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CFAS_150412: What is Crowdfunding to me?

Steffen Peschel started an interesting action, in his Kultur2Punkt0-Blog with crowdfunding on Sunday (cfas), which I willingly want to support. On this weekend, it’s all about thinking individually about crowdfunding – “What is crowdfunding to me”?

Well, where to start? In January 2008, my attention was drawn to SellaBand through an article in the WiWo (economy week). It was my first contact with crowdfunding (CF) and in Germany, at that time, only the fewest had heard something about it. At the time I was convinced, that CF could be a) an investing opportunity and b) a way of revolutionizing the music industry.

At least this is what was suggested during the establishment hype of different music CF-platforms (among which ForMyBand, Slicethepie). The alternative a), means the wish to make money through CF (as an investor), quickly turned out to be a deception- at latest when the first SellaBand albums didn’t turn out to be bestsellers. Even the boastfully announced revolution of the music industry is, so far, absent… even in the CF industry one is still tied up to the old ways of thinking. Today, crowdfunding has lost a lot of its magic. SellaBand, in the meantime, has declared bankrupt and found its way back again, ForMyBand from Berlin doesn’t exist anymore. And even Slicethepie no longer has anything to do with CF. Even all the other providers seem to have found their spot in this recess. There obviously is no sufficient market to be able to make money out of CF. For me, crowdfunding in today’s music is a niche product, which with the current approach of it only being a project-related mediator between musicians and fans, barely exploits its potentials and in my opinion doesn’t have much of a future as a business model. In this way, it will neither help revolutionizing the music industry, nor help musicians overcome their dependence on record deals/ record labels. Here, three theses that music-CF could possibly develop in the future:

1. CF-platforms need to become full-service providers and consistently develop and market musicians with new, creative ideas- meaning, they are a new form of a record label (“Crowd label”) – in order to do so, they have to separate themselves from a simply project-related way of viewing, possibly also find other organizations or alternatively types of companies ( for example cooperatives), which will help implement it all,
2. CF needs to find its way back to what really makes crowdfunding decisive: the crowd- the community is the most important aspect of CF but today it’s mostly left behind- investing in developing a community is therefore the crucial success factor for a CF platform.
3. CF in Europe doesn’t work if based on a national standard- there’s a national CF platform being provided to a small market- problems here occur because of the different cultures in Europe, which need to be overcome which need to be individually catered to- at the moment, Sellaband (still) is well constructed in this aspect.

I look forward to the discussion.

Where’s the Crowd in Crowdfunding?

Although Tim Schafer’s Kickstarter “Double Fine Adventure” game project is making headlines, the big number of over 57.000 supporters (on Kickstarter called backers) shouldn’t mislead from the fact that this project is an absolute exception and can’t be compared to music crowdfunding projects.

Even if we take in consideration the positively running project of the Libertins on Pledgemusic, with at the time around 1.800 supporters (on Pledgemusic called pledgers), it still is a barely repeatable success, which only few musicians will achieve. I don’t possess any statistical values about the number of supporters and their financial contribution to music crowdfunding projects. I do assume that most (quite successful) projects are supported by hundreds if not even only tens of supporters.

These are more than good numbers for many artists who are so far unknown. “Newcomers” mostly face many problems at the same time. Firstly, they still aren’t as experienced in the music business, in dealing with fans (and sometimes the media), in presenting on the web (most of them don’t have Website, Twitter, Facebook or MySpace accounts) and generally in promoting. This is where a fan can be of tremendous support, whether it’s a new or an old one. The crowd shouldn’t only have a financial role. They can also help through giving advices, actively helping on building an online presence or simply through buzz marketing. From experience, usually there are a number of supporters who willingly take over those assignments, because they identify themselves outstandingly with the musician or his/her music. A decisive problem in this case is the consistency of this approach. Many fans tend to overstate the supporting or have a different idea of what support really means, and I know this from experience. This is what crowdfunding platforms are missing- suitable collaboration tools.

Besides, not even established crowdfunding providers managed to achieve a big, sustainable crowd, the so-called regular crowd. Most of the supporters are narrowed down to a single project and they attract other supporters through the interest of the media in the project. I believe the reason is that so far it hasn’t been possible to establish a crowdfunding brand, which can sustain enough supporters for a long period of time, regardless of some stars. Simply focusing on the funding act has surely played a big part in this case. In the beginning, crowdfunding platforms like SellaBand or Slicethepie (which no longer is identified as a crowdfunding platform) have worked a lot towards a vivid community-life. In the meantime, such activities barely ever take place. Reducing it all to a simple money business is letting a big potential go to waste. One can only hope, that the providers will remember what eventually makes crowdfunding a success – the crowd.