Music Business Journal: Crowdfunding's Logic
Crowdfunding is quickly becoming a useful alternative for musicians looking to pay for the production and distribution of their albums and concert tours. As will be shown, crowdfunding is a quantum leap from traditional record label financing. Furthermore, US sites have so far only accepted pledges, i.e. donations against some form of merchandise or service return, when the project is completed. However, the medium will become much more complex when the JOBS Act goes into effect early next year and regulations are relaxed for small businesses seeking to raise equity capital (JOBS stands for Jumpstart Our Business Startups).
Artists seek financial support and fans provide it. But there are upsides and downsides. We start by exploring three of the best-known music crowdfunding sites: Kickstarter, IndieGoGo, and PledgeMusic. All three feature common elements: the project in an ad-hoc self-contained webpage, a video presentation, an outline of the fundraising goals, and, finally, the list of rewards offered to contributors.