An Argument Against Fan Funding

Kate Havnevik on PledgeMusic

Let’s be honest. You don’t need the money.

Anyone can make a record for next to nothing these days. Almost any other hobby is more expensive: photography, mountain biking, even video gaming. When a teenager singing into a webcam gets exponentially more views on YouTube than your latest “professional” video, the answer isn’t more money.

You’re just not there yet.

(hey, don’t feel bad – I’m not either)

Tracking at Abbey Road Studios won’t get you there. Hiring T-Bone Burnett to mix your album won’t get you there. A full-day mastering session with Bob Ludwig won’t get you there. 10,000 pressed CDs with 18-page inserts won’t get you there. A $5,000 promotion budget won’t get you there either.

No matter how much money you throw at your project, we’re all limited by a stubborn principle called free market pricing. People are only willing to pay what a product is worth to them, not what it costs to produce. The intrinsic value of music is in free fall, and people won’t pay for it if they’re just not that into you.

So why are musicians flocking to fan funding (also known as “crowdfunding”) sites like Kickstarter, Sellaband, Slicethepie, PledgeMusic, and artistShare in droves?

My guess is that they figure “why not give it a shot”? Well, I’ll tell you why not, and offer a better option.

  1. It’s dishonest. I’m simply not willing to pretend it costs thousands of dollars to put out an album. If you can’t sell 100 CDs at $10 to pay for replication, make CD-Rs at $2 a pop, produce them on-demand, or go digital-only. Effective promotion doesn’t necessarily come with a price tag. And really, why should your fans pay to promote something they already bought?
  2. They own you. By entering into a partnership with your fans, you become accountable to them. Until you follow through on your promises, you no longer call the shots. As Hugh McLeod explains in Ignore Everybody, “The sovereignty you have over your work will inspire far more people than the actual content ever will. The best way to get approval is not to need it.” While some may actually like the added pressure, it comes with a loss of control.
  3. You could fail. Publicly and humiliatingly. Everyone will get their money back while you walk away empty-handed. Your fans may conclude that either your goal was too ambitious, or just maybe, your music isn’t as good as they thought is was. Your failure functions as a reverse testimonial. And then what? Are you really going to dump the whole project? If not, why hold it hostage in the first place?

We’re all adults here, right? If your project is so promising and you can’t scrape together $1500 from your “real job,” you could always write up a business plan and get a loan from the bank. Then again, they may just chuckle and offer to raise the limit on your Visa.

Fortunately, there’s a way to reap all the benefits of fan funding with none of the downsides: take pre-orders.

You can still create tiers with personalized extras, like phone calls with the artist, studio attendance, or a custom song. If you accept payments directly, you earn an extra 10% that would otherwise go to a third party. You can create a plan that scales with your goals (“if we reach 100 pre-orders, I’ll press CDs and all digital album sales will include physical CDs as well”). Or you can wait to add tiers until you reach certain milestones, so you don’t promise anything you can’t deliver. Best of all, you’re not locked in to anything. You can adjust your approach as you go based on fan response.

Taking pre-orders puts free market pricing on your side, by allowing you to create only what you need to fulfill demand. Best of all, there’s no “goal” to reach, so you keep every dollar. Risk is no longer a factor.

When is fan funding a better choice than taking pre-orders? What can an artist do on a fan funding site that they can’t do on their own? Let me know in the comments!

36 thoughts on “An Argument Against Fan Funding”

  1. Why not do both?

    You can always roll pre-sales into the Fan Funding tiers. If your fans donate $20 or more, they’ll get a free copy of the CD when it comes out. The Fan Funding aspect of it helps make it feel like a collective effort among your fan community…like “we’re all in this together” trying to reach the funding goal.

    Another option is to start the project with a Fan Funding strategy, asking for donations in exchange for your fans being a part of the process of creating the album. They’ll be more willing to do that than to pre-purchase an album that may not even have a name yet. Then, once it’s mostly recorded, you can throw up your first single to show folks what the album is going to sound like and start taking pre-orders. Fans are more willing to actually pre-order when they can hear a taste of what they’ll be getting.

