Hypebot is reporting that PledgeMusic has gone into pre-administration as its future now hangs in the balance. According to sources, a buyer for the troubled crowdfunding platform is still possibly in the wings seeking to acquire it – but is deliberating.
“UK based corporate advisory FRP has been named to contact potential buyers and value the company’s assets in pre-administration; while in parallel, the interested buyer finishes due diligence,” writes Hypebot.
It is calming that if a buyer does not come forward “within the week”, Pledge will have to go into administration. “The process is designed to determine the maximum value of PledgeMusic’s remaining assets, the sale of which would be used to pay artists, merchant bank Sword, Rowe & Company and other creditors,” it adds.
Noisetrade, a subsidiary of Pledge, was sold last week and it is estimated that Pledge itself owes artists upwards of $3m for projects that were funded but had not been fully delivered. With regard to pre-administration, it is unclear how much (if anything) could make its way back to artists who were using the platform and had been working under the belief they were delivering successful projects to their fans.
This is all, of course, a rolling story and there are a lot of potential end scenarios; but ultimately it means that many artists, believing they had a new commercial route outside of the label system, could have the rug pulled from under their feet and find it impossible to carry on.
The collapse of Pledge is upsetting on many levels but the long-term effect could be felt for years to come where fans are wary of backing any projects from favourite artists while those working to build crowdfunding platforms could find the very notion of it toxic in the VC world. It is a very public disaster that could make the very notion of crowdfunded music an impossibility – and that might just be the biggest catastrophe here.