Kickstarter and the growth of crowd funding

Kickstarter, the latest in a list of crowd-funding initiatives, announced earlier this week that it is going to be launching in the UK this Autumn. Considering that since it opened its US-based doors in 2009 it has successfully funded over 26,000 projects, raising a cumulative $236m, this is clearly a big deal. But how’s the project grown and what will this mean for UK musicians?

Essentially what Kickstarter does is allow you to source small investments from loads of people to collectively reach a funding target. Almost any creative endeavour is allowed, be it music, art, games, film, theatre, with the caveat that should you not reach your target then you receive none of the money pledged. The process is called crowd-funding and, although it was a model that previously existed, Kickstarter popularised it in the US in the way eBay did with internet auctions.

Kickstarter’s main strength, as with Pledge Music and Sellaband, is that it gives artists an alternative to the traditional methods of funding, such as taking out a bank loan or finding a publisher or venture capitalist to bankroll a project. It places the creative direction in your hands leaving you only beholden to your fans.

Of the numbers quoted above, $41m was for music projects alone. Kickstarter has kick-started over 8,000 music-based projects. These have been everything from raising money for band tours, creating web series, to Amanda Palmer raising over $1m to promote and distribute her new album. The scope of project sizes and amount raised vary hugely but the takeaway is that the site has managed to help musicians big and small make the music they want to for the fans who want it.

That ‘want’ element is key, Kickstarter only transfers funds to a project owner if they beat their target. It’s part of the reason that only a little over half of the projects manage to find their funding. Either it doesn’t capture the audience’s interest or the target is set too high. Though, by this point, a lot of the trial and error and work towards finding the sweet spot for funding targets has been done.

Kickstarter is the most successful crowd-funding initiative yet. Every year since it launched, Kickstarter has tripled in revenue, meaning artists here in the UK are about to have the gates to a huge market of potential funding opened to them. We could be about to see a resurgence in bands who, despite having made a name for themselves, are unable to get a good deal with traditional publishers. Take Amanda Palmer as an example. She left Roadrunner Records in a very public fashion after they cut shots of her belly from a music video claiming she looked overweight. She had no intention of working for another label after that, and it wouldn’t have been easy finding a new label after she recorded ‘Please Drop Me’ and her fans formed the ReBellyon – hundreds of fans posed for photos of their bellys and posted them to Roadrunner, they even printed a book – so crowd-funding is a natural fit: she wants creative control, she has an active fan base, and she has something to give back (new music recorded with the Grand Theft Orchestra).

Amanda Palmer

Amanda Palmer

In the UK, artists have already achieved some success through crowd-funding, one of the most famous being Gang of Four who raised money from Pledge Music for their album ‘Content’. The launch of Kickstarter, and the fact that competition now exists between companies seeking to provide this service, gives a strong indication that crowd-sourcing actually works on both sides of the Atlantic. Furthermore, it only requires a quick, back-of-a-beer-mat calculation to see who this project benefits the most. Kickstarter has raised $40m for 8,000 projects (excluding Amanda Palmer). That is $5,000 per project. Of course some projects receive a lot more, but this figure hints at the fact that those who benefit the most from this service are local artists who, with only a few hundred fans, are able to raise a significant amount of money through crowd-funding, in a similar vein to the way JustGiving works for charitable causes. People donate because they have a relatively close connection with the artist.

Of course, there are some downsides to crowd-funding. For a large project, only artists with a large committed following, like Gang of Four or Amanda Palmer, can expect to raise the money required. There is also a luck element to crowd-funding as some excellent projects won’t win their funding because they can’t entice an audience, whilst others that shouldn’t be made will be because the project leads know how to whip up a funding frenzy. Finally there is the fact that for most artists, particularly ones who are small and looking to grow, crowd-funding does not replace having a strong label with infrastructure and experience behind them to drive the artists forward. Yet fans, through crowd-funding, have shown that they can step in when musicians, big or small, cannot raise the money they need to provide the music their fans love.

We’ve written at length about searching for new ways to make money from music – artists after all have to live – and this is one of the best attempts we have come across before. It wraps creativity, funding and control into a lovely package. We as listeners can step-in and pay the musicians we like to make more music when traditional sources of funding breakdown. We aren’t paying for the music itself, we pay for the artist’s subsistence whilst they make the music.

About The Phonograph

Looking at music in a wider context since July'11. Follow @thePhonograph for news and analysis on everything music related from the Music Industry to the Libyan Revolution via Festivals, Games and Sexism and a whole lote more.
This entry was posted in Music and tagged , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *