Crowdfunding – a good financial model for musicians?

Crowdfunding, the modern way to raise a money to a project. Crowdfunding is a financial model where you are asking the general public for donations that provide startup capital for new projects. This kind of financial model the musicians can ignore the help of record labels and pitch ideas straight to everyday Internet users to all over the world, who provide financial support. (Ruth 2014; Steinberg 2012, 2.)

With the help from companies like Kickstarter and Indiegogo, who offers crowdfunding services, they allow you to create web pages that include all the information about the project, photos and promotional videos on products, projects or services they’re looking to get funded. Usually you are offering some special rewards in exchange for pledges that support the effort of the project. Rather than equity or a share of profits though, benefits often take the form of exclusive merchandise, advance access to new releases, or some personal incentives. (Ruth 2014; Steinberg 2012, 2.)

One example is Austrian rock musicianKerim Lechner how already have a small fanbase and he start the campaign with IndieGogo for his new album. He collected at the end of the campaign to nearly 7,000 euros when the target was 5,000 euros. He offered different kind of perks starting with 1€ Pre-order list + signature to 45€ which included online lesson + CD. More information can be found here

One of the biggest complaints from artists in the increasingly cost cutting music business is that they can’t get enough money from their record label. Crowdfunding gives musicians who don’t like their arrangement with a record label another option. And it gives musicians who might not ever get a record deal a chance to put their work directly in front of people who might like it.

It also requires musicians to do at least some of the work record label employees used to do. Musicians do have to spend money and a lot of time to hit their crowdfunding goals, so failure can be expensive. Another significant advantage of crowdfunding is that you don’t give away any ownership of your work.

Crowdfunding as a financing model is important because it is no longer financially feasible to go into debt to produce an album. The only way to guarantee that musicians are able to make an album financially is to get that financing up front. And that’s where fans come into play. If you want the music to be made, you have to support it on the front end. Give the pledge of support up front and someone will produce the music for you to enjoy. Musicians will need you.

 

Source material

The Crowdfunding Economy Is About to Pop. 24.9.2013. http://business.time.com/2013/09/24/the-crowdfunding-economy-is-about-to-pop/

The basics of crowdfunding. http://www.entrepreneur.com/article/228125

Janet Ruth. Crowdfunding: The Complete Guide to Using Kickstarter, Indiegogo, and Other Crowdfunding Sources 2014.

Scott Steinberg. The Crowdfunding Bible 2012.

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