Today we’re going to look at crowdfunding for musicians and music industry professionals.
By now you’re probably familiar with the term crowdfunding, and may even know of companies like KickStarter, Indiegogo, GoFundme, and other fund raising platforms. Their popularity is increasing as they provide a real way to raise the money you need to do more in your music career. That said, it’s not simply a case of you using these sites and getting money thrown at you; you still need to convince people to give you their hard-earned cash.
There’s a lot to running a campaign let alone having a successful one. It’s often a time consuming endeavor that requires planning, research, a sizable support group and most importantly a compelling story or idea that motivates people to break their piggy banks and give you what’s inside.
If you’re considering this method as a way of financing your next music project here’s what you need to know. Note: This gives you some more advanced things to think about when setting up a music related crowd funded project. If you’re a complete beginner to it all and want to know the basics you can find them here.
You Need To Create A Solid Plan
Repeat this four-letter word PLAN.
Now take a deep breath.
Proper planning involves thinking about your story or idea and how you will present it, as well as setting a realistic monetary goal. It’ll also get you thinking about your budget and how you will raise and subsequently spend the money.
Additionally, planning helps you determine what types of rewards to offer (if your campaign is rewards based), how much equity you’re selling (if you’re selling a percentage of your company or idea), or projections on how fast you expect to pay the lenders back (if your campaign is lender based).
You’ll need to decide on whether to hire a PR firm to create a pitch video or use your iPhone; there may be benefits to doing both, such as cost and professionalism. Bear in mind that the creativity in how you tell your story may trump the medium you use to record it. Most people are used to the varying quality of videos uploaded to Vimeo and YouTube so it may not be a deal breaker if it’s viewed in less than HD.
However, if your story is lacking in interest, detail, and ingenuity, having a film-grade presentation may not even be enough to persuade your supporters to part with their hard-earned money. As someone who works in the music industry though, hopefully you should have the personality thing down. If not, look at how your favorite musicians carry themselves, and what made them likable to you. Is this something you can replicate in your music career?
Pre-Exposure Is Important – Do You Have Existing Fans Who Can Fund?
According to Clay Hebert, founder of crowdfundinghacks.com, the majority of crowdfunding campaigns are funded before they launch. He says, “Platforms like Kickstarter and IndieGogo might bring you 5% to 10% of your traffic, the rest is up to you”. Those numbers are pretty astonishing and makes you wonder why use a platform anyway.
So make sure you’ve got potential backers in place before you launch your campaign. If you don’t, don’t expect to get much funding.
How Much Real Support Do You Have For Your Music?
If you research previous music projects that got funded versus those that didn’t, you’ll find some pretty depressing news. A majority of music projects don’t reach their goals.
The exact percentages are unknown since most platforms keep that info secret probably in order not to dissuade you. Regardless, this means that to get your project funded, you must meet certain prelaunch benchmarks well above the norm.
Amanda Palmer raised more than a $1M, which started out as a $100,000 goal. A group from Australia raised zero of a nearly $10,000 goal. Probably the greatest deciding factor between these two is that of real support versus perceived support.
Amanda Palmer had nearly 25,000 backers and her stated goal of $100,000 was reasonable. The Australian group may have perceived they had an adequate fan base to reach their objective, but in the end, it was only in their mind and their target of $10,000 was therefore unreasonable.
In reality they could’ve asked for $10.00 which might seem more than feasible, but again, zero dollars were raised. I can’t emphasize enough, the pre-work of lining up your support long before you launch is crucial.
Musicians, Know Your Numbers
How many units must you sell to break even? Five hundred, one thousand, or more? How many T-Shirts must you sell, or CD/DVD pre-orders must you have? And how many people funding your music do you need to hit these goals?
Know the numbers.
Breaking even is the magic number that at least says you can do it again if you reach this goal. This number often isn’t usually really high provided you haven’t gone over the top in spending on rewards, but getting there can be more difficult than you realize. Because it’s technically possible to run a national or even international campaign, the temptation to do so is high, especially when we only have to click ‘submit’ and instantly our campaign can be seen around the world.
PROBLEM: running a national campaign isn’t always practical. The shipping of your music will be more expensive, and you won’t be able to personally meet fans to do ‘in person’ rewards. So it’s often best to stick to locations where prizes are easier to provide.
Get Your Story Right
Most successful campaigns tell a compelling story. It may be comical, tragic, altruistic, deeply personal, spiritual, etc. Hopefully as a musician or music industry professional, you already have a good idea of what your story will be. Whatever it is, your story is a vital link to the piggy bank.
Not all of your supporters will be able to relate to this story, but remember the 80/20 rule: statistically, 80% of your financial support will likely come from 20% of your supporters.
You should research the most successful music related campaigns. Read their stories and look at the videos. The stories may be dissimilar but there will be something unique about how they tell their story. If you’re not very good at telling stories, you might consider hiring professional help.
Don’t Forget Taxes
You have most likely heard about certain campaigns that raised a surprisingly large amount of money, although the average successful rewards-based campaign is about $7,000 to $9,000 dollars. That said, not all of this will go in your pocket if you end up profiting from your campaign at the end of the tax year.
Unless you’re a nonprofit and/or are receiving donations for a charitable purpose, the money you raise through your campaign will likely be considered taxable income. I encourage you to know your tax bracket and how adding a few dollars will may impact your finances.
It may sound like you have to do a lot to convince people to give you money, and you do. But if you work hard to get your backers in place before hand and build on the campaign while it’s happening, crowdfunding can be a good way of raising money in your music carer.
So, have you ever tried crowdfunding before? If so let us know how it went in the comments.
Franklin Purnell is contributing writer at SplashFlood. He started in the music industry as a recording engineer tracking and mixing for well and little known artists. He transitioned to BMI before leaving to start Fusic Publishing. He consults on a variety of industry topics and presently writes for music business and technical blogs on subjects that range from production and mixing to promotion and marketing.