OPINION: What's the future of fan-funding in the wake of the devastating collapse of PledgeMusic? 2

OPINION: What’s the future of fan-funding in the wake of the devastating collapse of PledgeMusic?

Last month PledgeMusic announced it was going into administration after it failed to find a buyer for the struggling firm. This was a big blow financially for acts using the service, which had once filled a need for artists looking to fund their releases and tours through direct fan funding. It left artists and fans distraught at the financial loss, the breach of trust and the way it had been handled by the company, with artists cancelling their campaigns straight away on social media and scrambling to cover their rewards and fans investments. Jesus Jones Tweeted: “PledgeMusic is now dead. Everyone who had their money STOLEN, will never see it again. All of us – artists, fans, suppliers – we were all the victims of a crime. It’s time those responsible were held to account for their actions!”

PledgeMusic was on the face of it a success story for eight years. A direct-to-fan platform where artists worked directly with their audiences to fund their albums, tours and a range of merch, with fans able to access everything from customised guitar picks and t-shirts to home concerts. Artists such as Ladytron, Weezer, Future of the Left and many more had used the service to fund their releases and tours.

It was a service built on a series of pledgers in exchange for reward requirements from artists to pledgers; along with other fan fan-funding sites it bridged the gap as digitisation and streaming eroded much of the finance in the music business. It allowed emerging and middle tier artists and those with a dedicated fan base to continue touring and releasing records even if they didn’t have a label or management. It gave them an automny and creative freedom to shape and distribute their work.

However the crowdfunding platform stopped paying artists their donations last year, and an email was leaked alleging that the company had no staff and was offering the company for sale “free from any liabilities”. With anywhere between “$1million and $3 million still owed to acts” according to the NME with”electro-industrialists ohGR owed $100,000, Queensryche more than $70,000″ each.

PledgeMusic’s steep 15% cut was they claimed in order to cover their hosting, support, and even credit card fees. They promised artists they would “only get paid if you reach your goal. With pre-order campaigns, the same fees apply.” PledgeMusic ran a staggered payment system. One third of the money from pledgers would arrive once the project was completely funded, another third when it was released digitally and the final third once all pledges were completed. This might have orginally been designed to fulfill rewards to fans, but it left artists(who could often least afford it) getting in to serious debt to fulfill up front costs of recording and manufacturing.

This steep liability also meant artists were in greater financial risk when the company went bust due to mismanagement. Given that artists are still out of pocket and angry and pledgers are short of their rewards or the records they were hoping to ultimately fund. It has for some, led to a sad breakdown of trust in the model itself; it may make people hesitate before investing in backing their favourite artists in future, which would be a shame.

Some are looking at criminal proceedings as a way of trying to reclaim any monies owed from the wreckage of potential liquidation. What’s more, Pledgemusic’s demise has also thrown the future of fan-funding models into sharp focus, in an era where streaming has eaten into physical sales and there has been a drop off in funding in emerging and middle tier artists via independent labels.

I began to look into how fan-funding works and how it might work better in future, I spoke to artists who have had both positive and negative experiences of fan-funding.

Pledgemusic founder Benji Rogers told users: “I am truly sorry. The company will go into administration at some point this week or early next which means that any funds received for the assets of Pledge will be distributed to all of the creditors involved. This will include all of the artists who are owed money”.

JC Carroll of the band The Members noted in a Facebook post that “Pledge music did more then steal from people like Richard England and artists like me and our fans: they destroyed confidence in the pledge system and they stole our dreams and the superfans’ chance to support the music and artists they loved. We all lost money but the biggest loss is that of trust.Who would pledge again ?”

Lost Map artist FELL aka Nicolas Burrows, told us about his experiences. “I was affected by the Pledge music fiasco. They owe me roughly £1400 which I’ve had to cover out of my own pocket. And by my own pocket, I mean a credit card. And I had to pay a few people really late which wasn’t very professional or comfortable for me. I got my record made but I’m in a worse financial position than I was before, meaning I really can’t see any way of continuing to make music without more PRS funding or similar.”

Burrows details the painstaking time and work required to keep a PledgeMusic campaign active and the rewards flowing. It appears you have to become your own marketer, distributor and manager with some campaigns and this can all too often affect the time left to spend on real-life concerns. “All the time it takes to make and post the rewards takes time away from other work. You need to spend extra money on the exclusives/rewards whatever and I didn’t take that into account with the budgeting. It feels like you’re spending more money to make things and so you need to raise more than the amount you need to make the record or whatever. But maybe that was just my choice of items.

