Crowdfunding is still effective – and it's still not begging

This article is an excerpt from Ari Herstand’s second edition of How to Make It in the New Music Business:

In 2009, I was co-managing one of my favorite Minneapolis bands with my girlfriend. I was actively touring, playing 100+ dates a year myself, so the day-to-day duties were mostly handled by her. The band had built up a loyal grass-roots following and were selling out venues in a five-state region. They were bringing 600 people to their local shows every couple months and were becoming known on the festival circuit.

They were making just enough money to support the five band members’ living expenses while on tour, but had virtually nothing left over to invest. They had the material for their next album, but we didn’t know where we were going to come up with the funds. No matter how we crunched the numbers, no amount of gigging or merch sales was going to bring in the $10,000+ we needed to make the album.

Then one day, through creative Googling, I stumbled upon this new site called Kickstarter. It had just launched a couple months prior, but a Brooklyn-based musician, Allison Weiss, had raised $7,700 from just 200 people through what this new startup called “crowdfunding.”

We thought, what the hell, it’s worth a try. The band has a loyal fanbase that wants to support it. Could we replicate this other relatively unknown indie artist’s success? We got Kickstarter to approve our project (by that point it was invite only) and on December 1, 2009, we asked the fans to help fund the new album. Sixty-five days later we raised $10,455 from 173 backers. We didn’t really know what crowdfunding was, but we knew, whatever it was, it worked. It enabled the band to fund the new album.

Two years later, I decided to take the plunge for my album. Through a meticulously organized campaign, I raised $13,544 from 222 backers in 30 days.

It’s funny to look back before Pono, Pebble, Coolest Cooler, Amanda Palmer, Zach Braff, Veronica Mars, Reading Rainbow and, er, potato salad broke records and thrust this scrappy startup into the mainstream. But not too long ago, asking people to pay for simply an idea was not just unheard of, but inconceivable.

Now crowdfunding is a commonly used practice utilized by hundreds of thousands of creators supported by millions of backers generating billions of dollars.

But for some reason, many artists still feel very uncomfortable with the entire concept of crowdfunding. Taking a fat check from a corporation who wants to own the rights to your creative properties (and your firstborn), no problem. Asking fans for financial support to create art in exchange for nothing more than, uh, art (and some fun rewards), big problem.

Artists (incorrectly) referred to this as “begging” and many refused to even entertain the idea. While these artists struggled and starved, their less stubborn counterparts were forging ahead in this new asking economy, funding projects and building successful careers.

Luckily, the negative crowdfunding stigma has all but been removed from most artist communities and now if you don’t crowdfund an album, eyebrows are raised. Oh, how times have changed.
Since inception, over $200 million has been crowdfunded for 60,000 music projects on Kickstarter—not to mention musicians who have seen success on competitors like Indiegogo.

Crowdfunding vs. Fan Clubs

Crowdfunding is great for raising a bulk amount of funds for a big project, like an album. It’s not so great at generating a livable income. Or helping constant creators, putting out art, regularly, like YouTubers. That’s why Jack Conte, one-half of the band Pomplamoose (who rose to fame on YouTube), created Patreon.

Famous YouTubers were getting millions upon millions of views, but seeing a minuscule amount in ad revenue from YouTube. Jack knew he (and fellow YouTubers) had fans willing to support them, they just didn’t have an available mechanism to do so. He was right. Creators on Patreon include musicians, bloggers, podcasters, comedians, artists, comic book artists. Patrons of these creators either pay per piece of content (like per song posted) or per month.

This ongoing patronage model, or Crowdfunding 2.0, can be looked at as a fan club of sorts. Bandcamp recently added subscriptions to their already very popular platform. On Bandcamp, fans can support their favorite artists paying a set amount per month or per year.

Even Beethoven depended heavily on the patronage of just a few wealthy noblemen to make a living. At some point in the twentieth century, however, the music business became solely about selling small-priced items (records) to lots of people. For some reason making $1 million from 100,000 people was better than making $1 million from 10 people.

If you can affect 10 people on such a deep level that they want to support you to this level, accept it. Appreciate it. Welcome it. Respect it. If Beethoven didn’t have those few patrons who believed in him, he may have given up composing, become a piano teacher and deprived the world of some of the most beautiful music in the history of mankind.

