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Why Reddit to Richard Branson Are Betting Big on Crowdfunding

posted Nov 8, 2014, 10:52 PM by J Shaw   [ updated Nov 8, 2014, 10:53 PM ]
This September, when rap super duo Run the Jewels announced preorder sales for their second album, RTJ2, Atlanta rapper Killer Mike and Brooklyn rapper-producer El-P included a few playfully absurd special options on RTJ’s website. In addition to the $1 million "Retirement Plan" package, a completely unserious offer for the partners to quit music, there was the far more affordable Meow the Jewelsalbum bundle, a $40,000 bid to rerecord RTJ2 "using nothing but cat sounds for music." ("I was completely stoned out of my mind when I wrote that," El-P later told Indy Week.)

Sly Jones, a 30-year-old music blogger and Nike customer service rep from Arizona, took up the dare. On Sept. 17, with El-P’s amused blessing, Jones’ attempt to actualize Meow the Jewels launched on Kickstarter, the South Park-satirized "all or nothing" crowdfunding platform whose guidelines require projects to reach a fixed monetary goal by an immovable deadline, otherwise no money is transferred. No such problem with the cat-rap goof. When the 41-day drive ended on Oct. 28, Meow the Jewels had trounced its $40,000 goal, raising a total of $65,783, and El-P was already auditioning cats.

Run the Jewels' El-P Calls 'Meow' Kickstarter 'An Opportunity to Do Something Good in a Fun Way'

This is often how ridiculous, risky, or micro-niche creations are subsidized in 2014: by a throng of Little Guys, not by a singular Man. What was easily derided as "digital panhandling" a few years ago is now a model for a real, substantial business. In 2012, the crowdfunding industry was worth almost $3 billion worldwide. Kickstarter, which launched in 2009, alone reports $1 billion in total pledges. Patreon -- a 16-month-old site that works by backing

http://www.crowdfundmadeeasy.com
creators, not specific projects -- is already valued at $17 million and counts Reddit co-founder Alex Ohanian as a backer. In January, the San Francisco-based funding engine Indiegogo raised $40 million; four months later, Virgin mogul Richard Branson and PayPal co-founder Max Levchin became investors. And on Oct. 28, Reddit announced Redditmade, a crowdsourcing initiative for custom T-shirts and products that also helps facilitate the manufacture of the goods. All those Little Guys add up.

The arts have especially benefited from crowdfunding’s swell. Spike Lee, Zach Braff and Don Cheadle have all successfully subsidized film projects. In the music space, crowdfunding functions in place of label support, booking agents, even academic scholarships. Kickstarter alone has bankrolled more than 17,000 music projects, including two 2014 Grammy winners (the self-titled debuts from vocal octet Roomful of Teeth and Latin big band Pacific Mambo Orchestra both won statues) and an album from Kenny Loggins, who marshaled $121,797, that is due in 2015. By raising nearly $70,000 through the 2-year-old Tilt, a freelance creative director orchestrated a Foo Fighters concert this past September in Richmond, Va., where the rock band hadn’t played in 15 years. And, of course, there are failures. Right now on GoFundMe, a college-age bassist named Max is seeking to collect $20,000 for his Berklee College of Music tuition, an effort that has drearily plateaued at $515.

Corner Office: Kickstarter CEO Yancey Strickler on Success, 'Broken Promises' and Being Spoofed by 'South Park'

Crowdfunding successes tend to have a few primary persuasive characteristics. Beyond sympathy or charity, there’s the tug of nostalgia or personal loyalty: You simply have to pay for this. (See the $264,000 bankrolled for Toad the Wet Sprocket’s first LP in 16 years.) There’s the hyper-specific interest: No one else but you will pay for this. (Pacific Mambo Orchestra’s Grammy winner only sold 341 copies, according to Nielsen SoundScan). There’s the prospect of silliness: Wouldn’t it be funny if you paid for this? (Meow the Jewels; the Ohio man who famously raised $55,000 to make potato salad this summer). But the one pitch that’s still an awkward transaction is outright solicitation: Help me pay for this. (The threat of rejection is so real that a company called Launch and Release actually charges musicians $259 for "crowdfunding training.")

Anamanaguchi

Anamanaguchi, $277,399 
In 2013, this trio asked for $50,000 for its 22-track 8-bit opus, 'Endless Fantasy.' The band got five times that amount.Lloyd Bishop/NBC/NBCU Photo Bank

All crowdfunding once carried the whiff of shame. In 2008, before Meow the Jewels or Kickstarter, singer-songwriter Jill Sobule, now 49, raised $75,000 to record and promote her seventh studio album, California Years. Best-known for the 1995 single "I Kissed a Girl" (which predated Katy Perry’s Billboard Hot 100 No. 1 with the same name by more than a decade), Sobule used her personal website to solicit donations, offering incentives that ranged from an album download ($10) to a chance to sing on the full-length ($10,000). "I’m kind of a working-class musician -- I just want to be able to continue to create music," says Sobule now. At the time,Perez Hilton wasn’t so understanding. "She’s practically begging!" the gossip site sneered. "Desperate times call for desperate measures!"

"I was devastated," says Sobule. "I wasn’t asking for money for free. It was an exchange."