I was making digital products so I had to create new physical stuff (prints, t-shirts etc). I think the idea of a pre-order is really the best way it works. You just pay up front for the thing. The making of all the other things just feels like a big extra hassle. I didn’t want to make anything else but I had to fit the platform’s model. I think I could email people and say ‘I’m making a record, can you buy it now for £5’ and they probably would pay it. I don’t know if they really give a shit about the other stuff on offer. They were all people I knew/friends of friends – maybe other people wouldn’t, and it does mean I could get more money for some other items so it would take longer with pre-orders I guess. I did it as cheaply as I could, getting digital prints made and hand-painting t-shirts, writing original songs which all had minimal setup costs but took a lot of time to design and write and make.”

He’s still owed a large amount of money despite receiving a few payments: “Pledgemusic gave me an initial amount of money only after I’d rung the MD every day for a week. He fobbed me off with some bollocks about inheriting a flawed payment system that meant a huge backlog in processing payments. I knew it was rubbish but I had no leverage so I played along and just politely kept asking what was going on with my funds. I received an initial payment in two amounts and it didn’t match up with any expected percentage of what I should receive at that point. I think they had a whip-round in the office or something to get it together!”

She Makes War aka Laura Kidd, an artist well known for successfully using Pledgemusic in the past, responded on Twitter. Commenting that it was a “crying shame. What happens if the liquidation doesn’t pay back the artists who are owed money? I’m “lucky” in that I didn’t owe anyone else the £6K Pledge took from me, others are in a far worse situation. Hoping Musicians Union can help members. Thank you so much to everyone who supported my album releases through Pledge in the past – without you (and without them) I wouldn’t be where I am today. What a rubbish end to a brilliant platform.”

Kidd now runs her own club to fund her releases: “Given the situation, I’ve had to create my own way of fan funding the making of new music – my Supersub Club currently has 73 analogue memberships left plus digital and digi-one-offs + a free newsletter list”

PledgeMusic’s Rogers says he does not agree with those who have claimed that this shows that crowdfunding itself is untenable. “A failure in execution does not mean that the model is fundamentally flawed”, writes Rogers. “I still believe that there is a great future for fan-funded projects in this industry and I hope that someone builds a new version of, or resurrects what we started. I would gladly help in this effort”.

This will not be much comfort for the many devastated artists now caught up in the collapse of PledgeMusic though. As the company goes into administration, they will all become creditors and be placed in a queue for whatever money can be raised by selling off its assets. With outstanding artist payments estimated at between one and three million dollars, it now seems likely that many will never see the money they are due as they sit at the bottom of a que. Many will feel cheated that the promises made by the company failed to come to fruition. There are groups being set up to try and lobby the company and pressure them into reimbursing at least some of the funds owed alongside groups who are fundraising for the out of pocket artists. But what are the other options now that Pledge music has fallen by the wayside?

In contrast there are many positive stories around fan-funding. Scottish artist MALKA has taken a DIY approach to funding and releasing music: “I have been running my own record label now for 15 years and I am recording my 8th album (3rd as MALKA) at the moment. This will be my 3rd crowdfunding campaign which I need to run in order to fund the promo of the album.

I was lucky to receive funding from Creative Scotland to record the album with Paul Savage at Chem 19 or else I would be crowdfunding for that too. Since streaming has eaten into my sales I am reliant on any income I receive from sync (which is my main revenue stream for my music), royalties and crowdfunding to ensure that I can keep making music. I don’t tour as much as the costs just don’t add up for me. So I do lose out on extra sales from that. But I tour when I can.”

Kickstarter has carved itself a place for artists looking to fan fund. However, a note of caution with Kickstarter: if a campaign is not successful and doesn’t reach its fundraising goal, the money is never collected from your donors. If you miss your goal, you get nothing. Which means all your hard work and your fans money will be for naught. The artist Jacko Hooper told us about his success story with fan-funding, but it’s not without its hard work, costs and other aspects you need to examine before you embark on your ‘fan-funding journey’: “I went with Kickstarter a few years ago and managed to exceed £3,500 of funds for my debut EP. It was definitely difficult, the main thing I found with it is that you have to be incredibly consistent, you need to be pushing it on a daily basis – more than you would an upcoming show or even normal single/album release. I think it’s important to raise within a month, otherwise, all buzz is gone and it’s difficult to post things continuously that are engaging and your fanbase and community will enjoy without feeling pestered. It’s also worth noting that at the time I was doing my Kickstarter campaign, the Facebook algorithm wasn’t quite as cruel and was certainly not a ‘pay to play’ scheme like it tends to be now with posts – You have to spend money to reach your audience. That was something I didn’t have to factor in as much when promoting my Kickstarter and something I didn’t have to factor into my budget, whereas if I was doing it again It would be a big part of making sure it was financially viable.”

