Crowdfunding: the future of a home-made music industry

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Crowdfunding, before it began being a trend and a noticeable phenomenon impacting the music industry, was a common issue. Described as the financing of a project without intermediaries – but rather individuals giving directly – this type of funding has existed for a long time. From a small village building an equity to acquire agricultural tools in the middle ages, to wells in order to obtain sustainable water in Africa, crowdfunding is far from being a new thing. What’s new, however, is the model Internet enabled crowdfunding to have, and a newfound interest in financing something unusual on a large scale : music.

A thriving business for… platforms

At the moment, only two platforms seems to share information related to the success of the campaigns available or run through their website : Kickstarter and IndieGogo. And while other platforms such as PledgeMusic and RocketHub, equally successful, aren’t disclosing their numbers, those available are giving a good indication about crowdfunding bands and financing albums.

However, in the shadows of the “Ten best music crowdfunding campains”, lay hundreds of aborted projects which will unlikely see the light. According to kickstarter, only 44% of projects are successfully conducted (but without any more specifics about the domains of projects).And despite IndieGogo being one of the only platforms allowing partial goals to be backed (thus giving funds to the project even if it hasn’t reached its goals), most require substantial amounts of money in order to fund an album, or concerts (paying for logistics for example).

Given Kickstarter Guidelines, “If a project is successfully funded, Kickstarter applies a 5% fee to the funds collected”, and recent announcements about the website having collected more than 1 billion dollars (from sucessful projects) since it opened in 2009, a rough estimate can give the platform a 50 million dollars in earnings over a 5 year span.

A new era of street performers

As successful as it may be, those platform may not appeal to everyone (and every artist either). Crowdfunding, as straightforward as it seems, may be seen as a digital alternative to collecting money on the street. Since artists and bands always had various opportunities to be discovered and ascent to fame, many went lucky and met a producer while performing in bars, cabarets, talent shows… Musicians or bands performing on the streets are becoming increasingly rare, since it is far from being an ideal starter for careers. TV, through shows like “America’s got Talent”, “The Voice”,”X Factor “ and so on, has displayed over the last 5 to 10 years an incredible array of talents, although offering very few winners. But since TV exposure has become the most easiest way of getting successful, having a street experience isn’t often publicly disclosed.

Amanda Palmer, an artist than successfully raided more than 1.2 million dollars from crowdsourcing, explains : “six years of busking, often as a living statue called “The Eight-Foot Bride”, led me to realise that people willing to toss money in a hat do so according to their means and interest rather than in response to a specific reward.”

And, given the top ten successes of unknown musicians, and the low pledges associated to it, most would deduct that successful crowdfunding is rather associated with modest musicians who know their way around building a fanbase, than beyonce-level artists who tend to bypass their label to avoid boredom.

The benefits of crowdfunding, beyond money

As many may state, there are perks to relying on a crowdfunding campaign rather than trying your luck on a tv show, or waiting for a producer to get in touch with your talent:

– Connecting to an audience and receiving feedback

– Developing marketing skills

– Testing new ideas…

While that may seem odd, these are kind of antithetic compared to what music, as an industry, has to offer (given you’re not a superstar yet, since you rely on crowdfunding) :

– Having community managers do the work for you

– Being marketed the way should appeal to an increased audience, sometimes miles away from your true nature, and being sold as a doll at Wallmart

– Being restricted to a predefinite cycle : album release, promotion, concert….and forking 90% of your profits to fund the next album

As it seems, the crowdsourcing model is bringing new opportunities to a new generation (and even to the old one), removing the need for intermediaries, or limiting them as a whole. A very bold idea, that Internet made possible, and that is more and more adopted, or tested, even by widely know groups. Pink Floyd is know as one of the most direct-to-fans music selling group, and such a search on Google will show how rising this method is going to be. But that may be the subject of my next article.

Sources:
http://www.hypebot.com/hypebot/2014/01/top-10-music-crowdfunding-campaigns-of-2013.html
https://www.kickstarter.com/help/faq/kickstarter%20basics
http://www.economist.com/blogs/babbage/2012/06/crowdfunding-music
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