    In any case, I think there’s room for both pre-funding models depending on your situation. Most importantly, artists should think through their choice and have a plan in place that best fits their circumstances.

    1. Two rounds of funding – I like it! :)

      Still, why not do both on the artist’s own site? I have yet to see anything being done on fan funding sites that an artist can’t do on his/her own.

      1. Because Kickstarter has already dumped money into solving the problem of fan funding, and rolled it up into an easy-to-use interface that people are familiar with. If you roll your own, you have to deal with:

        1) Campaign site design
        2) Payments
        3) Sending out digital items as gifts
        4) Infrastructure for fan updates (“hey, we reached our goal!”)
        5) Social sharing (“share this campaign with your friends”)

        I don’t see how an artist benefits from re-building this infrastructure that already exists.

        Counter-arguments might be:

        1) You save on Kickstarter fees — fine, but you spend a lot of $ in time setting it up yourself
        2) You can brand it to your band, and control the process from start to finish — possible, but how likely are you to do a better job than Kickstarter as an indie musician?

        1. Good points David, but I really don’t think it’s that difficult to do yourself!

          WordPress can handle items 1, 4, and 5 on your list (I recently named some plug-ins that could come in handy). Throw in WP e-Commerce, and that takes care of 2 and 3.

          You’d also gain by adding each of the contributors to your mailing list, not to mention all the SEO benefits to your site. Most importantly, you’d gain flexibility and eliminate risk.

          1. I actually would love to see one of these fan funding sites add in a mailing list for the artist. Of course the better route would be to integrate more easily reverbnations mailing list widgets

            fan funding is great if the band has thought things through a bit rather then signing up with no plan to work with.

  2. You make some good points here, Brian. I really think it all depends on the artist’s fan base. If his/her/their fans like to contribute to charities, and enjoy the “feel good” sensation that comes from supporting a cause, then using fan funding might be a more desirable option that simply asking for pre-orders. If fans are strictly business, and know what to expect from the artist, and know that they will probably enjoy it, then pre-orders would be a better avenue.

  3. I think that fundamentally, pre-orders and fan-funding are two totally separate issues. Unfortunately it doesn’t seem as though most ‘fan-funding’ sites have yet to properly explain themselves, but in reality, fan-funding is less about getting people to pay for your music as a final product, as it is getting fans to pay, or contribute their funds in order to take part in the overall experience, whether it be recording a new album, funding a tour, mastering a track, etc. etc. etc. Whatever the situation is, fan-funding allows for an emotional connection between artist and fans that allows everyone to share in the magic of creation.

    Just think about your favorite band… wouldn’t you pay 5 or 10 or even 50 dollars to get a chance to receive exclusive and candid updates directly from the band on a regular basis throughout the entire recording process? I know I sure as hell would! In my eyes, fan-funding is less about getting the final product made and getting it into the hands of the fans as it is having the opportunity to strengthen the loyalty of your fan base…. which is something that a pre-order simply cannot do.

    1. I’m not too familiar with the whole fan-funding issue, so correct me if I’m wrong, but it seems that many of the bands looking to use it aren’t established yet.

      Maybe that’s the point, to help gain exposure while bringing in some dough – but as a listener, I can’t bring myself to support a band (outside of purchasing records and going to shows) without already being a huge fan, which generally comes only when they’ve been around for a while and have proven their worth to me.

      It’d be nice to say that you took a chance and invested in a band when they were starting out, but unless they’ve crafted some unbelieveably good music, I’m not going to pull out my wallet.

    2. Great to hear from you Jon! I know it won’t come as a surprise to you that I have a slightly different take. :)

      To my way of thinking, the terms “pre-orders” and “fan funding” don’t necessarily mean different things. Fan funding campaigns typically center around a product, and tend to include that product at all funding levels. It’s a pre-order, plus whatever other “value adds” are thrown in at higher tiers. And while we typically think of a pre-order as selling a nearly completed product before its release date, it doesn’t have to be that way. You can frame it just as you would a fan funding campaign.

