Home » Crowdfunding

Category: Crowdfunding

Pledgemusic – Did They Line Their Own Pockets?

… or: Bang Goes the Money Again!

An essay about the end of Pledgemusic, Sellaband and of music crowdfunding

Almost ten years after being founded, one of the last pillars of music crowdfunding is starting to crumble. Even when those behind Pledgemusic, especially its co-founder Benji Rogers, vehemently denied operating music crowdfunding, the platform was always being mentioned in the same breath as the former (Sellaband, MyMajorCompany, AKAmusic) and current (Indiegogo, Kickstarter) leaders of the branch. As early as the summer of last year, artists proclaimed that Pledgemusic still owed them money which was collected from fans.

In light of the already announced bankruptcy, this is another chapter for music crowdfunding which is sadly coming to a close now. Moreover, it reminds us of the eerily quiet conclusion of Sellaband just a few years earlier. The parallels are astonishing and at the same time surprising. Musicians are not being paid. There have been wordy apologies and stalling strategies from the side of the platform, but these are never followed by any real results. The funds from the supporters were apparently never kept separate from the operating capital. Catastrophic crisis management, lost trust, coupled with a management incapable of getting a handle on things will lead to the obvious and inevitable end of Pledgemusic. I still hope Pledgemusic will disabuse me.

But no one learned from the Sellaband debacle. Maybe or perhaps because Sellaband died a quiet death.

What went wrong and what were the causes of the crisis of Pledgemusic – an initial analysis:

Artist are not getting paid

It is obvious that the financial management of Pledgemusic was not able to manage the funds from supporters (Pledgers) properly, as deemed appropriate for a prudent businessman, and pass on the funds to the artists. It is even more surprising when taking into consideration that the managing of such financial funds makes up a large part of Pledgemusic’s business model. This is not only sad, but also frustrating for the artists who were not able to finalize their projects or who were forced to finance them by investing even more time and effort. Let us hope that there is still something left for the artists at Pledgemusic.

What are artists‘ options now:

  1. Back in February, Sound Royalties advertised effectively that it would give out advance payments to artists … in the form of a credit.
  2. Each and every artist should decide whether or not they need an intermediary (crowdfunding) platform that charges a fee of up to 15%. Perhaps, they would be better advised to use their own internet presence and social media channels for a more personal version of crowdfunding or for pre-sales. This seems to be both more secure and more promising.
  3. For those of you who do not want to go without a crowdfunding platform, you should take advantage of an established player in the market: Kickstarter and Indiegogo could be some alternatives. But, each and every artist should examine in detail how the financial funds are managed and, when in doubt, contact the platform directly.
  4. Use Bandcamp`s pre-order tool. At least you are established and equipped with a decent fanbase.
Funds from the supporters have vanished

Supports are just as affected considering that they trusted their hard earned money to Pledgemusic and are now quite probably waiting for an album or their rewards in vain.

Sellaband set up a notarial escrow account when it was founded where the funds from supporters (Believers) should have been deposited until the successful conclusion of a project and it was time to pay the artists. These funds were thus kept strictly separated from the operating capital of Sellaband. However, towards the end, these safety measures were also circumvented by Sellaband so that artist were not paid and the funds from Believers vanished. Pledgemusic finds itself in the exact same situation in that there is currently no apparent separation between such funds and the operating capital.

Moreover, Sellaband did not quite understand how to score using the escrow account and stop the (double) bankruptcy. An escrow account seems to have never even been an option for Pledgemusic.

The separation of operating and crowdfunding funds is essential for the crowdfunding model and should be demanded by both the artists as well as the supporters. Otherwise, there will always be cases like Sellaband and Pledgemusic in the future and the funds from supporters will still not reach the artists but line the pockets of the platforms.

By the way, every Pledger should write off their funds pledged and use the last days of the platform to secure their album downloads. That is all that can be done.

