Funding a CD with Kickstarter

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There is a current trend that is starting to get very popular these days for artists wanting to produce CDs. They post the project on and ask for donations.  Usually, rewards given at different donation levels (such as free CDs for a $10 donation all the way up to full concerts for a $2500 donation). Here is what a typical project looks like there.

One thing I have noticed is that even established musicians are starting to use Kickstarter.   Lately, I have seen a few Southern Gospel groups on there that are quite popular by any standard.

Traditionally of course, musicians/labels front the money for their CDs and recoup their money by selling CDs. If they are fortunate, they even eventually make a profit. That sounds good, but as I have discussed before, the number of CDs that actually ever become profitable is well less than 10% and probably closer to 5%.

Because those numbers are so bleak, it is hardly a surprise that musicians want to avoid borrowing or investing their own money to record a project. That is where Kickstarter comes in. In theory, Kickstarter allows musicians to have their cake and eat it too. They can fund projects before ever walking into the studio and start earning money from the CD as soon as it is released.

There is absolutely nothing morally wrong with doing this of course.  Variations of the Kickstarter model have always been out there: borrowing money from family, finding sponsors, record labels, etc. Kickstarter is a natural result of what is happening in the music industry as musicians shift from labels to independent.

But I am not jumping on that bandwagon yet and it is unlikely I ever will (though I will never say never). For those that are tempted, here are some things I have observed.

1) The odds are against a successful campaign. Don’t think for a second that begging for money is easy. Once your parents throw in their $200 and your six best friends donate $25 each, expect things to get very quiet on your Kickstarter page.

Kickstarter maintains that between 40-45% of the projects posted reach their target goal of donations. (It is an all-or-nothing deal; projects that don’t get fully funded do not get funded at all.)  I don’t doubt their numbers but I have to believe that the percentage is way less for music CDs. In fact, in my time watching it, I have not seen many projects hit their goal in the world of Christian music.

American Idol contestant Chris Sligh‘s did.  I noticed that another group did too, but I am 99% sure they cheated by making $5,000 worth of shrill donations at the end of their campaign to reach their goal and lock in the $5,000 they had been pledged. If you want to know the truth, I would bet that this happens very often on Kickstarter.  If you are a desperate musician that needs $5,000 and only have $4,000 pledged on the last day of your campaign, you would be very tempted to “donate” the last $1,000 under a fake name so that Kickstarter would collect the other $4,000 for you. I am not saying they should (they shouldn’t) but I don’t doubt that they do.

Kickstarter is guaranteed to have even lower success rates in the future because of dilution. Face it–everyone is making CDs these days.  The only real barrier to entry is money.  Now that musicians know that they can avoid coming up with the money themselves by using Kickstarter, you are going to start getting more requests to donate to various projects.  In this economy, people don’t have much money to donate to CD production and the more crowded it gets, the less money there will be to go around.

2) Using Kickstarter will hurt your personal brand. Yes, I said that dogmatically and perhaps I am overstating it but I don’t think so.  I did an informal survey on this a year ago asking people what they thought about musicians that asked for money in this way. The feedback was decidedly negative. At best, people are likely to see those musicians as unsuccessful in their music careers. At worst, they see them as gold diggers.

In regards to that last perception, I sort of see the point. Music should not be exempt from the way capitalism works. In other words, typically, if you want to start a business, you take the risk by investing the money. If you don’t have the money, you either borrow it or you sell stock (equity) in the company. Kickstarter does not work that way. People that donate never see their money again and they do not get to share in the profits.

People pick up on that and many of them resent it. They see it as double dipping–making money on both ends of the equation. I know that is not really fair because I know most musicians are going to struggle financially regardless of whether they get their production costs given to them or not. But most people still do not understand that.

Those are the two main problems but there are more. For example, here is a fact: you will work harder if you have your own skin in the game. Your project will turn out better if you write the checks yourself rather than using others’ money.

If you are a musician, I think there are better ways to fund production costs.  The most obvious is budgeting for it. Maybe set aside a few dollars for each sold CD to fund the next one.  You can also do pre-sales by offering a discounted price on the new project if people will buy it early.  It is entirely conceivable to walk into the studio with enough pre-orders to cover most or all of production.

But I am not saying not to use Kickstarter.  I am just saying it is not optimal.  It may be the easiest way right now but I don’t think it is the best way.