      So whatever you choose to call it, the important question is, where are you going to host your campaign? At a fan funding site, with its inherent costs and risks? Or on your own site, with its inherent flexibility and SEO benefits? Do you want to establish a direct relationship with your fans, or do it through a third party?

      As for involving fans in the full experience, I did that with my last album. The fans were involved from the very beginning, from commenting on and picking the best of 30 short instrumental snippets to develop, to suggesting changes to the lyrics. The entire process is detailed at colortheory.com for anyone to see.

      Could I have charged money for it? Sure, and I bet I could’ve got 50-100 people to sign on. Is that worth shutting the rest of the world out? Definitely not! Not only did it strengthen the loyalty of my fan base – it got new visitors to the site involved in the process, creating more fans. A fan funding campaign can’t do that. Once you take the money, you have to turn everyone else away at the door.

  4. What I really like about this article is that it touches on a fundamental point that often seems to be lacking in the DNA of many emerging musicians. Basically just because you started “a band” doesn’t mean that I should automatically support you financially, just like when I bought “a nice camera”, I didn’t mean that I could call myself “a photographer” and expect to start charging people for my photos.

    The monetary support had to be earned. So many times I hear bands talking about doing a fan funding campaign when the BASICS of running their band (aka business) are not even in place. Real examples include bands wanting to fan fund a new album without even having an update to date website that is selling their CURRENT album or other current merch, bands wanting to fan fund an album when they are not even playing out (they just want to go ‘straight to festivals’), bands wanting to do fan funding that ARE playing out but not doing merch at the shows or not putting out a mailing list, etc.

    I think too often bands see fan funding as “easy money” that they can use to pay someone else to do things they are not stepping up to do themselves. I agree that it certainly can be the right choice for some bands and I’m glad these sites exist, but I hope more band look critically at themselves before they jump on the train.

    1. Awesome Jenn, that is so true.

      Something has gone horribly awry if I, as a listener, have to work to find your music to purchase. I can’t tell you how many bands/musicians I’ve TRIED to purchase music from that don’t bother to make it available.

      Not saying that it relates directly to the fan-funding issue, but it is a widespread issue. If a band wants to be taken seriously, then, for the love of god, make what you’re selling available.

      Oh and ditto on the camera analogy, I tried it myself and failed miserably!

  5. I’m just so happy that someone agrees with me on this. I find the concept of fan-funding embarrasing. You’re essentially begging. no thanks. Make sure your music is amazing and then just get on with it kids!

  6. Brian, this is a really good article and thought provoking too. Thank you!

    My take is that as artists we should be true to our art and that the commercial side should be secondary. In the past when working inside the big corporate machine I knew that some artists refused to compromise or agree to changes suggested by the A & R team. Good for them. With hindsight, more often than not they were right both commercially and also in being true to their art. So many times “constructive criticism” or the decision to like and buy our music is going to be a subjective view. Such is art. If you want money, go into business. If you want to make music, make music.

  7. Brian first of all I would love it if you could get in touch with me. Is there a PM function or email on here ? If not email me at

    http://www.vhprecords.com/vhprecords/?q=contact

    Now my thoughts on this are quite simple. Artists are being misled left right and centre with these totally pointless sites. Crowd funding is a waste of money and a waste of time as you will spend all your energy trying to raise the funds on these sites.

    If these sites had investors who would take a listen to your music and then decide to invest X amount of dollars then they will have some value. Of course you’re right that artists DO NOT need to raise money in this way as long as they are able to THINK outside the box.

    You will need some money of course BUT nothing you don’t have or cannot get by putting in a few shifts at 7/11 lol or wherever you work.

    People are being fooled by the crowd funding sites that getting some name producer is necessary or getting some PR team to work your record is going to do you any good.

