‘Help needed:’ an analysis of crowdfunding

Back in 2002, David Bowie was quoted as saying: “Music itself is going to become like running water or electricity” (Titlow, 2016). Almost 20 years later, after the introduction of Spotify and other assorted entertainment streaming services, this has become a reality. However, artists are earning very little from streaming services (Smith, 2020), so how can they generate funds to live and record?

One option for artists seeking funding is to crowdfund, this essentially means getting small amounts of financial support from a large group of fans (Seydel, 2016). This could be through pre-orders from fans, subscribing to fan club style websites, etc., or simply donating money to one’s favorite artist. The most important part of all crowdfunding campaigns is that the traditional labels have been eliminated, and, therefore, the money flows directly to the artist.

One of the first bands to attempt crowdfunding were Radiohead. They were established in 1985 and were signed to EMI, the record label, in 1991 (Erlewine, n.d.). They released several albums with EMI, including their hit ‘Creep,’ and breakthrough album ‘OK Computer,’ which earned them a Grammy (Erlewine, n.d). It is important to note that every record they had been releasing had been increasingly more profitable than the previous album. However, in 2005, they split with EMI and chose to be independent (Cohen, 2007).

Consequently, when the next record, ‘In Rainbows,’ was due for release in 2007, the band decided to offer the album digitally on a ‘pay what you want’ basis (Cohen, 2007). This meant that all fans could do exactly that, pay any amount they wanted for a digital copy of the album. There was also the option to buy a disc box, including 2 LPs and a CD, for 40 pounds (Cohen, 2007). Many people denounced the system, either because it seemed to encourage pirating (the album had been downloaded on BitTorrent 2.3 million times in 24 days since its release (NME, 2007)), or because it made it harder for new bands to break into the market (Hodgkinson, 2007).

However, in a time when most bands and labels were opposed and even hostile to people downloading music illegally, it was often this target audience that wanted music more than anything else but did not have easy and legitimate access to it. By offering their album for free, or anything a fan was willing to pay, they grew their relationship with each fan that downloaded the album. Here was a band that cared about its fans, not about revenue.

Radiohead played into this need perfectly with their ‘pay what you want’ campaign. The album ended up selling more than all of their previous albums, combined (NME, 2017). Therefore,  while this model may not work for everyone, since Radiohead already had an established and engaged fanbase, it does show that the time was ripe to start thinking about alternative album sale models.

In 2021, Radiohead is a great example of how successful a crowdfunding campaign can be, and many have followed their example. However, in recent years, a slight variation in the crowdfunding model has sprung up. Platforms such as Patreon enable fans to pay a monthly subscription fee to artists, in order to sustain them long-term, while the artists are (still) in a creative process. In return, artists are often expected to supply consistent and regular content, and each subscription price has different tiers and rewards (Patreon, n.d.)

An advantage of this is that an artist can essentially collect all his aficionado fans (Nielsen, 2013) in one place, and at the same time give these fans exactly what they want and engage with them, thus deepening and consolidating the relationship.

A great example of an artist utilizing this platform is Daniel Graves, whose band is called Aesthetic Perfection. Several years ago he parted ways with his management and record label, and decided to become a 100% independent artist (Instagram, 2021). As a result, Daniel has been able to leverage over 650 people to ‘back him up’ on Patreon, supplying him with an average monthly income of almost $5000 (Patreon, n.d). This is revenue from Patreon only, as his music, live shows, sponsorships, and other revenue streams are bound to bring in additional income. Because of his subscribers, he is able to create and release 12 singles in 12 months, and since the subscriber-artist relationship is so strong, chances are big that as subscribers spread the word about each single, the number of subscribers will also increase with each release.

Check out his Patreon here.

Daniel Graves might be an excellent example of where the industry is heading towards. As streaming changes more and more previously closed-off markets into viable revenue sources such as Africa, and creates new discovery opportunities for fans, more artists will be able to gather a worldwide following. As the democratization of streaming continues, as Daniel Ek calls it (Hodgson, 2021), more and more mid-level artists will appear. These are artists that have a decent following, but no massive hits. They are the personification of the ‘Long Tail,’ which means there is more value spread over niches than there is in mainstream hits (Anderson, 2004). It is likely that as these artists get bigger in their niche, they will try to pivot from whatever platform they utilize to their own platform or website, in order to save on middleman fees. this would become detrimental to these platforms which exist by the grace of the projects they host; if it becomes easier and easier to move these operations in-house, it will be important for these third-party platforms to add value to the process, so they remain relevant. This could be the ease of the user interface, but it could also be a built-in audience of people who pledge to projects they find interesting. Additionally, if the third party platform has a selection process they could eventually start fulfilling the role of a record label in regards to financing and guaranteeing quality by association with their name or brand.

All in all, crowdfunding and subscription platforms can be a great chance for these artists to raise enough funds to tour, record, or basically create art while still maintaining a strong and healthy relationship with their fans. It is apparent that the industry is at a (crowdfunding) precipice with streaming exploding and crowdfunding growing; Bowie was right, after all, music is like water. Water that is, in the current times, steadily filling up behind a dyke that is about to break.

References

Anderson, C. (October 10th, 2004). The Long Tail. https://www.wired.com/2004/10/tail/ 

Cohen, J. (October 1st, 2007). Radiohead Asks Fans To Name Price For New Album. https://www.billboard.com/articles/news/1048766/radiohead-asks-fans-to-name-price-for-new-album 

Erlewine, S. T. (n.d.). Radiohead Artist Biography. https://www.allmusic.com/artist/radiohead-mn0000326249/biography 

Hodgkinson, W. (October 19th, 2007). Thanks, Radiohead, for making it ever harder for new acts to survive. https://www.theguardian.com/music/musicblog/2007/oct/19/thanksradioheadformakingit 

Hodgson, T. (26th of April, 2021). Spotify and the democratisation of music. https://www.cambridge.org/core/journals/popular-music/article/spotify-and-the-democratisation-of-music/3C232D4AA12F522BF297EB1CCA0C7E02 

Instagram (n.d.). Aesthetic Perfection Instagram. https://www.instagram.com/thisisaestheticperfection/ 

Nielsen (19th of March, 2013). TURN IT UP: MUSIC FANS COULD SPEND UP TO $2.6B MORE ANNUALLY. https://www.nielsen.com/us/en/insights/article/2013/turn-it-up–music-fans-could-spend-up-to–2-6b-more-annually/ 

NME (October 17th 2017). Did Radiohead’s ‘In Rainbows’ honesty box actually damage the music industry? https://www.nme.com/blogs/nme-blogs/did-radioheads-in-rainbows-honesty-box-actually-damage-the-music-industry-765394 

Patreon (n.d.). What is Patreon? https://support.patreon.com/hc/en-us/articles/204606315-What-is-Patreon- 

Patreon (n.d.). Daniel Graves Patreon. https://www.patreon.com/danielgraves 

Seydel, R. (September 19th, 2016). Crowdfunding for Musicians: How to Get Money For Your Next Project. https://blog.landr.com/crowdfunding-for-musicians/ 

Smith, D. (September 9th, 2020). A Former Spotify Exec Explains Why Artists Get Paid So Little on Streaming. https://www.digitalmusicnews.com/2020/09/09/former-spotify-exec-streaming/ 

Titlow, J. P. (1st of November, 2016). David Bowie Predicted The Future Of Music In 2002. https://www.fastcompany.com/3055340/david-bowie-predicted-the-future-of-music-in-2002 

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