Your critique appears to assume that every tech company or startup begins by offering below market rates. That's not universal, and who knows, maybe they had a seed round and were able to pay people appropriately. They were also founded in 2008, it was a different time in the market anyway.
Looking at Crunchbase's list of articles, the earliest news story from May '08 mentions that it was a four-man startup that was completely virtual. Don't know how that lasted, but not having an office certainly frees up the budget to pay people.
https://gigaom.com/2008/05/07/bandcamp-clubwiki/
