Crowdfunding, as a word, is relatively new. But as a concept, crowdfunding has been around for centuries.
With musicians, crowdfunding used to involve pre-sales through the mail (with a postage stamp and a cheque/money order) and events like the album decorating parties held by Texas punk band Meat Joy in the 1980s.
With the coming of the internet (and its buddies social media, online financial transactions, digital downloads, smart phones), there has been an online crowdfunding revolution, including for musicians.
Crowdfunding is, according to the Oxford English Dictionary, the “practice of funding a project or venture by raising money from a large number of people, each of whom contributes a relatively small amount, typically via the Internet.”
Marketing is a key part of crowdfunding – potential funders need to know about the project, be comfortable with the funding platform, feel that the project is appropriate and be willing and able to participate.
Although online crowdfunding is popular, it’s not without risk, controversy or unforeseen consequences.
Some funders might get caught up in the excitement of crowdfunding and making a pledge that they cannot afford. Other funders might be disappointed with the outcome of the crowdfunding project and/or not receive promised rewards.
For musicians, it is essential to fully understand the obligations, costs and risks of crowdfunding. There are many crowdfunding platforms, some based outside Australia, and many different terms, conditions and fees. There is no guarantee that a particular crowdfunding platform is reliable, secure, easy to use, flexible or allows for funder anonymity. Crowdfunding can also be a huge emotional investment (even when successful) and consume a lot of time and resources. As music crowdfunding invariably involves rewards, musicians need a diverse suite of rewards and to minimise negative impacts on future earnings. Consideration also has to be given to timing (e.g. the length of the project, when rewards are to be distributed). And setting the financial target can be tricky, as funding might dry up when the minimum target is reached and the project will have associated costs (e.g. platform fees, GST, credit cards/PayPal fees, rewards (including distribution)) and possibly tax liabilities.
As online crowdfunding matures, however, musicians are increasingly able to access advice and draw upon the experiences of other people. Now that is a reward!
Resources
Australian Taxation Office
www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/crowdfunding
www.ato.gov.au/Business/GST/In-detail/Rules-for-specific-transactions/GST-crowdfunding
Arts Law Centre of Australia
www.artslaw.com.au/info-sheets/info-sheet/crowdfunding-music-projects
www.artslaw.com.au/info-sheets/info-sheet/crowdfunding
Choice Magazine
www.choice.com.au/money/financial-planning-and-investing/stock-market-investing/articles/crowdfunding-risks-and-rewards
Jenny Biddle (Australian singer/songwriter) – Crowdfunding Blog
www.jennybiddle.com/blogcrowdfunding
Case Studies
Sal Kimber & The Rollin’ Wheel (www.salkimber.com.au) used Kickstarter to launch, Southern Light. Rewards included Sal’s banjo Polly, yoga/meditation classes with Mumma Kimber, bush dance (called by Sal), postcards, lessons/jam sessions with drummer Cat Leahy.
How was your crowdfunding experience?
Scary at first, then just fun!
Crowdfunding tips from Sal Kimber
Being personable really helped us. We found the rewards that were most popular were things connected to authentic elements of our life – e.g. Kimber collections (collection of music recorded over the years by our family), our mum’s yoga sessions and daggy postcards from the road.
All Our Exes Live in Texas (www.allourexesliveintexas.com) used PledgeMusic for its debut CD. Rewards included house concerts, double passes, All Our Exes crocheted doll/teaspoons and a book of Wighton family secret recipes.
How was your crowdfunding experience?
Awesome!
Crowdfunding tips from Katie Wighton
Talk to the crowdfunding people BEFORE you make your video – they can tell you what to put in there. Work out the way that YOUR fans engage. We were told mailing lists were the best, but for us Facebook was the best form of engaging our fans. Use a platform that lets people pre-order and continue to pre-order after the goal date!
John Flanagan (www.johnflanagan.net) used Pozible for his album, Nashville. Rewards included a limited edition songbook and singing/songwriting/guitar/banjo lessons with John.
How was your crowdfunding experience?
Exciting and nerve-racking, but overall positive.
Share some crowdfunding tips
Dream big, but be realistic with the financial goal. Tell the story of what you are trying to do – a good, honest video is important. Look at other successful campaigns, especially for people who are at a similar stage in their career, so you have a good idea of what target/rewards to choose.
Cyndi Boste (www.cyndiboste.com.au) used Pozible with her CD, Nowadays. Rewards included house concerts, being part of the back cover photo (your dog, being an extra and (for musicians) inclusion of a promo poster), as well as having a love declaration on a graffiti wall in the CD booklet.
How was your crowdfunding experience?
Challenging, all-consuming, heartening and nerve-rackingly good fun.
Share some crowdfunding tips
There are quite a few crowdfunding platforms. Read the fine print, as terms and percentages differ. Think about who your fans are and what they might think worth purchasing. Be creative and try to offer something for all budgets. As hard as it can be to do, you must keep reminding people of your campaign – they’re busy too!