i have heard of this, but i have to say, a relatively unknown tribute band is not usually the target - usually its bigger businesses
either he's genuine, wants to be in your band and thought he was doing you a favour that would endear him to you, and ensure him the job - or, he wants you to buy the name off him...
ask him.
however there are many different domain endings - org, net, co.uk, biz, etc etc, so just choose a different one... unless he's bought them all!! in which case - stalker/weirdo - avoid!
bigger companies will pay for a com or a co.uk, but with a band people will search the name of the band, so i doubt it matters