Here’s a typical (abbreviated) Facebook status from your favorite local band…
“Hey guys! Want to help us get a new album out sooner PLUS get the ball rolling on a tour for later this year? You can pledge any amount you want on our Kickstarter! We’ve got some really great perks lined up – everything from a sticker to a private acoustic performance in your living room. Thanks to everyone who donates any amount, every dollar really touches our hearts. Our fans are the best and we hope to see you on the road real soon!”
You’ve seen the names Kickstarter, Indiegogo, RocketHub, and many more floating around lately, but what is the hype all about? These sites are all in the business of crowdfunding, a term so new that Microsoft Word doesn’t even recognize it. The basic concept of crowdfunding is almost exactly what it sounds like – the fans of whatever the campaign is (everything from album production to app developers to student theater companies and beyond) can help provide the financial backing for it. As long as the project reaches its goal amount by a certain deadline, the project is funded and the supporters all receive their respective “perks” depending on how much money they pledged. The more you donate, the bigger the perk. Crowdfunding has rooted itself deeply into the music scene, with bands creating campaigns to get various projects in motion. It seems perfect: the biggest supporters get to donate to their favorite campaigns, get a “perk” depending on the amount they’ve pledged, and then the idea becomes a reality.
For some reason, my views on crowdfunding are much like the cliché “he loves me, he loves me not” game you play while tearing petals off a daisy: parts of it I think are great, parts of it I think are awful. Let’s assume you’re the band in the aforementioned mock Facebook status that wants to raise money to cover some production costs and get a touring van. Here are a few pros & cons to your crowdfunding venture:
- In crowdfunding, you must set a deadline for your funding goal, for example $1,000 in 30 days…and that’s it! It creates an exact time frame for your fundraising, shortening the normally extensive fundraising period by quite a bit. No uncertain waiting period after your deadline, it’s pretty black and white on this one.
- You are seeing if there is demand for your band as a brand – do people like your music? Do they want to see you live? This is essentially a giant pre-sale, and if you reach your goal, then the demand is great enough. If you are unsure if your album will sell, you can set up an Indiegogo with a $10 pledge receiving a copy of your album once it’s all finished. These are people saying “Hey, I like you guys, and I’m gonna pre-order this album – here’s my money.”
- Anyone of any level can crowdfund, which makes it great for unsigned bands without a record label to help out with a touring advance.
- Crowdfunding is sort of a one-time deal. Regardless of your campaign’s success [or lack thereof], if you continue to go back to your fans for more money, you will exhaust your backers. Many campaigns are to get an idea on the track towards financial stability, where they wouldn’t have to rely so much on fan donations.
- Even if you choose to do another crowdfunding campaign, keep in mind that is not a consistent form of funding for your band. It’s not as if your backers have cemented financial support in your band, like an investor might if he had bought equity in an entrepreneurial venture (Accounting 201, anyone?)
- Sometimes, you overestimate how much your crowd actually wants to fund you. The most prominent example of this is Eisley’s overambitious $100,000 campaign for what was vaguely described as a traveling daycare center. This was met with quite a bit of backlash, both for their goal amount and for the fact that they were taking their infant children on the road with them, and ultimately came up $40,000 short. They should have taken notes from Amanda Palmer’s campaign, which successfully raised over a million dollars after many years of careful planning.
- You could end up like any of the campaigns featured on yourkickstartersucks.tumblr.com (and that would suck).
All in all, crowdfunding is surely going to take off even more than it already has. Don’t forget that this was nearly impossible before age of social media, so as the digital age progresses, so will the culture of crowdfunding.