Wordy apologies from the platforms

… and stalling is often done, but is still not a useful tactic. Neither Sellaband nor Pledgemusic was successful in finding acceptable solutions for both the artists and the fans during the corresponding crises. Sellaband already got so little attention during the (last) crisis that the deceived artists did not get nearly as much public attention as the artists from Pledgemusic do now. There were also artists from Poland, Australia and Germany who were less well-known beyond Sellaband and who feared for their reputation.

Unfortunately, it seems that the legal steps to assert claims were not very successful due to the fact that Sellaband no longer had any assets. The statements given by Pledgemusic and co-founder Benji Rogers did little to console the artists and the supporters. They were, under no circumstances, capable of regaining lost trust.

Lost trust

The most damaging thing for artists and fans (apart from the lost money), but also for Pledgemusic and crowdfunding as a whole, is the loss of trust. Crowdfunding platforms, as intermediaries between fans and artists, cannot limit themselves to the artistic or communicative element of crowdfunding. This discussion has been going on for years, especially when another Kickstarter project turns out to be a fraud. The handling and management of financial funds is a crucial part of the business. Trust is of the utmost importance. An almost year-long payment problem, which is talked about in large parts of the music industry, is associated with a considerable loss of trust. The breaking point has now been reached with Benji Rogers’ announcement of the bankruptcy. It is doubtful that this lost trust in music crowdfunding can be regained. The damage has been done and is difficult to repair.

If UK Music now demands that the British government should order an investigation into the Pledgemusic case, then it is only fitting. Unfortunately, the umbrella association only represents the side of the artists, so that the interests of the supporters are probably not in the focus and will fall by the wayside.

The consequences:

  1. In the future, crowdfunding platforms will have to consistently manage operating capital and funds from supporters separately. These funds simply do not belong together. Notaries or trustworthy trustees must be appointed as administrators of crowdfunding funds. Entrusting the platforms with this separation did not work out in at least two cases now.
  2. The separation of funds must be communicated in a transparent manner and must be verifiable at all times. This open communication should be possible. Verification is certainly difficult, but not impossible.
  3. Consideration should be given to setting up an advisory board to monitor the platform and, in particular, the financial transactions related to crowdfunding projects. The advisory board should consist of representatives for the artists and supporters.
  4. The CEOs of the platforms must be assisted by financial professionals who are responsible for the management (and separation) of the funds.

Pledgemusic (and also other music crowdfunding platforms) have always advertised with their expertise and contacts in the industry. As we can now see, this is only part of the success. The economic know-how and experience in the field of finance is just as important. Maybe the public pressure in the case at hand leads to a fundamental change in crowdfunding platform’s dealing with the funds of supporters and artists.

Music Crowdfunding - connect it with your real world

Combine Your Worlds – 3 Tips for Your Crowdfunding

Crowdfunding is, briefly put, street performances online. This, of course, sounds a bit strange but it is true. With crowdfunding, generally all you are doing is presenting yourself and your music … in front of a worldwide crowd. And while you are doing this, you are passing around the hat.

Even though the majority of your crowdfunding campaign takes part online, meaning via the crowdfunding platform, social networks and through email communication, you should not underestimate how much the real world can influence the success of your crowdfunding.

Of course, you are going to ask your family, friends and acquaintances to support your campaign when you see them. But the same applies to your fans; you should not just ask them for their online support.

Here are my three tips on how you can incorporate the real world into your campaign:

1. Use gigs to advertise for your campaign
This is an example for a flyer (order sheet) the band Lilabungalow used for their #VINYLBACKEN campaign on German crowdfunding platform Visionbakery

Just as it is in the online world, the same is true here: don’t spam. This means that you do not take every suitable and unsuitable chance to annoy people with your campaign. But still, you should explain what drives you, your activities and your goals. And you can get your fans in the know when they are attending your gigs.

