Back in the late 1980s, whenever Howard Lipson ran into his colleague Laurence Fink, the two moneymen talked about something far more important than balance sheets or currency spreads.

“Rock and roll was what really mattered,” recalls Lipson, 43, then a young dealmaker at Blackstone and now a partner at the Pilot Group, a private equity firm started by MTV founder Bob Pittman. Fink, 54, the chairman and C.E.O. of BlackRock, an asset management company that was once part of Blackstone, concurs: “Most boys grow out of it, but neither of us did.”

These days, Fink and Lipson do more than just talk rock; they own a piece of it. Along with eight other Wall Street pals, they are the financial muscle behind Octone Records, the independent label responsible for Maroon 5. Songs About Jane, the Los Angeles band’s 2002 debut, has sold 10 million copies worldwide, and its follow-up, It Won’t Be Soon Before Long, comes out this month. The investment group’s original stake in Octone—totaling $5 million—was recently valued at about $40 million.

Wall Street players have long made side bets, in ventures ranging from restaurants to racehorses, but backing a record label is a bit more outré. “People think you’re crazy when you tell them you’ve invested in the music business,” says Fink, who at BlackRock presides over 4,700 employees worldwide and more than $1 trillion in assets. “They recite all the things they’ve read about the problems in the industry, the issues about downloading, the lack of planning, as though I didn’t know that already.”

The partnership began in 1999, when Lipson met James Diener, a goateed, porkpie-hat-wearing Columbia ­Records exec. One night over sushi, they hit on the idea for Octone—but needed backers. Lipson’s first call was to Fink, who, despite the über-financier image (a ­Jaeger-LeCoultre watch peeks out from under his French-cuffed shirtsleeve), had kept up his habit of haunting Irving Plaza and other Manhattan rock clubs. Fink, whose other personal investments include a jewelry store in Aspen and an ice-skating rink in Hackensack, New Jersey, didn’t need much convincing; he and Lipson easily rounded up eight more partners, four from BlackRock. The main qualifications: a passion for music and the stomach for a bit of risk. The partners’ stakes varied in size, but everybody put up at least six figures. That’s pocket lint for Fink, whose bonus that year was $5.6 million. But for some of the partners, it was a weighty bet—big enough, Lipson jokes, “that you might have to ask your wife.”

A key piece of Diener’s strategy for the venture was to negotiate an “upstreaming” deal with a major label. In this scenario, when one of Octone’s artists reached a certain sales threshold, the artist moved up to the major label while Octone retained a 50 percent stake. Such arrangements are crucial to attracting talent because, regardless of the industry’s turmoil, it still takes major-label clout to market an act to radio networks and international music chains, lifting a band from niche success to mass stardom.

But the big companies didn’t come running to deal with Octone, a lean operation that even today has only eight full-time employees in a 2,000-square-foot loft in downtown Manhattan. Many were put off, says Lipson, by an unusual but nonnegotiable part of the partners’ pitch: They wanted the major label to give Diener a day job in its A&R (artists and repertory) department. The idea was to “ensure that our acts would get treated right once they did graduate,” says Lipson, who talks to Diener frequently and, along with Fink, keeps all the partners in the loop via email. The only label that bit was J Records, which was newly formed by industry legend Clive Davis; it badly needed product and gave Diener a position as senior V.P. for A&R/marketing at both J Records and the RCA Music Group.

Maroon 5, the first act Octone signed, moved up to J Records in 2003 but hasn’t forgotten its roots: The band played BlackRock’s holiday party last year at the Jacob K. Javits Convention Center in New York. Singer-songwriter Michael Tolcher followed in 2005, and Flyleaf, a crossover Christian-rock group whose self-titled debut has sold 600,000 copies, made the cut last year.