    A decent home studio should be de rigeur for any band and if you can’t then team up with a producer or studio boffin. Worst case scenario, go old school and do a live recording in a studio like they did in Sun Records day. But a decent desktop computer with the right accessories will get you recording and producing in no time.
    Production is most about the sifting of ideas and that is invaluable but no big deal if you can’t hire Bob Clearmountain or Quincy Jones. There is Brian Hazard and he is much cheaper haha.

    For marketing well you cannot and should NOT look past Google, Youtube and Facebook. Spend your time and money on these sites and working out how to crack them so that people can find you.

    The internet is not a broadcast medium it is a narrowcast medium in which you reach people one by one.

  8. By the way if you can’t afford a big production video then buy a second hand Super 8 camera (cost $20) one cartridge (cost $20) and make a film according to the brief of http://www.straight8.net. You can take this principle and apply it to your HD camera (if you have one) as well.

    Video production is within your reach and marketing is also within your reach.

    You would need YOUR OWN site and monetise it simply by teaming up with a video ads company or even Google.

    Do not waste your money on PR people as they cannot do anything for you that you cannot do yourself. The time to hire them is if:

    1. You can get a freelancer
    2. You are overworked

    I think I will write a book/report about it all.

  9. Hi Brian

    Interesting perspective on the fan funding debate.

    I’d say some artists do need the money. Making a record with a skilled producer/engineer and getting it mastered properly is expensive and some people don’t have access to funds or credit but want to make a high quality album. Yes you can make something good on garage band etc but you need engineering skills to make something great. Often great engineers are not great musicians and vice versa.

    The key is to get your audience to want to fund you, as we now live in a time when people can get music for for free if they want to (whether this is legal or not).As Amanda Palmer says we are moving to a patronage society. Fan funding lets your audience be part of your story and the more they have invested in your career (financially or terms of being a “true fan”) the more likely they are to tell friends. Word of mouth coupled with goodwill does sell records by developing an audience that wants to support a band.

    Fan funding projects unite online fan communities and give people something to talk about via social media. Of course to make this happen you do need an established fan base so its hard to make it work for a new artist. Using an established fan funding site can add authenticity to what you are doing, rather than just having Paypal buttons on your own page.

    There is a further discussion on fan funding here on our blog – http://www.liveunsigned.com/blog/2010/10/fan-funding-your-next-recording-project/

    1. I’d argue that if you’re a new artist without a fan base, maybe you’re not ready to record a high quality album with a skilled producer/engineer. Heck, I’d like to record an album backed by the London Symphony Orchestra, but I don’t think I’m entitled to it!

      1. Without a high quality product you’re unlikely to gain a fanbase and stand out from the crowd of poorly recorded music. Its the whole thing of creating great content and getting people to talk about it. If its not great why do it? The key is to be remarkable.

        1. I think that puts the cart before the horse. You don’t release a world-class product and then start promoting it. Post an acoustic performance to YouTube, build a mailing list, put out some demos, self-release an album. Artist development takes time, but the truly remarkable will be rewarded.

  10. I’m pretty sure accepting money for a product that does not yet exist is illegal. Fan funding or crowd sourcing is a valid option, but I’d have to say that I agree with some of the commenters here that home recording is a better option if you have the patience to learn to do it right. I posted a piece about an approach where you make demo versions of your songs available to your fans for free that allows you to pre test your songs and build an e-mail list so you can spend wisely and market effectively once you have enough feedback to go on. I personally think that’s the best way to go about things.

  11. Yes yes yes! The whole fan funding thing has put a bad taste in my mouth from day one. I’ve been under a lot of pressure from various consultants, PR people and so forth to do it, and have always said no, then had trouble coming up with a good reason why not. From here on out I’ll just forward your article …. Many many many thanks for writing it.
    Sarah McQuaid
    http://www.sarahmcquaid.com

  12. The main problem here is the majority defend fan funding as “investing in a business.” This makes those involved feel great, “I’m the latest hot IPO!”, but..

    If you are fan funding, your band is NOT a business.

    Proponents can’t use the words investment, major corporations, “going public”, when talking about funding and then talk about “an autographed DVD” or “private screening” as a return on that investment.