However, there is still room for more: Design flyers which you can pass out at your gigs. You can use them to advertise for your campaign or you can do like the band Lilabungalow does at some of their gigs and immediately take up some donations and hand out reward coupons to your fans.

The flyers can also be used to expand your pool of email addresses. Ideally, this can be done by incorporating a QR code which leads your fans directly to an email registration site. Maybe you can reward them for registering by offering them a free download of one of your songs.

Generally, you should plan a crowdfunding campaign for the long run. This means start early with collecting email addresses. A list of emails with numerous fans does not only increase your chances of successfully completing a crowdfunding campaign.

2. Let fans take part in your life

This does not mean that fans have access to the darkest corners of your private life. The rewards which you offer during crowdfunding will only bring in as much money as they are worth to the fans. The value of a CD or a T-shirt is always compared to similar products. This is, for example, why it is difficult to raffle off a T-shirt for 100 €.

This is why the rewards should always communicate something unique and have a personal added value. You should begin well in advance before the launch of your campaign with collecting personal things from your musical career. Things such as signed drumsticks or an old guitar which has its own story and has been signed can be the star prizes among your rewards. And, they do not cost you a lot when compared to other rewards which you must first have produced. Let your imagination take hold of you and ask your fans what they would like to have from you.

3. Pass on your experience

If you have successfully completed crowdfunding in the past, speak up or write about your experiences. Even if you are in the middle of a campaign, it is sometimes helpful to talk or write about it. Artists who are considering crowdfunding are thankful for any tips and knowledge they can gain from experience. This way you can possibly avoid the one or the other mistake. Use your blog, your contacts to other bloggers or other media. A real worthwhile summary about their crowdfunding campaign using Kickstarter was written by The Doubleklicks.

Maybe you also have the option or the contacts to pass on your own crowdfunding experience in the form of workshops. Furthermore, here you can make contacts and and gain feedback.

If you want to support other artists as a mentor with their crowdfunding campaign, then please get in touch with me. As an artist with at least one successfully completed crowdfunding project, you have the chance to pass on your knowledge and your experiences using music+crowdfunding.

As an indie artist, you should definitely take advantage of what established artists or superstars rarely have and that is the closeness to your fans.

Lilabungalow #VINYLBACKEN campaign on Visionbakery











Death Is Not The End Or … The Slow Death Of Sellaband

Almost a year and a half ago, I heard Nick Cave’s cover of the Bob Dylan song from 1988 for the last time. I am just as sad today as I was then. Apparently, Sellaband no longer exists. My sadness is only exceeded by my agitation of the fact that this obviously means little to anybody. In January of 2008, I discovered Sellaband, a vital music crowdfunding community which brought forth an impressive number of musical works from famous and not-so-famous artists since its founding in 2006, however was not able to bring about the much needed commercial success.

After the initial (Dutch) management went bankrupt in the beginning of 2010, a German CEO took over the business. The takeover left behind a lot of disappointed and upset artists as well as believers (supporters) but, thanks to a few dedicated employees, the platform had a brief second bloom until the fall of 2013.

Since then Sellaband had only been a shadow of its former self. The sad remainder was put to rest sometime in December of 2015 unbeknownst to the rest of the world.

For me, the downfall of Sellaband raises several questions which the supporters of Sellaband, music crowdfunding in general as well as all supporters of crowdfunding deserve answers to.