Amanda Palmer knows this predicament better than anyone. A musician, artist and Internet firebrand who also has become a de facto poster woman for the crowdfunding movement, the 38-year-old first gained a cult following as half of the cabaret-punk duo Dresden Dolls, whose second album Yes, Virginia peaked at No. 42 on the Billboard 200 in 2006. Signed to Roadrunner Records, the singer was forthcoming about her ongoing frustrations with her label, even once publicly begging it to drop her, so when the Warner Music Group subsidiary did in 2010, she immediately updated her blog with a giddy note, a download of an unreleased song and a gentle invitation for PayPal support. To this day, a donation link appears on her personal site, footnoted with an explanation of the shift in responsibility: "YOU are my label now, comrades."

U.S.-Based Iraqi Metal Band Acrassicauda Raises Funds on Kickstarter to Record Debut Album

Palmer has always abided by the pass-the-hat ethos. In the late-’90s, the Massachusetts native earned money as a street performer called the Eight-Foot Bride, accepting dollar bills in a spraypainted vase. A little more than a decade later, Palmer and her now-husband, best-selling author Neil Gaiman, together raised $133,341 in 2011 to sponsor a five-date co-headlining U.S. tour. The following year, Palmer launched a Kickstarter campaign asking for $100,000 to fund her solo album Theatre Is Evil, along with an accompanying book and supporting tour. Instead, she smashed that goal with an astounding $1.2 million, logging the (still) biggest music project in crowdfunding history. But the firestorm of criticism ignited three months later, when the singer put out a call asking musicians to play on the Theatre Is Evil Tour for free. Fellow musicians lambasted her, including Steve AlbiniOwen Pallett and a Seattle musicians’ union. Online,The New Yorker referred to her cattle call as "hypocrisy."

Bob Mould performs during the Riot Fest Music Festival

Bob Mould, $103,172 
Only the Husker Du songwriter would be able to pull off crowdfunding a documentary about his own tribute show. In 2012, he did.Tim Mosenfelder/Getty Images

"One of the saddest misunderstandings about my Kickstarter," Palmer tells Billboard, "was that people believed I had just pocketed $1.2 million when nothing could have been further from the truth." (At the time, in a 2,214-word blog post, Palmer detailed a long list of "back-of-the-napkin costs," including $250,000 for various outstanding debts, $80,000 to $100,000 for four to five music videos and $80,000 for the books, plus management and an accountant.)

A year later, Palmer gave a 13-minute TED Talk about the controversy and received a standing ovation. The lecture has since been viewed online more than 6 million times. "We have very strange and romantic notions about art and how it should -- and shouldn’t -- have value," says Palmer, who parlayed the talk’s theme into the framework of a memoir, The Art of Asking, to be published Nov. 11 by Grand Central. "Now with the curtain pulled back, and the system being exposed, there’s a lot of skittishness. But I’d much rather face these things head on, [rather] than pretend there is some magic going on that isn’t."

YouTube Announces Crowdfunding, Donations, Free Music

Jack Conte, percussionist half of the twee duo Pomplamoose, also struggled with transparency and the guilt of asking fans to pay. His oddball band was a viral video pioneer. A homespun cover of Beyoncé’s "Single Ladies (Put a Ring on It)" was viewed more than 4 million times, and in 2010, the duo landed a Toyota commercial with a cover of The Chordettes' "Mr. Sandman." But in 2013, Conte poured his life savings — $15,000 -- into shooting a music video co-starring robots and only yielded $100 in YouTube ad revenue. The experience inspired him to start Patreon, a crowdfunding service that works by backing creators, not projects. (In September, YouTube also added a fan-funding component, allowing users to donate directly to video creators.) Launched in May 2013, Patreon now processes $250 million in pledges every month for its 49,086 creators. "I personally don’t take a salary," says Conte, explaining that his band releases two videos per month on Patreon, raising an average of $6,200 per video.

Josh Dibb of Animal Collective performs during 2013 Governors Ball

Animal Collective, $25,985 
In 2009, Josh "Deakin" Dibb crowdfunded a Mali trip, promising artwork inspired by the visit. He went, but never delivered.Ilya S. Savenok/Getty Images

Meanwhile, PledgeMusic, a site that bills itself as a "direct to fan" platform, has deliberately distanced itself from the perceived indignities associated with crowdfunding, hosting fundraising campaigns with financial targets without disclosing the figures. "The musicians at the caliber that we wanted to work with -- the larger musicians -- didn’t want to crowdfund," says PledgeMusic president and founder Benji Rogers. "They didn’t want to ask for money; they didn’t want to show publicly what they were worth. Our greatest success came when we erased the financial target."

So far, it has worked. According to Rogers, his site’s campaigns out-raise traditional crowdfunding projects by 40 percent. Slash used PledgeMusic to release his score for Nothing Left to Fear, a 2013 horror film from the guitarist’s production company. The Hold Steady put out a five-song covers EP through the site. Currently, a reunited Juliana Hatfield Three is relying on the platform to help make a new album, offering a range of incentives, including a limited number of Hatfield’s handwritten diary entries for $40, a Skype guitar tutorial with her for $250 and a signed snare drum for $750.

"Crowdfunding is an incredible tool for technologies and for investment in business -- I just believe it’s the wrong tool for music," says Rogers, a musician who used to be a roots-rock artist named Marwood. He might be on to something. Maybe there’s a better way to boil down the essentials and support independent projects without the shame or indecency of raw currency. "Music has an emotional bond with the artist and fans. If you place finance in the middle of that, it muddies the water. I don’t want to know how much an artist I love is worth. I just want to be a part of the magic."

Posted from : http://www.billboard.com/articles/business/6311940/why-reddit-to-richard-branson-are-betting-big-on-crowdfunding