Crowdfunding For Songwriters
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Introduction by Jim Liddane
Getting money to set up a recording studio, or a record label, or a music publishing operation, is never easy. But at least, they are sort of "regular" bricks-and-mortar businesses, and accordingly there are precedents you can examine, precedents which if correctly presented, might (just might) melt the heart of even the hardest bank manager.
But aspiring songwriters don't usually have track records, nor spreadsheets, nor well-spoken, grey-suited accountants to press their case.
If songwriters need cash, they usually end up having to come up with the money themselves.
So, how about Crowdfunding?
Crowdfunding is a deceptively simple idea: it involves a multitude of individuals contributing modest sums of money to support a particular project, venture, or cause. This collective effort allows creators to sidestep conventional financing avenues, such as loans or venture capital, in favour of relying on their community and kindred spirits who share their vision.
The origins of crowdfunding can be traced back to the early 2000s, with platforms like ArtistShare and Kiva laying the initial groundwork. However, the true watershed moment came in 2009 with the launch of Kickstarter. This platform opened the door for innovators, artists, and entrepreneurs to present their projects to a global audience and seek support directly from those who believed in their vision.
Crowdfunding encompasses several models, not all of which are suitable for songwriters.
Rewards-Based Crowdfunding: Platforms like Kickstarter and Indiegogo enable creators to provide incentives to backers. These incentives can range from exclusive access to the product or service being funded to personalised merchandise or unique experiences.
Equity Crowdfunding: In this model, backers receive a stake in the venture they support, effectively making them potential co-owners. Startups often employ this approach to secure funds while involving their earliest supporters in their success.
Donation-Based Crowdfunding: This form of crowdfunding, commonly used for charitable causes, relies on the generosity of contributors without the expectation of financial returns. Platforms like GoFundMe facilitate fundraising for personal and societal causes.
Peer-to-Peer Lending: Platforms such as Prosper and LendingClub facilitate peer-to-peer loans, bypassing the need for traditional financial institutions.
Crowdfunding has transcended its origins to become a potent catalyst for innovation, democratisation, and community-building in our interconnected world. It demonstrates the incredible power of collective action and the belief that, with the support of the crowd, anyone can turn their dreams into reality.
Graham Way looks at this alternative source of funding.
Crowdfunding For Songwriters
Sometimes referred to as fanfunding, hyper funding, micropatronage, or other such terms, crowdfunding can be defined as the activity of raising money from the public through individual contributions that are facilitated by a fund-raising campaign hosted on one or another Internet website. A handful of third-party fund-raising platforms have garnered most of the attention these days, like Kickstarter and Indiegogo, but there are now estimated to be over 500 crowdfunding platforms around the world servicing individuals and organisations of almost every stripe.
At its root, the crowdfunding concept is very simple. You post your project idea on a website that is set up to accept
contributions, spread the word about it any way you can, and hope people become interested enough in it to
contribute.
There are several general types of crowdfunding models, but only three that seem at all relevant for the independent
artist--the donation model, the investment model, and the micro-rights model.
The donation model runs on the premise that contributors give to a project without expecting any financial return,
although some other form of incentive to donate is usually offered (a perk such as a personal letter of thanks from
the creator, updates, previews, or whatever). Indeed, bigger incentives are very often provided to induce larger
donations.
This model commonly involves the majority of money flowing from many donors providing relatively small
contributions. For the music artist, donations would usually be towards an audio or video recording project, or a
tour, or something the artist needs to acquire in order to pursue their career, such as a piece of equipment. While no
two crowdfunding services of this ilk operate in exactly the same way, they typically allow for the project creators to
keep all money raised over the lifespan of the campaign, minus a relatively small commission.
The investment model is one in which money is provided in return for a promise of something of equivalent or
greater value in return. These can take several forms, the most common being lending arrangements and advance
purchases of the item, but may also including a share of ownership.
The micro rights model allows artists with a music product (or tour) in the works to raise money by selling single-
purpose rights (a "micro" licence) to individuals or organisations willing to promote the item (or upcoming
performance) in their locality in return for a share of the income on eventual sale of product (or tickets) that they
pre-order. These may be entrepreneurial types who are looking to earn money for themselves, or non-profits wanting
to raise funds for their organisation or a cause, and they might be inclined to go so far as to actually organise a
performance event for the artist.