  1. Can music crowdfunding establish itself as an alternative to conventional music financing? Answer: It is possible, but not in its current form. Sellaband and other such music crowdfunding platforms have only established themselves as an instrument for the financing of music. In order to truly become established, there have to be options which cover the other links of the value-added chain (e.g. A&R, sales, promotion). In the end, this can only be accomplished by creating capacities for such aspects within the platform or in cooperation with established players within the music industry. This is the only way crowdfunding can establish itself as a sustainable business model and further develop into a true alternative to the classic music industry.
  2. Is music crowdfunding done for? Answer: Yes, if crowdfunding platforms do not evolve and if they continue to see crowdfunding as an independent “industry” – or if they see crowdfunding as self-fulfilling. Crowdfunding is only one of many options which an artist can take into consideration when he wants to finance his music – and it is not even the most convenient. Crowdfunding platforms have to make this type of financing both more attractive and more flexible in order to make crowdfunding more than just hype. For several years now, there have been no new concepts and no new visions – except for offers such as Patreon. All in all, it seems to be that the wind has definitely gone out of the crowdfunding sails.
  3. Can music crowdfunding establish itself in Germany? Answer: It will be difficult. The German music market itself is a difficult one. In addition, there are skeptical artists, fans who would much rather consume music than actively forge music careers and then there are record labels for whom the topic of crowdfunding does not even seem to exist. There is a lot of informing and convincing to be done here.
  4. How quickly can the trust from supporters be lost in music crowdfunding? Answer: Light speed. I was able to experience this phenomenon during the first bankruptcy of Sellaband at the beginning of 2010 after which numerous artists and believers turned their backs on the platform. During its second blooming in 2012/2013, Sellaband was not able to return to its former glory even though it concluded several successful projects. After the most recent bankruptcy filing in August 2015, I cannot say whether I will ever see the money I invested in the Sellaband system again or not. It is also doubtful as to whether or not the artists I have supported will ever be able to realize their projects which were concluded successfully within the platform. Some of the artists, according to their own accounts, have been waiting for the funding from their believers since 2013. Trust in crowdfunding cannot blossom in such an environment, yet trust remains one of the most important pillars of the business model.

It remains to be seen if 2016 will be a better year for music crowdfunding.

The Agony of Choice … to Find the Right Crowdfunding Platform

A few days ago, Fiona Zwieb introduced musicians to three of the largest crowdfunding platforms (Kickstarter, Indiegogo, Patreon) for their music projects in the DIY musician blog. Sadly, this falls a little bit too short. One of the most important aspects of preparing crowdfunding projects is, without a doubt, choosing the right platform. There is no such thing as the only one. Use the following criteria when making your choice:

  1. Will I reach my fans? An important aspect for the success of a crowdfunding project is activating the existing fan base and gaining their support. After all, the largest portion of your funding is going to come from this source. It is, of course, important to know who your fans are, where they live and whether or not they have easy access to the platform (such as language and handling of payments). You will surely tell your fans about your project through your website, project related email newsletters and through your social media channels (Twitter, Facebook, Youtube, Soundcloud, …). But, you will want to communicate with your fans through the crowdfunding platform as well. Naturally, this should take place in an environment where you both feel comfortable.
  2. The type of your project – Most of the crowdfunding platforms offer a large range of product categories for creative projects. It does not matter if you are funding just a music project (album, EP, tour) or collecting for a larger project layout which includes other art forms such as dance or theatre, an overview of the various platforms will pay out. Some platforms have specialised in music projects. The founders of these platforms often have a background in the music industry themselves, thus, likely have relevant contacts and can step up with branch experience. This is often not the case with platforms which cover everything from technology to social ideas and art.
  3. Platform support – Here, drastic differences between the platforms can be found: from engaged well-rounded support to a complete lack thereof, you can find it all. The well-rounded support includes support during the preparation phase (video, design and texts within the project profile), tips during the project (e.g. concerning how to increase reach and proceeds) and a final discussion. However, this service is often reflected within the platform fees. This is definitely something crowdfunding novices should consider. Experienced DIY artists can achieve substantial crowdfunding proceeds without such support. And, thus, save on platform costs which would otherwise reduce the project proceeds.
  4. What does it cost? We have now reached a crucial point when deciding for or against a platform. During the preparation phase of every crowdfunding project, a calculation should always be made. It is here that the more substantial costs will need to be documented, such as, for example, for production and for the shipping of rewards. The costs for the platform and handling of payments, to be paid by the project initiator (artist), are also a relatively substantial cost. This can be between 7 and 18 % of the funding sum and in extreme cases even up to 31.5 %. This simply means that this money is not available for the actual project. In some cases, the supporters must also help with the costs which could lead to the project not being funded or only being funded to a small amount.