“I ended up surpassing my goal but it does take a lot of work as the posts need to be creative.” He continues “You can’t just throw things out there and hope people start paying attention, especially as so many other people now do similar types of campaigns, it’ll get lost in the landslide of other artists raising money and if you have the page up for two or three weeks and nobody is biting it’s not a great PR campaign – which is also a big part of the whole process I think. By doing a Kickstarter and raising money and continuously pushing your music/brand/record you are also promoting a LOT so if you ensure you have enough assets when going into the process (don’t just make things as you go… Have things prepared – making 1000s of rewards afterwards is not fun!) you can take full advantage of what it can bring.”

Fan-funding isn’t just about raising money, it’s also about inviting your fans into your art, creating a direct communication with your listeners: “It’s a great way to start a conversation with your audience so it’s important to keep that conversation going – with personal updates to comments and messages you receive and updates to pledgers as a whole. They will feel part of the journey if you let them and it will encourage more people to pledge as they’ll want to be part of the community you’re growing, people want to feel a part of something – so let them.

Hooper says that consistency is important if you want to make your campaign a success: “In some ways it was the most amount of work I had to put into something musically, it’s a lot of fun and very rewarding but it’s something you need to be pushing on a day to day basis. I would recommend plotting out your month prior to the release of the Kickstarter – Don’t just whack something together and put it on the site, it won’t work. You need to plan each week, what assets will I be releasing week 1, week 2 etc. – Personal video updates, exclusive track tracks and posts about what pledgers are receiving to encourage others to join the community.  It’s a lot of work but so rewarding and a great way to not only keep your current fanbase engaged but to grow it further as they will be posting about it and building a buzz from it too.”

He does sound a note of caution though: “Keep an eye out for what costs the website themselves take and also if the money you are raising includes the P&P costs. I was caught out by this by not realising that P&P costs were optional. Thus when it came to sending out all my rewards it took out a huge lump of my overall sum at the end when I thought my P&P costs hadn’t been added yet – This may have changed now but the subtlety of the optional aspect caught me out anyway.” Hooper points out the new environment is tough “As an artist you still need to make the music, promote the music, create the artwork, videos, tour etc.. And streaming just isn’t generating anything that comes close to covering any of those costs for me. I don’t make the playlists on Spotify so as a marketing tool it isn’t doing much for me either.” Before thanking his fans “I am grateful to my fans for supporting my music and the fact that I get those syncs means that I see a purpose in still creating. It can be hard to manage these campaigns alone and I do find it pretty stressful. The main thing for me is to set a realistic target and consider how the money can cover at least some of the outgoings.”

Indiegogo is another option for artists looking for a new home post-Pledgemusic. With Indiegogo, if you want to raise money for charity, you can register your campaign as a nonprofit.

Many artists rely on other streams of funding in 2019. Whether these come in the form of sync deals (licensing your music for use in TV or Films) from arts councils, the momentum fund and other funds around the country which is often tied with fan funding requirements. FELL tells us about his experience with the PRS funding and the pressures involved ’emerging artist fund “In 2018 PRS and Pledgemusic created a joint funding award called the ‘Emerging Artist Fund’. Artists have to use Pledge Music to raise an initial amount (set by the artist), and on meeting, this goal receives up to £2500 additional funding from PRS. I’d applied for a few PRS grants for my writing/recording project ‘Fell’ before, but this was the first time I’d been successful. I knew it would be an arduous and difficult process doing the crowdfunding part of it, but I’m reliant on funding to make music so any kind of support is critical to me. I wouldn’t have gone down the crowdfunding route independently, but with it being packaged up in this award it seemed a better option. I did feel a bit corralled into using Pledgemusic in order to receive the dangling PRS carrot, but I was grateful for the opportunity. There was no certainty I’d receive anything, as the pledge and PRS grant depended on meeting the pledge target – which I set at £2500.”

He acknowledges the practical reality of running a fan funding campaign is hard to fit it all in between other jobs and family life: “I knew from friends who’ve done crowdfunding that it’d take over my life a bit getting everything done. I dragged out finishing up the ‘exclusives’ for people because I had to fit it in around my work and family (I had a second child in October). Everything was late. I hated having to do endless social media posts to try to get people to pledge, but I did learn that emailing people directly and asking for money is the best way to get funded. People ignore a lot of social media or don’t really engage with it beyond a superficial glance and like. I felt pressure to get everything done on time. Luckily most of the pledgers were people I know so there weren’t any complaints about the overrunning of the project and I did keep people updated. In the end it all went out, the record and videos got made and it’s now getting a re-release (through Lost Map) in October.”

