Musicians have been using sites including Kickstarter, Patreon, PledgeMusic and Indiegogo to crowdfund their new projects for years.
Meanwhile, new platforms like Seedrs and SeedInvest are emerging to help tech startups tap crowds of small investors. Crowdfunding and crowdsourcing may be slow-burning trends for music, but they are interesting and important ones.
The first session of the day at the Midem conference in Cannes explored them. The panel included Molly Neuman, head of music at Kickstarter; Ben Aronsten, chief marketing officer of Seedrs; Jon Skinner, CEO of Music Gateway; and Jean-Christophe Morisseau, co-founder of Newvelle Records. Music Ally CEO Paul Brindley moderated the session.
Skinner started by talking about Music Gateway, which was founded five years ago as a business platform for the music industry, connecting labels, publishers, artists and other people and partners around music, as well as helping them manage their projects. More than 1,000 indie labels and 700 publishers are among the 30k+ users of the service.
What about funding though? “This year we put a pot of money – about $50k – to help contribute to people’s projects,” said Skinner. “If someone comes to us and they want to record an album or a single, and they need that promoted, they need a radio plugger or a video done, they talk to us… This is a yearly thing that we’re going to do, and we’re hoping to increase that next year to $100k, and we’re talking to several brands at the moment too.”
Neuman talked about Kickstarter, which launched in 2009. It has 15 core categories now, with music sitting alongside art, dance, film and other creative areas, as well as design and technology.
“In music we have now raised successfully 23,000 projects,” said Neuman – with around 90% of those being new albums, and the rest mainly tours and live events. “We can work with all kinds of different projects from labels to artist projects and instruments. Any idea has the possibility to use our platform.”
Music is among the most successful of the categories on Kickstarter – just over 50% of music projects hit their crowdfunding goals. “Music projects aren’t raising a tremendous amount: between $5k and $20k, so it’s a little bit more attainable,” said Neuman.
One of the most high-profile projects of 2015 was De La Soul’s new album, which raised more than $600k. “For the music category that is definitely more on the edge. Primarily it is the lower goals: artists early in their careers,” said Neuman.
“We really see the Kickstarter opportunity as a way for artists to develop their case: if they ultimately want to be on a label or want to set up their own label, setting a case for their own community and how they’re able to raise funds and connect their community is something we’re able to do.”
Kickstarter also sees its platform as an opportunity for labels to develop artists, which is something she’s discussing more and more with the industry.
Over to Morisseau to talk about Newvelle Records, which is a label releasing music only on vinyl. It invites artists into a New York studio and records their albums, releasing six in 2015.
“We pay the artist upfront, and what we do is we create a new relationship between the label and the artist,” he said. The company keeps the vinyl rights permanently, but after two years all the other rights – digital included – pass back to the artist.
Newvelle Records got started with its own Kickstarter campaign, raising just under €34k. Morisseau noted that each of the albums released so far includes a poem on its inner sleeve, with the company now “closing a deal with a very well-known writer” to follow suit for its next set of releases.
The model works as a subscription: members get a new album every two months, but they don’t know when signing up what that music will be. “It’s what we call a ‘rendez-vous’ in French. It’s an emotional rendez-vous! People don’t know exactly what they’re buying, but they know it will be great.” The subscription costs €600 a year (so €100 per album, effectively).
Aronsten spoke next about Seedr’s equity-crowdfunding platform, where people can invest in a campaign or business and receive equity in return, rather than Kickstarter-style rewards. It’s been going for five years, and has had about £130m of investment come into the platform.
Those include DJ-streaming community Chew, which raised “a few hundred thousand pounds” on Seedrs, and vinyl-led label Gearbox Records.
The panel talked about crowdfunding tips. “Preparation is absolutely key. You have to crescend all of your plans throughout the campaign period. It’s very hard work,” said Skinner.
“You can count on your friends and family for a certain amount hopefully! But we really encourage creators to evaluate their community and their goal in harmony,” said Neuman, who said too many projects still come in “without the story in place” to fuel a successful campaign.
“The story, the photos: our editorial team is very, very clear that a campaign must have strong imagery. That the internet really requires photos now,” she added.
“It’s not all about money,” said Morisseau. “It’s about how does that platform fit in to your strategy? Where are you in your cycle, and how do you position that crowdfunding company in your cycle. It’s all about the anticipation for the campaign.”
Aronsten talked about where Seedrs finds investors. “The number one answer is ‘it’s your audience’. If you can’t get your customers or your audience engaged in investing, how are you going to get people coming in completely cold to your idea? That’s the difference between failure and success.”
Only about 20% of businesses that apply to crowdfund on Seedrs are chosen to go onto the platform, and of those, around half hit their funding goals: Aronsten said that it’s the ones who understand their customers or audience well that are best positioned for success.
Neuman said that at any given time, Kickstarter has between 550 and 600 projects live, making it hard to get deeply involved in every project with its resources. “My team is working on new ways that we can offer these tools and resources in our own music-focused channels,” she said.
Skinner and Aronsten talked up the current state of affairs in the UK, where investors in tech and music can get tax relief on those investments, which both agreed is spurring more activity in the sector.
Morisseau brought the conversation back to the need for a “story” behind every campaign, so that potential backers can “make sure you are real: it’s sincere, it’s genuine… you are here to tell a story and to create a relationship that you expect to last over time“.
Neuman was asked about whether Kickstarter wants to take a chunk of rights for successful music projects, and made it clear that it does not.
“We definitely are hoping to offer resources to our creators who are looking for distribution partners, performance partners or publishing partners. Because of the nexus of the platform, there is a lot of opportunity in that regard. But we would never be pursuing any participation.”
“I don’t see a crowdfunding platform helping me developing my business. It’s in silos: I know what I can expect from them,” added Morisseau. “If I need supporting developing parts of my business, maybe I go to professionals. They [crowdfunding services] are professionals in raising money.”
Sometimes these platforms can work together. Seedrs has a campaign for a smart compass for bicycles, which raised its initial money on Kickstarter from early adopters of its product, and is now selling equity to investors on Seedrs.
“Investors are not our friends. They are friends of their own money!” said Morisseau. When you go to the investors, they will say ‘do you have a market, do you have customers? Show me revenue, show me clients’. What Kickstarter gives you is access to that first market, and that’s why those platforms are really helpful. You go there, and people will accept that you do not have a market.”
Now Newvelle is trying to raise more money from investors, and is being taken seriously because its Kickstarter campaign and first year of releases show them a proof of concept. The company currently has 130 subscribers and is aiming for 300 by the end of 2016, although its break-even point will be 500 subscribers (which would be €300k a year in subscription revenues at its current price.)