These are just some of the questions which you should ask yourself during the preparation phase for your crowdfunding project. If you need some help or have any questions, then just contact me at mario(at) musicandcrowdfunding.com. Within the next couple of days, I will introduce some crowdfunding platforms here which are especially suited for musicians.

Artists and Fans Don’t Fit Together … or Do They?

Artists and fans live in two different worlds. That’s the common belief. When you think of artists you immediately picture big stars, which it seems like make their millions without a struggle, fly out from one party to another and in between, every now and then, have concert tours around the world. The reality is different for many artists. Many of them barely finance themselves and their families with an ordinary job and usually finance even their music with it. At least they can make a living out of music. It’s the world of crickets, that Sascha Lobo described in an article based on the old Aesop’s fable about the ant and the grasshopper, as a reaction to Sven Regener’s lament about copyrighting.

Lobo criticizes the widely spread scornfulness towards (unsuccessful) artists and the general low opinion about art. This doesn’t only explain the stolen copies and copyright infringements, but also why many artists can’t make a living out of their music. And this is where the ants come to play. They work diligently and dream of a better, worry free life, in their opinion the kind of lives that artists have. And they don’t want to pay a dime for music and give, at best, only charities.

Similar to every cliché, there is a tiny part of truth in how others imagine the world. But the other part, the big part, is made out of ignorance and isn’t really thoroughly thought out. However, at that time, a constructive dialogue on copyrighting and the value of art, didn’t take place at all.

Yet, when I separate the “financing of music or musicians” issue out of the, at that time, heated debate, the opportunities of crowdfunding immediately come to mind. With it, I can scatter the artists’ worries of having to ask their fans for money (or charity). Fans will gladly support you, if they believe in you. I want to tell a short story on the subject:

It had to be around the end of 2009 when I, at Sellaband, stumbled upon a singer/songwriter whose music immediately blew me away. Alex Highton was then new in crowdfunding; I on the other hand had initiated the 50K MUSIC MAG at the beginning of 2009 and therefore asked him If I can present him there. Certainly, I also helped finance his album project. The interview was published, I eventually also received my rewards – up to this point, everything according to the normal crowdfunding process. Then “it” happened, which gave crowdfunding a larger meaning: we stayed in touch. We wrote each other emails, we met in Birmingham and Leipzig, he sent me small Christmas presents, I returned the favor with small gifts for his girls… in 2011, I and a fan, partially financed Alex’s trip to SXSW.

In 2013, he started the crowdfunding for his new album “Nobody Knows Anything” on Pledgemusic. And I was there. Some of his fans too, which I recognized from the Sellaband project.

What I want to say with all of this? Crowdfunding can be a first step towards developing a relationship with fans and questioning clichés. Yet, the crowdfunding platform and the crowdfunding itself are just additional tools. The key success factor is the artist himself. You are the person that communicates with the fans, laughs, cries, tells them stories (your stories) and ultimately asks them for money. However, it should always be an individual way of asking. If someone simply copies Amanda Palmer’s “The Art of Asking”, it won’t work. You have to understand the principle behind it and of course, your fans. And, you should offer your fans various channels, where they can collect information about you and communicate with you.

Your crowdfunding project will still always be just one part of your relationship with your fans. Take the chance to build a sustainable, intensive and lasting friendship with them – connect yourself with them … online, but also in the real world. That’s where you’ll find the true value of crowdfunding.

Make Your Crowdfunding Project a Campaign

Crowdfunding has meanwhile become a real alternative for financing art, in the German-speaking areas as well. Crowdfunding is a unique way, especially for musicians to finance their music. Fans can and gladly want to help in this process. Waiting for a big record deal is like waiting to hit the jackpot. Only the fewest of us actually get it.

