Four reasons to avoid Kickstarter

I have written here and there about the Kickstarter phenomenon before but never in length. I have to admit that the underlying philosophy bothers me a bit and I actually think it may do musicians far more harm than good. So I want to take a post and explain why.

Here is a quick background for those of you who have not heard of Kickstarter. Kickstarter is a popular site where people post a project and ask other people to pledge money towards a goal. If the goal is reached, the project is funded, which means that all of the people that pledged have to cough up the money to Kickstarter which then passes it along (minus fees) to the person who posted the project. If the goal is not reached, no pledges are collected.

One other quick thing. There are other very similar services to Kickstarter such as GoFundMe. What I am about to say is not specific to Kickstarter but rather all of those services.

The reason I am writing about Kickstarter is because it has become a popular place for musicians to try to raise money to produce CDs and other similar endeavors. Many see it as an easy way to get funding and very often, the only way they can really do a project. It is an attractive idea. Some get a bit more creative with it. For example, a young piano student in Canada recently begged me to donate money to her project in which she was trying to buy a grand piano.

I am careful here because like I said, many musicians see Kickstarter as the only viable option to fulfill a dream. If you see it that way, I want to give you an alternative view. There are four major reasons why I recommend you avoid Kickstarter:

1) It is a charity platform rather than a borrowing/investing platform.

It is entirely legitimate for people to attempt to raise money to do a business project and there are two main ways that happens: borrowing and finding investors. Borrowing and investing are designed to benefit both sides. The person coughing up the money either earns interest or gets ownership in something.

On Kickstarter, that does not happen. Other than some (normally) insignificant gifts given for different pledge levels, it is a one-sided transaction. There is a big significance to to that and it is this: the person receiving the money owes nothing to the person donating money. There is no real accountability at all.

I don’t like that. Maybe I am old school. I know there are non-profits and ministries that need to raise money by donation but I don’t like for-profit businesses asking for donations. I think business transactions should be mutually beneficial and I think the person receiving the money should be accountable to the people giving money.

I am not saying that the Kickerstarter way is morally wrong. But on the other hand, the strategy behind it is a problem because in general, people accepting money without responsibility are going to have a high tendency to mismanage and misuse it. That brings me to my second point.

2) It does not foster good money management and responsibility.

I don’t think there is any doubt that easy money is easily spent and anyone who thinks that Kickstarter funds get spent as responsibly as a personal savings account is in denial. That is not the way humans are. If you are spending your own money or money you know you have to pay back, you are going to be much more careful with it than money you get for free.

I know the production costs of music very well and when I see certain music projects posted, I am often skeptical. Some of them are asking for money that they do not even need. Others ask for a large sum of money but give almost no details on how the money will be spent. And some are asking for an amount of money that is far more than what they need done is going to cost.

The truth is that raising money on Kickstarter does not teach skills that you really need to know. It is more likely that doing so will teach money management practices that will be harmful to you as a musician. Bootstrapping a business is hard. Paying for a CD out of personal savings is hard. But those approaches will help you out in the business of music in the long run far more than Kickstarter.

3) It annoys all your friends and family.

Seriously, is there a worse relationship killer than posting a 60 day project on Kickstarter and then posting it on Facebook twice a day for those 60 days? If there is a better way to annoy people than that, I would love to know what it is.

4) It rarely works.

I have good friends that have used Kickstarter or similar services. There have been a few times when the project has been fully funded. The people that have seen success are ironically the people that you would think need the help the least. They are the more popular musicians that everyone knows. The unknown people almost always fail to raise the money they need. It turns out that to raise money, you need a big audience. For the newer musicians, that means you have a chicken/egg problem.

Some projects appear to fund but they really don’t. Here is what happens: the musician or a partner himself will pledge money at the last second to meet the goal. That is done because it locks in the pledges that were made. Remember that on Kickstarter, you have to be fully funded or you get nothing. Whether that is unethical or not I will leave for you to decide. But that is what happens.

To make matters worse, as Kickstarter grows in popularity, the percentage of projects that fully fund is going to go down. More projects means less money to spread around. I don’t know about you but I get multiple project requests a week now.

So if I don’t recommend Kickstarter, what do I recommend? Let’s talk about that just a second.

First, for those of you that like to fund projects or help your musician friends record projects, keep giving money. But do it outside Kickstarter. That will save the musician from the fees they charge.

Now for those of you that want to record music but don’t have the financial means to do it:

1) Do it the traditional way by saving money. Put aside a few hundred dollars a month for a year or two and you can do your project. For some people, that might be as simple as turning off cable and practicing your music instead. 🙂

2) Bootstrap. Bootstrapping is the business term for starting small and living within your means. You don’t have to record a fancy project first. My first project Timeless Reflections was done in my living room on my own piano. It was not the best production quality but I sold 15,000 copies of it before we retired it last year.

3) If all else fails, offer a legitimate business opportunity. Asking for money without offering anything of value is the Kickstarter way. My advice would be to ask for money with a deal in place so that the people giving you money can get their money back plus have the potential of profits. You could give away part ownership in the project. You could also do a profit-sharing deal where for example, they earn a royalty on every CD you sell.

I know my advice here is counter-cultural. But think about it if you want to do a project. In the long run, I think you have a better chance of success if you avoid the Kickstarter trap.