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Crowd Funding Troubles

May 1, 2012

While not wholly adverse to the idea of fan funded campaigns such as making an album I do have quite a few personal reservations. There have been plenty of bands that successfully achieve their goals and get the necessary funds needed for their projects on websites like Kickstarter or Pledge Music(upwards of 600% funding on some) there are also those that fail. There are those that even though they get the funding do not actually do what is promised.

The biggest problem I have with these things is that they investors out of regular people who may not have a clue how to properly go about this. When actual businesses and professionals look at investing in something they ask for a lot of info and details. This include financial breakdowns, list of intended companies to provide supplies and services, estimated timeline and various other things. While it is possible to publish these things few do and that leaves potential investors without crucial information that could affect how they might use their money.

Another major problem with crowd funding is that it lacks legal or contractual obligations other forms of investment have. There are usually established goals and rewards for the amount a person invests there are no actual definitive punishments if the recipient does not fulfill these. It also means that timeline based goals can often be delayed of ignored as there is no one forcing the other party to meet these or any punishments.

All these problems though tend to stem from the larger and overall problem is that investing is a large corporate style of monetary exchange, which most bands and fans are not. Almost all of the problems can be avoided and resolved fairly easily with experience or knowledge of proper investment practices, but few people or bands have this. Research can help but even then like most things a person is bound to make some mistakes with their first attempt.

While fan investing can be great source of direct monetary gains for a desired project it leaves both parties involved vulnerable to a lot of problems. The easiest way to avoid this is with rigid and clear goals, open documentation of how the money is intended to be used and a lot of research into proper investing practices. Overall I think that fan investment is a rising fad that will eventually subceed and be forgotten. From a practicality point of view only a few bands can get the money wanted as people only have so much money to invest.

-Hassan

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One Comment leave one →
  1. June 4, 2012 1:40 PM

    I certainly understand your reservations, and all things considered this is a very good article, but I’m not sure I agree that fan funding is going to fade away, nor that it should. It’s definitely the case that most bands at present don’t have the corporate mentality to support honest and transparent use of crowd funding, but this is a problem with bands, not with this method of funding.

    I see crowdsourcing as an excellent way for bands to finance their projects, and not just that, but as another valid avenue for audience engagement. Allowing fans to have a direct hand in creating an album, rather than merely supporting the band, makes them feel like a part of the band. Beyond that, if used creatively, the reward mechanisms on donation sites like Kickstarter could be used to really engender fan loyalty and promote the band as one who both loves, and is loved by, its dedicated fans.

    I think that learning to use Kickstarter (or similar sites) properly and openly is something that, like improving their use of social networking to engage their audience, bands should really pursue. Your reservations are valid, but in crowdsourcing we as musicians have an opportunity to improve our professional image, engage our crowd, and achieve our projects and goals in ways that might otherwise be impossible. Worth considering, anyway.

    p.s.: I love this blog. A friend turned me onto it the other day, and I really appreciate what you guys are doing. You’ll probably get more comments from me as I peruse your archives. Cheers!

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