Crowd Funding for Artists

Kickstarter is the sum total of the stories and ambitions of the creative artists who have successfully funded a flood of projects — from films to CDs to books — on the Web site. Launched in 2009, Kickstarter is not the only fan-funding site for creative artists, but it has emerged as the most popular and effective. This type of fan-driven financial support, in which an artist posts a request for funds for a particular project and fans pledge amounts ranging from pocket change to thousands of dollars, has forced the record industry to take notice.

In an era of iTunes, laptops, smartphones, tablets, Twitter, YouTube and Facebook, the music business has undergone a metamorphosis. The business model has been turned on its head, and artists are capable of taking control of their own careers in ways once impossible to imagine. Into that mix comes Kickstarter, the next critical application for self-sufficiency.

Since Kickstarter’s founding, more than 4.3 million donors have pledged more than $663 million for more than 43,000 creative projects. In 2012, music was the most popular category on Kickstarter, with more than 5,000 successful projects drawing a total of over $35 million in pledges. Among those who worked Kickstarter’s dream machine was Paula Cole, a Grammy-winning singer and songwriter who is remaking her career on her own terms.

In the 1990’s, well before “American Idol” and the digitalization of the music industry, Cole began a career that most young musicians can only dream about. She recorded a string of mega-hits like “Where Have All the Cowboys Gone” and “I Don’t Want to Wait” for Warner Brothers Records. Her 1996 album “This Fire” went double platinum. She was nominated for seven Grammy awards and won one in 1998 for Best New Artist. The sky, it seemed, was the limit.

But Cole’s fairy-tale career took a sharp detour that resulted in her leaving the business for nearly eight years, only to re-emerge in a different environment. As a debut artist, the Berklee College of Music grad had learned the harsh lessons of the music business. In those days, young artists often had contentious and draining relationships with the overlords of the star-making corporate machinery. Only major labels could successfully create, produce and record a physical CD and then market and distribute the product to a mass audience. Some performers made lots of money, but more often it was the record labels that were enriched while the artists, including Cole, struggled.

She had the ill-timed luck of entering the industry just as it was heading into major upheaval. The advent of Napster, the widespread downloading of digital music and the industry’s feckless response to rapid change resulted in turmoil, especially for the talent. Amid this disruption, major labels consolidated and artists’ contracts were included in the deals much like office furniture.

Having worked with four record labels and knowing the anguish of trying to maintain positive relationships in companies struggling to survive, Cole was ready to change, and after disappointing results with her last album with a major label in 2010, she had an epiphany. “I’m watching the trend,” she says. “I’m thinking this is not a very well-run business. I’m in my 40’s now. I should pull myself up by own bootstraps. I know I’m not a huge act anymore. I’m humbled by the marketplace, by the digital reality of the music business and where my career is. I decided I’d like to try doing this myself because I know my business better than anybody and I know my fans better than anybody.”

So in 2012, Cole turned to Kickstarter. On Kickstarter, the artist posts a financial goal along with details of the project and the rewards for donors. If the goal is not reached, no money goes to the artist. The key to Kickstarter is that it is not an investment vehicle. Donors do not share in the profits and do not expect to be repaid. The donations are not tax-deductable. Donors receive a copy of the CD or DVD, a T-shirt, or a mention in the credits and the satisfaction of supporting an artist they admire. It is, in fact, a form of patronage that characterized the funding of creative types, from Mozart to Mark Twain, for centuries. Cole asked for $50,000 to help pay the production costs of her new album, “Raven.” In just 37 days, bolstered by a small but deeply loyal fan base, she received $75,000. “Raven” was released in early 2013.

“With fan funding, you own your own intellectual property,” Cole says. “You are free to make royalties on your very first sale, and you become your own manager. I can call the shots for my career and for my personal life.”

For the tens of thousands of aspiring artists, some with fan bases such as Cole and others with budding careers, Kickstarter changes the landscape.

