Kevin,
Now that is a different deal altogether and one that I know well. There is absolutely nothing wrong with a "vanity project.' If you are a writer and want your songs to sound the best they can. Writing what is in your heart, getting them done first rate in the studio, is a very good reason to record. A celebration, if you will.
It would just be better if they wrote them with artists involved. Taht way you STILL have your vanity project, you have the artist's version (nothing wrong with multiple versions) backing tracks, (the songs without vocals), and a relationship started with all concerned. Just seems to me killing a lot of birds with a very few stones.
MAB
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