Currently, the donation model is the most popular approach in crowdfunding, with well over half a billion dollars
being raised this way in 2011. For the artist it is a significant innovation, in that it is a true departure from the
traditional patronage model of earlier times when it was almost exclusively the wealthy who supported creators of
artistic works. The other models are arguably less innovative than adaptive, more or less fitting pre-existing
financing concepts into the networking environment of the Websphere.
All sorts of variations on, and even combinations of, the above models exist; and policies, procedures and features
vary from site to site. For example, some do not release the funds to you unless a designated monetary target is
reached, and will refund everyone's money if it isn't; others permit you to keep whatever is raised. Some offer both
options.
Thus, before committing to a particular site, you should assess both your own particular needs and the merits of the
site in order to determine which model, and which of the multitude of third-party platforms out there, is the best fit
for you. In this regard, it helps to understand and evaluate such things as the site's track record of success, what
other complementary services they may offer, their system's functionality, the artist's obligations, their privacy
policy, their protocol and terms of agreement, whether safeguards are in place to protect contributions from
misappropriation while under their administration, and so on.
Interestingly, there are artists who have chosen to bypass these crowdfunding "middlemen" altogether and deal
directly with the public, relying on their own website, social media, and whatever other means they can to drum up
support. In such case, an extra level of trust must form between the artist and potential contributors than would be
the case if they were sourcing through an established third-party site. The upside is that there are no commissions
to pay and you set your own rules of engagement; plus, all the time and effort you spend marketing your project will
be drawing people to your website, not that of some third-party. Crowd sourcing this way has worked quite well for
some acts.
Some people carry the misconception that raising money through crowdfunding sites is pretty well a slam-dunk,
similar to the rather naοve "just build it and they will come" attitude some have about their own website. Truth is,
you need to have a sound strategy around raising money this way and be diligent about implementing it in order to
make it work for you. In this respect, crowdfunding is no different from other methods of fund-raising-it takes
effort and having something about you or your music that attracts.
I have one final thought on this whole subject, which has to do with the potential legal implications of facilitating
financial transactions through a third-party crowdfunding site.
Ideally, due diligence should be undertaken by the artist to ensure that he/she is protected against (and indemnified
from) any misrepresentation, negligence, misappropriation of funds, and copyright/patent infringement by the site.
For example, consider the possible consequences if a crowdfunding site an artist was using were to be sued by
another site over a patent infringement issue. If the defending site were to lose, or a cease and desist order issued
by the court, that might put the site out of action for some time and the artist's funding efforts in limbo. It could
even jeopardise already contributed funds still held by that site. To my point, at the time of this writing, Kickstarter
just happens to be embroiled in a significant legal dispute with ArtistShare over the possible infringement of
ArtistShare's crowdfunding patent. It will be interesting to see how that plays out.
For more on this and lots of other topics about the music business, go to my blogsite at
http://www.grahamway.ca
where you will find useful resources for musicians, singers, songwriters and bands. I'd love to hear from you.
Contact me with your thoughts about this article or if you need help with your career.
Copyright Songwriter Magazine, International Songwriters Association & Graham Way: All Rights Reserved
If you have wandered onto this page by accident, then you may very well be wondering what "The Knowledge" button above is all about.
"The Knowledge" is a free multi-part course which takes you from thinking up the basic idea for your song, through using AI or Artificial Intelligence to help improve your writing skills, to penning the title, the lyric and the melody. It then covers plagiarism (what to do if you're told your song sounds like another one!) and copyrighting your song, so that you can take action if your work is stolen.
Finally, it deals with selling your song, promoting your demo, music publishers, putting your songs on the web, and in movies, or on television, getting the money in, raising cash to fund your career via crowd-funding, before setting up your own music publishing company so that you get to keep all of the money! And that blue button at the bottom of each lesson simply takes you to the next lesson.
If however you would like to go back to Lesson 1 and start the course (it will take about 90 minutes to complete), then just press HERE
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