To have your album financed by your fans is for most artists an unusual, but in reflection a positive experience. Certainly, a crowdfunding project always takes hard work. One has to establish a crowdfunding platform and of course, write texts to match it. The pitch video needs to be filmed. You have to determine what the rewards will be, the quid pro quo for all the supporters. The press and blog contacts have to be informed about the project. Certainly, the fans also need to know that there is something in process, in which they have a saying. Phew! This kind of a project can be quite stressful. In all seriousness though, that’s the least amount of work that needs to be invested in a crowdfunding project. Still, it’s also the absolute minimum of what is possible and can be achieved with it.

That’s why I speak of crowdfunding not as a project, but as a campaign. Because, what can be seen and happens on your profile site of the crowdfunding platform, is just a small portion and covers just a small part of the opportunities that this campaign has to offer. A crowdfunding campaign can affect a lot more than just sponsoring an album or a tour. It can increase the bond between you and your fans, reach new fans, improve the social media profile and strengthen the connection between the on-and offline world. The possibilities are almost infinite and are used by most artists only rudimentarily.

What can you expect from collaborating with music + crowdfunding? Initially, what you can’t expect: a sure formula of effortlessly making money with crowdfunding or advice based upon a specific pattern. Your crowdfunding campaign will take a lot of hard work. This I can promise you.

In the first step, we analyze your relationship with the fans- in the real world and the online world. This includes a specific analysis of your offline activities, for example: concerts, contacts to fans and fan groups. Furthermore, we considerate your activities online, which means a detailed social media analysis and an analysis of your website. We also take a look at how you bring the music to your fans.

From the analysis of your fan-relationship, we develop a unique crowdfunding campaign which will be complemented and supported by online and offline accompanying measures. The crowdfunding campaign of a singer/songwriter is, naturally, different than the one of an alternative rock band.

Our work together on your crowdfunding campaign is not about telling you how the music business works. As a musician, you already know that good enough. We will mostly try to optimally combine all your existing resources and to use them for a campaign success. We can only achieve your goal of funding your project together and if we work to the max, a lot more than that.

At any step of our collaboration on your campaign, you can determine what and how much of the work the music + crowdfunding will take up on. It can go from an assessment and evaluation of your existing project plan, to a detailed campaign strategy including delivery of finished press articles. Let us talk about the details of your crowdfunding campaign in our first Skype conversation.

Social Networks are Completely Overrated

At last year’s a2n-Crowdfunding-Workshop, as part of the Berlin Music Week, I had a small dispute with Simone Janson about the importance of social networks for crowdfunding. What does it mean, especially for musicians, to have 1.000 followers on Twitter, or 2.000 Facebook fans or 5.000 likes on the homepage? Nothing! Okay, almost nothing. Just as little as Market Research Data speaks of marketing quality, exactly as little does the number of fans or followers or likes, say anything about the quality of the musician-fan relationship.

One simply cannot express this relationship in numbers. The ones, who try will miserably fail. Same as those, who try to manipulate these numbers, by using services offered from shifty agencies: “2.000 followers for only 20€” or “10.000 Facebook likes for 50$”. Of course, the temptation to push up your profile a little, is always there. Besides the fact that such a thing is prohibited by the Terms of Use of most social networks, in the end one only fools himself.

You can’t become a fan just by clicking a like button or sending a friend request. I’ll become a fan because of the music, because of the musicians’ personality, because of the feelings or passions that both music and musicians awake in me. Of course I can differentiate between real friends and facebook friends. I mean, the quality is different. Maybe we need to redefine or at least define the term “fan”. A real fan, in the true sense of word, can’t be compared to a facebook friend or a “like” on a website. Only real fans are willing to financially support an artist. It can be by buying his albums, pre financing his music, visiting his concerts or simply through crowdfunding. If however, crowdfunding platforms like Stellaband or Pledgemusic, decide about taking in an artist based on his number of followers or facebook likes, then it’s really not well thought out. An artist on crowdfunding will sustain an ongoing support only from a loyal fan community. To shrink it all down to pure statistics and numbers, may be economically correct, but it brushes aside the real opportunities of crowdfunding.