    If I told you I invested $500 in Netflix in 2002 and what I got in return was: An invitation to the launch party, a signed t-shirt, and got to be part of a huge success story (only emotionally), what would you think?

    What would you think if I told you I invested $500 in Netflix in 2002 and it turned into $10,000 and I used it on a down payment to buy my first house?

    The first example is a donation, the second example is an investment.

    When a business loses money for three years the IRS declares it a hobby. Fan funding is a handout for hobbyists. If you are profitable in your music ventures, then you should be able to live within your means and cover your own expenses like a real business. If you’re 14 and just starting, then I think a one-time pass as “seed money” may be justified. But, if you’ve been doing this for years, this isn’t an investment, it’s a donation. Unless we are talking about a world where I “invest” in my wife and I get “love” in return.

    In 1978, Sam Raimi’s first film, “Evil Dead”, used investors for its funding. The investors got to feel good AND they got rich off of their investment.

    If you can just give me ONE example of a fan funding project that made its investors any money I will apologize and change my position. The majority of the bands I know, their expenses exceed their revenue. Most bands consider it a huge success just to generate a personal profit on their project. There used to be investors making money off bands, record labels. But all I hear about in the press is record labels losing money these days.

    The top of the site used in the article graphic is Pledge Music. There slogan is “Involve Your Fans – Keep Your Rights – Fund Your Music – Raise Money For Charity.” The main revenue stream, record sales, are dead. Instead of finding a new revenue stream we have come to this. Hand outs? Fan funding is like an animal shelter fund raiser, not a cool new startup launching an IPO.

    Are you OK with your musical project being considered a charity? I’m not.

    1. One example: Sonic Angel in Belgium just payed all the people who invested in Tom Dice. They made 360% profit! It was the best investment of 2010. Now Belgium has a second fan funding platform: http://www.akamusic.com, with even more promising artists. I know where to put my money…

  13. I am living this reality right now as I try to get my music off the ground. Its a tough reality trying to promote using social networking and the internet. You have to be pretty saavy in order to scrape a living through music these days. The days of making a living playing in a bar band on the weekends are over…

    -kz-

    Check out my music at http://www.iamthekz.com/ also stop by and tell me what you think at my new blog http://iamthekz.blogspot.com/

  14. I have to say there is something to what Live Unsigned mentioned about quality.
    Is this why so much indie music is just plain sonically bad?

    As someone who places music often, Brian, don’t you think sonic quality plays a big part in getting placements?
    Should wanting quality exclude those of us who don’t have a huge fan base?

    Paying to have a decent engineer and/or producer guide the project is a good idea for the folks who forget to tune up or check recording levels for distortions.
    While they are not free, some work on sliding scales and some may even work for back end points or whatever you can work out.
    Let’s not even get into paying musicians, who fully deserve it as well.
    Yes, you can play, record, and mix it all yourself on Garageband, but should you?

    Homemade CDR’s suck by the way, especially when they get stuck in the CD player of a Publishing Exec’s Lexus, I speak from experience.
    If raising money so you can go record at some legendary studio is part of the dream perhaps that’s not the best strategy for a first record.
    Mine was in a living room, and interestingly enough I have placed a few songs from that very low fi (relative sonic quality) endeavor.
    So while some ordinary costs just make sense, for me the larger question is how is this changing the creative process itself for better or worse?

    Fan funding to me is anathema, yet I can see why for some it is so alluring.
    Ultimately to me it’s not the size of you dollar it’s how you use it.

    1. Great points!

      As a mastering engineer, I’m all about sonic quality. A high quality release will sell more, get more placements, and show the world you’re a pro. Working with a good engineer and/or producer can also be a powerful learning experience.

      At the same time, there’s something to be said for artist development and building a career one step at a time.

      I’ve always been a DIY guy, and looking back, I think I would’ve benefited immensely from working with professional producers and engineers. But I wouldn’t have asked my fans, much less my family and friends, to pay for it. Seems like putting the cart before the horse to me.

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