a show—much less a song—but Sobule has always had a close relationship with her fans. She sends them unreleased tracks of her smart, folksy ballads and protest songs, asking which should make her records and which should get the ax. At concerts, she frequently asks them to join her as she sings about everything from the French Resistance to anorexia to the manager of a shoe store. Now with her latest CD, California Years, she has made her fans producers, too.

The project began last winter, when Sobule was ready to record the album but didn’t know where she’d get the funding—her last two labels had gone bankrupt. So she made a direct appeal in an e-mail to her fans: Would they finance the record? “Rather than shopping around for another record deal, I thought, why not go to the people who have always supported me?” says Sobule from her home in Los Angeles.

Sobule initially wanted to devise a system where her fans directly shared the profits, but creating a stockholder plan proved too complicated. Instead, she threw a PBS-style pledge drive with a sliding scale of incentives: a $25 pledge won an advance copy of the CD; for $100 you got a T-shirt and producer credit, too. For a $500 pledge she’d incorporate your name into a song; for $5,000 she’d perform at your house, and for a $10,000 “weapons-grade plutonium” donation you could perform a duet with Sobule on the CD. “Don’t worry if you can’t sing—we can fix that on our end. Also, you can always play the cowbell,” she wrote.

When she sent the e-mail to her newsletter subscribers, Sobule had no idea what the response would be. “I thought maybe it would be a few friends and my mother,” she says. Instead, she got half of her $75,000 target the first week; by the time she shut down the drive she had $85,000. She even scored a $10 donation from a man who said, “I don’t really like your music, but I’m donating because I like this idea.”

"The whole thing has given me tremendous confidence,” says Sobule. “In the music industry, there are all these middlemen—agents, managers, business managers—and sometimes we musicians can be negligent because we’re so into our music. I’m pretty ADD and spacey, so I was always happy to let people do stuff for me, but then I realized that a lot of them just never did a good job.”

Now Sobule is her own suit, a role she’s still adjusting to. “I’m having meetings! I never have meetings. Now I’m having meetings where I buy people lunch!” she says.

As a businesswoman, Sobule’s still a bit of a rock star. When dealing with a reporter, she frequently blew off appointments and left e-mails unreturned. Fortunately, her music is as enchanting as ever. As with her earlier works, California Years is a mix of apparent contradictions—grittiness and vulnerability, humor and social outrage. There are tender songs where she worries about the fates of her massage therapist and waitress, a fiery rant against a poseur record executive and a cheerful ditty about the end of the world, with Sobule’s wit, compassion and whispery voice pervading throughout.

As promised, the final song is a shout-out to her higher-level donors (plus her nephews). In another song, the giddily subversive “Mexican Pharmacy,” $10,000 donor Jo Pottinger harmonizes with Sobule—no cowbell or computer makeover necessary. “We put her up in a fancy hotel and took her to the movies. She ended up being someone you’d want to hang out with,” Sobule says. And per her fans’ request, the recording is clean and spare, reflecting the intimacy of her live shows. “Some of my favorite artists, like David Bowie, have a sense of otherness from the audience, a sense of wonder and mystery. Then there are others who are playing right to you. I’m [like] that. I don’t like when I can’t see people from the stage. I like to be social,” she says.

Does courting such intimacy ever lead to problems? Not yet, she says, though she knows musicians who’ve had trouble with overzealous fans. “I turn my stalkers into volunteers,” she says. “Then they stop being stalkers, and become friends.”