Right on the money: fan-funding

As Kickstarter prepares for its UK launch find out what fan funding sites can do for you.

Anita Awbi
  • By Anita Awbi
  • 26 Sep 2012
  • min read
As US website Kickstarter prepares for its UK launch, Eamonn Forde gets the low down on fan-funding platforms to find out what they can do for you.

Contestants on TV shows like American Idol are competing, we are boomingly told in the opening credits, for ‘a million dollar recording contract’. But earlier this year, Amanda Palmer created a new type of ‘million dollar contract’ by raising $1.2m on crowd-funding platform Kickstarter – 12 times what she initially hoped for.

Previously signed to Roadrunner as part of Dresden Dolls, she had a very public and even more acrimonious split from the ‘old’ record label system. Since going it alone, has become the poster girl for DIY artists by raising money in new ways and not relying on label or publisher advances to fund projects.

As a platform, Kickstarter (launched in 2008 under its original name of KickStartr) takes a cut of successful funding rounds. The owner of the project sets the deadline for funding targets and it only happens if that figure is raised. Until now, Kickstarter has been confined to the US but it is due to launch in the UK this autumn, meaning a new door is about to open up for British musicians.

‘You may pull other people in with the buzz around your project, but your goal on Kickstarter isn’t to pitch to total strangers,’ Palmer told the LA Times. ‘It’s to gather capital from your community - your pre-existing fans - with the hope that their enthusiasm might attract people to hop over the fence and take a look at what you’re doing.’ The money she raised is going to pay for an album, a tour and an art book.

Hungrily sniffing a new kind of revolution in the air, many hailed this as a watershed moment in fan-funding. But only seven projects have crossed the $1m mark on Kickstarter to date, with consumer technology projects proving more popular artist-centric ones.

Kickstarter is not the first crowd- or fan-funding platform, but it is the one that has most captured the public’s attention and the artistic community’s imagination. Before it, there were SellaBand and Slicethepie, as well as artists doing it entirely on their own.

Arguably, Marillion were the first band to successfully do this back in 1997 when, out of contract with EMI, they asked fans to help underwrite a US tour to the tune of $60,000. They subsequently built on this idea to have fans pre-order albums so they could pay the studio and manufacturing costs. And in 2007, Radiohead’s physical release of In Rainbows, charging £40 for pre-ordered limited edition box sets, was arguably a fan-funding move that got overlooked in the media hysteria about them letting fans choose what they wanted to pay for the mp3 version.

However, not all of these platforms, have been successful, but they helped pave the way for not just what Amanda Palmer achieved but also what is to follow.

The story of music on the internet has been marred by the perception of a slow chipping away at – or total annihilation of – all the old industry certainties and monopolies. Pricing, copyright, distribution, retail and marketing have been affected by both legal and illegal online music services, but one area the old industry (mainly labels, but also publishers) once dominated was access to finance. Through advances, they could get an act’s career off the ground.

But now, it seems, this last controlling element has slipped through their fingers. Fan-funding does not, of course, mean that labels (or publishers) are moribund, but it does mean that artists and songwriters now have a viable alternative and a choice. The Amanda Palmer story has pushed a trend that has been bubbling away in the background – with some successes, but arguably more failures – to the centre stage.

‘It was slightly tough at the start convincing people there was a new way of working in terms of bands at all different levels,’ says Malcolm Dunbar, Managing Director at PledgeMusic, which was founded in 2009. ‘The initial negatives were that bands didn’t want to ask their fans for money. My take was that they were not asking their fans for money – they were offering them better value for money at the early stages of that campaign.’

PledgeMusic has had notable success, with Ginger Wildheart recently raising £200,000 for his latest album and others like The Subways, Emmy The Great, Funeral For A Friend, The Libertines and Ben Folds Five all using the platform. To date, more than 1,000 funding projects have been undertaken on PledgeMusic, with Dunbar saying those where PledgeMusic works in an A&R capacity have had a 90 percent success rate of hitting funding targets.

