Tuesday, September 18, 2012

The Skinny on Crowd Funding and Direct Payment options

By Mike Galaxy

There are many crowd or "Fan" funding choices these days for bands and musicians. Have you researched which one is best for you?

Getting money from the three F's (fans, friends and family) can be difficult especially if you are struggling at selling your music and merch in the first place. But what if you were to give them something in return for their investment? Many Crowd Funding services are useful when trying to gather funds to record a new album or prepare for a tour. 

One of the more successful Crowd Funding participants was Amanda Palmer formerly of the Dresden Dolls who raised an astonishing $1.2 million dollars using the Kickstarter funding platform earlier this year. But, don't get hopes up so quickly. Only about 50% of all campaigns reach their goal. (it should be noted that some funding platforms like IndieGogo and Pledge Music, allow you to adjust your target amount to reflect what you have earned effectively allowing you to hit your funding goal and bumping up those averages). 

When deciding on a funding campaign, there are many things to take into consideration. Platform reputation, ease-ability, and fee's. Digital Music News recently reported on this as well and posted the following fee's from some of the biggest of the Crowd Funding platforms.
Below are the fee's earned on campaigns. 

Kickstarter: 5% (plus 3-4% Amazon payment processing fee.)
PledgeMusic: 15% (this includes credit card transaction fee)
Indiegogo: 4% (or, if you don't make goal you keep the money and give 9%)
artistshare: 15%
Sellaband: 15%
Rockethub: between 4% and 12%

Other things to consider when deciding on a platform are (in some cases) the additional banking transaction fee's. Note that direct to Paypal fee's will run 3.5% to 4% on every transaction, and the fast growing Square App is earning 2.75% on transactions. As of September 2012, Paypal announced their competition to the little Square card reader offering a blue triangle credit card reader for your iPhone and only taking 2.7%. Even individual credit card companies are jumping on the "Band Wagon" preparing for their own versions of card readers and crowd funding options. Google, Visa and Mastercard have been testing Mobile Wallets using NFC or near field technology for a while now allowing users to pay for items with their cell phone and never having to swipe a card. All you need are two NFC capable phones. Transactions like this allow the payment to be deducted from a pre-paid account or charged to a bank account directly.

Hypebot.com reported this week about Brazilian based Queremos launching their own unique crowd funding campaign to help with booking shows and tours. Rather than funding an entire album or a tour, fans pool their money together for one show by selling refundable tickets in hopes of raising the minimum amount required to bring the artist to their city. In essence, the band and the fans co-promote the show together in order to ensure that the band makes it to the gig. This is particularly great for fans, as they get to now play the role of promoter by ensuring that word gets out about the show and that the target is reached in order to bring the artists to their town. Most of the promotion for the shows naturally occurs within social media according to Queremos. 

This concept is truly ideal for fans who wish to see a particular artist who wouldn’t typically plan a stop in their town, as artists and labels oftentimes skip hitting particular markets on tour due to an uncertain draw and would rather not risk taking a loss for the gig. However, if a show is successfully funded through Queremos, then artists are pretty much guaranteed the viability of the gig and can ensure that they will see the required figures in order to plan the stop.

This page will be updated frequently. If you have any additional information to share, send it to mgalaxy (at) bandpromote (dotcom). 

Excerpts credited to: www.DigitalMusicNews.com , www.Hypebot.com


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