Amanda Palmer, famously, broke the Kickstarter music record when she raised $1.2 million from nearly 25,000 backers in 2012. But that money was all spent on recording costs, packaging and shipping the rewards. She has since joined Patreon and is making over $35,000 per “thing,” as she calls it.

Patreon calls it patronage. Bandcamp calls it subscription. What- ever you call it, you should look at it as a fan club. Make this space a fun, digital hangout for your biggest fans. You shouldn’t just set it and leave it, you should give your fans a reason to be members—aside from their love of your music, of course.

In addition to traditional fan club staples like discussion boards and access to advance tickets, give your fan club exclusive access to b-sides, demos, live streams from the studio or rehearsal studio. The beauty of the fan club (over an album-driven, one-time crowdfunding campaign) is that you don’t have to worry about sending out (and paying for) physical goods. Fans are happy to support and happy to get solely digital exclusive content and behind-the-scenes access.

Crowdfunding 2.0 doesn’t have to completely replace Crowdfunding 1.0. Many artists run traditional crowdfunding campaigns on Kickstarter or Indiegogo in addition to Patreon or Bandcamp fan clubs. YouTuber Julia Nunes ran a $134,403 Kickstarter campaign and a $1,700/video Patreon simultaneously. Funk band (and Sleepify inventors) Vulfpeck raised $55,266 on Kickstarter and ran a $35/year Bandcamp subscription.

These are two completely different platforms for completely different purposes targeting different subsets of your fanbase. Pull out that Pyramid of Investment. More of your fans will back your album-focused crowdfunding campaign than join your subscription-based fan club. But some will join both.
It’s all about how you frame it. Locking all of your music behind paywalls, and forcing your fans to consume music in a way that no longer makes sense to them, alienates your fans and will turn them off.

However, releasing all of your music for your fans to consume in a way that makes sense to them, while inviting them to support you for it (offering bonuses like exclusive, behind-the-scenes content and engagement) will overjoy and delight them.

Fans will pay you for music. Ask them. Don’t make them.

Sure, the average pledge amount is $5 (per release/month) on Patreon, but that’s not to say you can’t court your rich fans and encourage them to support you for a high amount that makes sense to them.

Which platform is right for me: Kickstarter or Indiegogo?

The most popular crowdfunding platforms for musicians are Kickstarter and Indiegogo. PledgeMusic used to be the go-to crowdfunding and preorder platform for musicians. But in February 2019, after months in which it failed to make payments to its artists because it simply didn’t have enough cash on hand, it suspended all contributions. By the time you read this, the platform may be completely defunct or it may have been resurrected. But as of early spring 2019, PledgeMusic was not a viable option.

Creators on Kickstarter and Indiegogo set public, monetary goal amounts and in some cases only receive the funds if they reach the goal. Indiegogo allows “flexible funding” as well, which allows you to receive the funds no matter if you reach your goal or not, however I strongly advise against this model.

For one, if you calculate that it will cost a minimum of $10,000 for the album production and $3,000 to fulfill (and ship) the reward packages (not to mention marketing costs), but only raise $5,000, you’re still on the hook to fulfil all the promised packages of an album that you now cannot afford to create.

And another downside of this flexible funding model is that if you set your campaign to last 30 days and 23 days in you’ve only reached 60% of your goal, you’ll shrug and say “Oh well, too bad we couldn’t reach our goal” and take the money you did make and do the best you can with it. Whereas if you ran a campaign where you would receive nothing if you don’t reach your goal and 23 days in were at 60%, you would make damn certain that you made up the 40% the final week.

I can speak to this first hand. This was my exact situation. In my final week of my Kickstarter campaign I kicked it into high gear, sent out personal requests to fans, friends and family, added extra incentives and not only reached my goal, but surpassed it by 35%.

A major element that sets Indiegogo apart from Kickstarter is their “InDemand” preorder solution. Once your crowdfunding campaign finishes, the pre-order begins. All of the work you put into rallying the troops around the crowdfunding campaign doesn’t have to immediately shut down the moment the campaign finishes. All of the rewards, exclusives and packages stay live, but instead of backing the crowdfunding campaign, fans simply pre-order packages.

Ari Herstand is the author of How To Make it in the New Music Business (second edition), a Los Angeles based musician and the founder of the music business education company and blog Ari’s Take. Follow him on Instagram @ariherstand.