And this Hypebot article by Eric Eckart proves me right with my point of view.

The Amanda Palmer Case

…or: one could stop being passionate about crowdfunding after this! Most of you must have followed the discussions about Amanda Palmer and her offer to fans or musicians to perform along with her, no fee included. I don’t want to heat up the discussion once more. It can all be read in different newspapers, blogs or online. However as a result of this discussion, some musicians might reconsider crowdfunding their music.

On one hand, it’s because they don’t want to have to publicly justify every step they make. Apart from musicians with a contract, such a justification doesn’t call for the media attention like the one in Amanda Palmer’s case. On the other hand, it’s often because of the lack of recourses for a strong and open communication. But in this case, Amanda Palmer showed that even difficult situations can be handled masterfully. So, what do we and especially crowdfunding musicians have to learn from the Amanda Palmer case? It’s mostly two things:
1. (Open) communication is everything Those, who finance their music with crowdfunding, are narrowly watched by fans, supporters and like in Amanda Palmer’s case, the media. It is expected that the project is arranged transparently and that the given promises are held. This is why it’s necessary to communicate clearly and openly about the project goals and actions taken, that are related to the project.
2. Build on your fans A loyal fan base is a decisive success factor and not only within the crowdfunding project. Also, when it comes to keeping the critics at distance, a loyal fan community can be an important component. This is why the fans have to be deeply involved and trust needs to be built through transparent acting. I can only hope, that the traditional media won’t describe crowdfunding with negative headlines only and rather emphasize the advantages that crowdfunding has: direct involvement of fans and a chance for musicians, off the retracted paths of the music industry.

The One-Step Program towards Success in Music Business

There are many lists and advices going around the internet, which are supposed to help musicians overcome the steep ways of the music business. They consist of some more and some less helpful tips (from five up to 20). Actually, most of them are obvious banalities that could work for the marketing of any given product.

Here, I want to oppose those with my One-Step Program: “Act professional!”

And it is really easy to implement, by the way: The central starting point on the web has to be one’s own internet site. Its basic design should consist of bio information, music, pictures and gigs. There probably is a talented web developer/-designer among the friend circle, who can draw that up. All social networks should lead to your website. It’s not necessary to appear on every social network, however Facebook, Twitter and for musicians also important, Reverbnation or Bandcamp, are a standard. Fans are the most important capital a musician can have. Contact with fans should always be a number one priority- but in a modest way, not by spamming (this also includes adding to unnecessary facebook groups)… and being reachable for fans always and through all channels. These are only a few relatively banal things that need to be taken in consideration. And in this case, one which always applies online as well as offline: professional appearance, even if behind the stage this doesn’t always go so smoothly. The fan should notice none of that. At crowdfunding this is decisive for everything, even success or failure. A professional appearance should be a standard in this matter as well. Here, an example (not from music crowdfunding): I am one of many, many backers of Double Fine Adventure on kickstarter.com. Not because I’m a gaming fan actually, but because this project (Attention!) made an extremely professional impression on me. Somehow, an email from this project stayed in my memory, an email after which all backers living outside the North American continent, had to pay extra 10$ shipping fees. I was certainly not thrilled to have to pay for something once again, which explains my partial amnesia. 🙂 However, this amnesia ended yesterday so I asked the DFA staff about it via the Kickstarter mailing system. Promptly, meaning within a few hours, I received an answer (1. proof of professionalism) with a link to a website, on which I could type in my backer email address and be forwarded straightaway to payment per credit card or PayPal (2. proof of professionalism). Surely, someone might object that it’s a piece of cake to do so when you have a 3, 3 Mio. $ Budget. Could be, but I think that nowadays you can have a successful (and professional) online appearance even with a small budget…. Besides, the rest is commitment and hard work. For questions and advice – cost-free - you can contact me on my email address mario[at]musicandcrowdfunding.com

Adios Big Four?