Patreon is another platform that allows fans an opportunity to support the ongoing creative career of a musician by pledging small amounts per month(say the price of a cup of coffee), in exchange for rewards. Artists are able to build a steady, fan-funded income stream with monthly payouts. Patreon is a subscription service to your favourite artists. A bit like a combination of Netflix, Youtube and a fan club but much more direct and personal.

Patreon was designed by musician Jack Conte from the duo Pomplamoose. Conte saw a major need for a network that not only allowed “creative types to build real, sustainable relationships with their communities, but that also allowed them the security of a reliable income. He saw that many musicians were finding popularity on YouTube, but that they weren’t able to harness that popularity and turn it into dependable income. Their videos were garnering millions of views, and they worked hard to nurture lasting relationships with their fanbase, only to receive a cheque for a couple of hundred dollars from AdSense every now and then.”

They found that on Youtube and other similiar platforms that the payouts weren’t proportionate to the amount of work put in and the engagement they’d earned. Thus Patreon emerged as a new more artist-centric platform, a way for musicians to continue serving their fans directly, keep creating at their current pace, and receive monthly payments from those who want to support their careers on an ongoing basis. In some ways, Patreon may be a peek into the future with the direct artist to fan models set to rise. Artists establishing a connection with their audience with regular content, videos and special privileges delivered to their fans in exchange for the price of a cup of coffee a month. However it may not suit every artist; some artists don’t like to record multiple videos, some artists prefer to take their time, or to be more mysterious. Also, whether fans are willing to sponsor artists in this way in the long term is an open question for this and other artist-curated platforms.

Billboard report, Amanda Palmer “has been music’s best-known crowdfunding pioneer ever since she used Kickstarter in 2012 to raise $1.2 million for her solo album Theatre Is Evil and its accompanying tour. With nearly 25,000 backers, it became the most successful music campaign in the site’s history.”  Now, as subscription models become the norm in the streaming era, the artist and member of the Dresden Dolls  has shifted to Patreon to successfully fund her work.

According to billboard, up to 2018, “20,600 patrons have funded her to the tune of more than $1.58 million”. “I am good at business,” boasts Palmer “But that’s not why people are giving me money. They’re giving me money because I’m good at making music.”  Since her Patreon launched on March 3rd 2015, she has used the revenue to make 56 products many of these are exclusive to her ‘patreon’ community.

“Palmer is one of 100,000 financially active creators on Patreon. The platform has seen growth since launching in 2013, the company is on track to double the number of patrons supporting members (from 1 million to 2 million) and the annual amount paid out to members (from $150 million to over $300 million) from 2017 to 2018. It’s now part of a constellation of fan-funding platforms including Kickstarter and Indiegogo — both of which continue to grow and have raised about $3.2 billion and $1.5 billion respectively for users in the past decade.”

Whether its Patreon, Kickstarter, Indiegogo, creating your own fan club, or newer ideas like Blockchain, it’s clear that navigating your way through the maze to fan funding your work as an artist is very hard work and can be very expensive and time-consuming. Not everyone has the luxury of being a known quantity like Amanda Palmer or having an existing fanbase like Ladytron, who fan-funded their new album. At their best fan-funding models can strengthen the ties between artists and fans, increase engagement and bridge that gap between unsigned and signed artists. They can give artists a sense of ownership and the ability to shape how their content and how their art is disseminated and funded without so much commercial pressure, to sound or look a certain way. It’s also positive for those with an existing fanbase. The problem comes with just how much time and resources a fan-funding campaign can take, also the admin side seems more like the business of a label or management to me. Thus it may not be for every artist, being weighed down by the requirement to keep providing rewards and exclusives must be tiring for some and mental health issues are on the rise in the music community.

The creative process isn’t always a conveyer belt of constant material and if it is, sometimes it can become forced. Also as has been seen with the demise of PledgeMusic there is a danger that if there’s a middle man handling the financials you don’t actually know if that money is secure. The collapse of PledgeMusic may have eroded some of the trust in third-party systems in the future, for both artists and fans alike. It shows you that there will always be scams out there and people trying to extract money from fans and artists in new ways. Maybe the future is in more direct to fan models for artists or existing platforms bridging the gap? In our next piece, I will look more closely at Blockchain a new cryptocurrency, for artistic pursuits that you can invest in from the ground up. The future of fan-funding is both exciting and littered with pitfalls, maybe some research, planning and thought is required before you take the leap.

God is in the TV is an online music and culture fanzine founded in Cardiff by the editor Bill Cummings in 2003. GIITTV Bill has developed the site with the aid of a team of sub-editors and writers from across Britain, covering a wide range of music from unsigned and independent artists to major releases.