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How crowdfunding is changing the way we pay musicians and our relationship with them

30 Mar 2016 music biz words by Terence Ill
How crowdfunding is changing the way we pay musicians and our relationship with them

If you are a musician in 2016, crowdfunding won’t be news to you. More and more musicians, including hip hop artists, use crowdfunding to finance their projects. It may seem like another payment method but it is actually a game changer on a much deeper level.

Crowdfunding 101

Crowdfunding platforms come in two basic shapes:

  • The Pozible, Kickstarter type
    Typically allow you to pitch a specific project to your audience and ask them to fund that project upfront. You define a financial goal and once your goal is reached you get access to the pledged funds.
  • The Patreon type
    On Patreon you pitch yourself as an artist (rather than your product) and ask your fans to sponsor you with ongoing payments. The payments are connected to goals. For instance, you can ask for a pledge of $5 per video or song you release. So a patron would commit to paying a set amount of money every time the artist they support releases a new video or a song. Artists can define different payment plans with different benefits depending on the level of contribution. The higher the pledge, the more benefits you get.

Bandcamp is now also offering a subscription service which allows you to subscribe to an artist's releases with a monthly or annual fee.

So, what’s the big deal with crowdfunding and the Patreon model in particular?

I recently spoke to Melbourne-based Canadian rapper Jonny Freesh about Patreon and how he sees it:

Jonny Freesh: I'm really excited about Patreon because it allows independent artists to earn a reasonable income from a much smaller fanbase than the traditional music industry model. You don't need millions of fans, you just need a few thousand superfans. And I believe this is because music was never meant to be a product, and to create a business around it as one requires an imbalanced system where someone is getting the short end of the stick. Which is usually the artist. Music is much better suited to be a service, because what people pay for is really the emotional experience, not the physical item. So with Patreon if I can curate a reasonably sized, dedicated community of people who cherish that experience, then they are also probably willing to donate a small amount of money so I can continue to create that experience. Especially when they know that money is going straight into my pocket, not into the coffers of a giant corporation.

In other words, supporting artists with a pledge of regular payments changes our relationship with them - and that’s a pretty big deal. In the traditional music trade an artist makes a product, then puts it on a shelf. If we like it we buy that product off the shelf.

Patreon is a good example of how ongoing support could effect everything, from how often artists release music, which format they choose and even what their music is about. Pledges on Patreon are connected to goals. You only get paid when you complete a specified body of work. Simply put: you don’t release anything, you don’t get paid. Hence, independent musicians will increasingly move away from releasing full length albums that often take years to make. Instead they will release smaller bodies of work more frequently, which will help maintain ongoing income. This has already been happening for a while. Ever since Soundcloud the one-off single has become more and more popular and we can expect this trend to continue. This also goes for video clips, where we can expect the amount of bigger productions to decrease in favour of more frequent releases with lower budgets - and probably more creative concepts, because the artist can’t rely on the production value to carry the clip. In other words, the way we pay artists will directly influence how they make and release music in the future.

Will crowdfunding soon be the new norm for independent musicians? Or even mainstream artists?

It will continue to conquer ground and will most likely become a major income source for independents. However, at this stage it is hard to imagine it ever replacing the current ‘post-paid’ model altogether. When it comes to music, the majority of music consumers seem to be more likely to spend money on impulse buys at a gig or at the record shop, rather than commit to ongoing payments.

Just think about it this way: How often have you donated some change out of your pocket to fundraisers in the street? We do occasionally, right? Most people have. I have - more ofthen than I can count. In comparison, how often have you signed up for ongoing donations to a charity? Most people will answer this with 'never'. I haven't - ever. Why? Because it's a commitment, an additional psychological hurdle that a lot of fans will not be willing to make, while they are still happy to pay for your music as you release it.

Then there is also the issue of volume. If you think about how many different artist you have purchased music from over the last few years, could you imagine committing to an ongoing payment for each one of those artists? According to a statistic released by Music Business Worldwide, the average Australian spent $16.26 to buy music in 2014 - yes, that is 16 bucks over 12 months. Let that sink in for a moment. That doesn’t sound like a lot of money to be shared between all your favourite artists. So if all music was crowd funded and people continue to spend the same amount of money on music, what would your share as an artist of those $16.26 per capita be?

The verdict

Crowdfunding music is still a fairly new concept and we all, musicians and those who support them, are still working out how to handle it and make it work. In the coming years, independent artists will undoubtedly benefit from the new possibilities crowdfunding offers. It’s an opportunity to generate an income stream that will enable more independent musicians to make a living from their art. And for those who are still hesitant to commit on an ongoing basis, there is no need to worry just yet. At least for the foreseeable future, we are realistically looking at a landscape where we will be sponsoring our favourites with ongoing cash, while we will continue to buy individual one-off songs and albums from others.

If you're excited and would like to support an artist on Patreon, why not start with this one?

Do you agree? Disagree? Feel free to share your view in a comment.