“The beneficiary is the vast majority of artists who can create the music they love, aggregate their own following and own the assets and the masters they create,” says Steven C. Beer, a New York-based attorney who concentrates on film, television and the music business. “The cost of production is so modest now, an artist can market and distribute their music for a much more modest sum. And the ability to create a sustainable career is greatly enhanced now.” 

Kickstarter enthusiasts are quick to point out that the most successful projects tend to be associated with known quantities. Cole had a small but deeply loyal fan base. Amanda Palmer, an icon of the alternative rock era, raised an astounding $1.2 million on Kickstarter in 2012 for her latest album. Palmer benefited from her visible and ardent online presence. She is intensely active on Twitter, YouTube and Facebook and maintains an open and vibrant connection to her fan base.

Jason Schmitt, an assistant professor of communications at Green Mountain College in Poultney, Vt., has tracked the music industry for many years, observing as the business structure has shifted “from label power to the kind of innate power held by the artists themselves.” He was enthralled with Amanda Palmer’s conquest of Kickstarter in 2012. In an interview with Palmer, Schmitt learned of her ability to eliminate the curtain between her and her fans using digital communications like Twitter.

Palmer told him that Kickstarter is not every musician’s savior and is not the first step for “career-building aspirations.”

“You can’t meet at a bar and say, ‘Let’s start a band and Kickstarter a record and get everybody excited about it on the Internet,’ ” Palmer told him. “You need to have your audience in the real, tangible world. Then Kickstarter is your tool to ask people to help you.”

Palmer, who had posted a goal of $100,000 and received 12 times that amount, has become the poster child for Kickstarter’s upside potential. She was overwhelmed by the publicity for her Kickstarter campaign and felt it overshadowed the record that it spawned. But despite that, “I think it is a great system,” she told Schmitt. If her success leads other artists to consider crowd funding, she is satisfied. She went so far as to post an open letter to the singer Morrissey, urging him to crowd-fund a new record.

“The Internet is now at the point where your fans will basically do the work of spreading the existence of your project for you, especially once they’ve hopped on to support it,” Palmer wrote.

Beer says crowd-funding sites like Kickstarter, PledgeMusic, Indiegogo and Patreon do not eliminate the traditional record label. Megastars like Taylor Swift and Kanye West continue to benefit from the scale of marketing and distribution coupled with the touring and merchandise sales that the giant companies offer. But crowd funding opens up an opportunity for others to chase their dreams on a more realistic and self-determined basis.

“Crowd-funding platforms like Kickstarter are empowerment tools,” Beer says. “They allow content creators, whether a music artist, filmmaker or publisher, to be as independent in the marketing and distribution of content as they are in the creation of it. It really opens up opportunities for success and the ability to create your own definition of success.”

Success, he added, is no longer dependent on winning Grammys, going platinum and filling Madison Square Garden. And it is a win for fans as well as artists. “People who really enjoy original material will have much more access because they are no longer prisoners of the major labels,” Beer says.

Skeptics say Kickstarter has yet to prove it can elevate unknown artists. Most of the funding for projects comes from relatives and friends of the artists, and the ability to break through with nothing more than a viral YouTube video remains limited.

But Schmitt sees something more than fame as the measure of success. The younger audiences that tend to fuel and spread the music have grown up in the Digital Age, where the belief is that all information should be shared freely. “We have artists growing up with that notion, too,” he says, “and they are realizing that their artistic product isn’t necessarily worth a specific monetary value, but their career and what they are creating as a whole is worth something. The fan base sees them as human beings, not as larger-than-life entities. It’s still a tough road, but it’s less tough than it used to be.”

Paula Cole agrees. Having a realistic vision of your own career is not always easy, but in the current music environment, it is crucial. “I’ve been a little beat up by the music business, but I’m also mature enough now to practice some acceptance,” she says. “I am an introvert who didn’t handle the sudden rise to fame very well. So today my goal is to make meaningful music, great music. I’ll run this thing myself on a smaller level for my audience, and if I can make a living, I’m O.K. with that.”

Korn Ferry’s Media & Entertainment Sector provides the experience and expertise you need to hire and develop leaders who know not only how to steadily respond to a fiercely competitive environment. Learn more.