However, that is not to say that this approach is devoid of complications. This is most illustrated by the fact that SellaBand had to file for bankruptcy in the Dutch courts in February 2010, although it was quickly bought by German investors. The warning signs, perhaps, were there when Public Enemy, whose leader Chuck D was made a US ambassador for SellaBand in March 2009, had to dramatically cut their funding targets for a new album from $250,000 to $75,000 when fan support proved to be a mere trickle.

Hinting at the pressures inherent in a nascent but still crowded market, Slicethepie has partnered with Pledge with the latter taking over the management of the funding activities of the former’s artists. Despite this, other services continue to launch, looking to stake a claim here. It could, however, be that Kickstarter has the most wind in its sails and does for fan-funding what iTunes did for downloads and Spotify did for streams. Neither iTunes nor Spotify were the first of their types but they were the ones that connected.

Even with the ‘Amanda Palmer effect’ building momentum and raising Kickstarter’s stocks, it is wise not to get carried away here and see it as the great, unbreakable panacea. As with every digital platform, one size will never fit all, so it is only the right platform for certain acts at certain points in their career.

While some acts can follow the totally autonomous Marillion route – McFly, for example, raised £500,000 in just two days in November 2010 from subscriptions to their online community – for many, going with established platforms is still the safest route as they can provide extra support and guidance.

‘It’s certainly a unique way of getting an album put together,’ says Bruce Foxton, former bassist with The Jam, who is using PledgeMusic to fund his new album. ‘Initially it’s not a money-making exercise. It’s just a means to get a record out there. If we break even, brilliant – I’ll be well happy.’

This is a crucial point. Such platforms are not intended or designed to offer a retirement strategy for artists. They are there to help complete one project and help set up the next. In that sense, they are exactly like advances, but the act makes all choices about where money is spent and what they do to raise that money.

Foxton says he met with two major labels about his album before discovering PledgeMusic, but the projected sales fell short of what the labels needed to make the numbers add up. ‘With the figures they [the labels] were talking about, they’d need to sell 100,000 albums to make it worthwhile,’ says Foxton. ‘I’m a realist. We have a good following and I wish we could sell 100,000 records. Who knows? Maybe we get lucky.’

Increasingly, acts are creating tiered offerings where fans can buy more than just an album or concert ticket – with signed merchandise, private gigs and other events involving the acts themselves commanding the highest prices. As more artists test these platforms, thinking creatively about what is on offer is essential to stand out.

‘It’s entirely up to the artist what they want to offer the fans,’ says Dunbar. ‘But it has to be tailored to their fans.’ Just as albums follow a creative process, the same level of creativity has to be applied to the fan-funding side of the project too.

For Foxton, the trick is to offer something fans will pay a premium for but not in a way that seems cheap or crass, as that could undermine everything else they are trying to do. ‘I didn’t want to come across as selling my soul!’ he laughs. ‘There is a fine line and I don’t want it to come across as smacking of desperation.’

It puts a new onus on acts: they now have to be self-starting and self-sufficient in order to take on the roles of marketers and accountants to ensure every pound raised and invested pays off in the long term.

‘We were thinking, “Christ – this is hard work!”’, admits Foxton. ‘There are only two of us and we are trying to spin all these plates. There is a lot to deal with. But it’s been a great experience.’

While bold claims are made on behalf of fan-funding platforms, they are often made by people not even associated with them. And, while Palmer had her woes with labels, fan-funding should not be seen as inherently anti-label or a ‘label killer’. Indeed, Palmer signed a deal with Cooking Vinyl for Europe and Foxton says part of his campaign involved a deal with Absolute. It is merely another option and one that, for now at least, best suits acts with an existing track record rather than box fresh ones.

The imminent arrival of Kickstarter in the UK will move things up a gear, but just being on one of these platforms is no guarantee of success. As with a label deal, there are huge risks and enormous amounts of hard work, luck and serendipity needed to make things fly.

This will be, for Dunbar, a new ingredient that will slowly change the entire business ecosystem. ‘In the future, a direct-to-fan campaign will be in its entirety or an important part of a new or an established artist’s career,’ he says. Ultimately, however, artists and songwriters will do well to understand how such platforms work. ‘There is a lot of pulling favours at this level… It’s not a big money-spinner,’ says Foxton. ‘We’re not jetting off to Barbados yet!’