The Institute for Communication in Social Media, shortly Ikosom, published a blog post named: “Music Crowdfunding and Labels”, at the beginning of June. A survey is planned to be conducted amongst German A&R-and Product managers of around 30 small and big German labels. I think the questions can, at the moment, still be commented on.

A couple of years ago, crowdfunding platforms boastfully announced the revolution of the music business. In the meantime, disillusion found its way to the revolutionaries. ForMyBand, the startup that was founded in 2008 in Berlin, wanted to unhinge the established concept about the music industry being headed towards a crisis. Today it can only be found on a tomb-like web site with the inscription “Germany’s first crowd funding startup closes its doors”. SellaBand, which used to be a forerunner for the crowdfunding guild that operated from Norway, which started in 2006 with the ambitious slogan “Level the playground in today’s music business” (or something similar), had to announce insolvency in February 2010 and was saved by German investors.

Meanwhile, the SellaBand team moved from Munich to Berlin and is again doing well in business. The contestants don’t seem to have such worries, yet no one has really successfully made a big breakthrough. Is the promised revolution not happening? What went wrong with the futuristic model of the music industry? The Ikosom blog post was also a reason for me to speculate deeper about the relationship between music crowdfunding and labels. What interests could labels have from crowdfunding? Or do they think of crowdfunding as competition? Are there any advantages in collaborating or even a synergy between crowdfunding and labels? Can one side or the other simply take over any steps of value chains?

Before we dedicate ourselves more deeply to the questions, we should take a look at the value chains of the music industry. Here, we can quickly recognize where crowdfunding starts, namely with the discovery of the artist, financing of the album/music and the production, which is mostly self-governed by the artist himself. And that’s where the possibilities of crowdfunding are worn out and the decisive steps of promoting and marketing as well as distributing the music, are left to others. Those are, in my point of view, exactly the points where, in the truest sense of the word, the music plays. It’s where the money is made. But it’s also where the supporters/fans are left out of the game. It wasn’t for nothing that Benji Rogers, Co-founder of Pledgemusic, established a record label in order to commercialize the artists that were discovered on Pledgemusic. (Although, only recently did Benji make it clear in an email, that he doesn’t consider Pledgemusic to be a crowdfunding platform). But, where is the supporters’ outrage? Why is it that, analogously to other branches, losses (or in this case the investing risks) are socialized and winnings are privatized? Up until now, the supports, apart from the fewest exceptions, have made no profit off of the artist’s success. A successful investment doesn’t work that way. But, let’s go back to our questions. I think that the business interest that labels have in crowdfunding, is rather low. They don’t necessarily have to fear competition in crowdfunding either. On the contrary, the labels can wait until the artists have gained some fan basis through crowdfunding and then, at the right moment, sign a contract with the artist- without the risk of financing a failed album. The supporters are the one who took the risk up to this point. Please, no misunderstandings, I wish for every artist to make profits out of their music. Surely, I see the synergy between crowdfunding and the labels. Even different points of the value chain can be taken over reciprocally. Though, it won’t work, because the labels work for profit and surely, which is understandable to me, they won’t want to share with the supporters, at least not without being forced to. The revolution of the music business can only come from the bottom. By fans and artists coming together and building a joint, new kind of a label, without mediators. This would surely be, even against the still actual GEMA discussion, an up-to-date answer to joint models of the Big Four, omnipresent music mainstream and the musical united mash on all channels. Additive (08.07.12): I am looking forward to the results of the Ikosom survey.