The music industry is currently going through a transition, more and more the culture is moving towards independent releases with artists and fans talking to each other and being more connected. An unexpected byproduct of this is the concept of crowdfunding. Why go through a label to fund a release when the fans can do it directly? In theory this is a great practice, but it isn't for everyone, here are some things to think about before entering the world of crowdfunding.
Are You Asking for the Right Amount of Money?
A common issue with crowdfunding is the lack of foresight into the project's expense. While you may have a general idea of costs, it is a good idea to get a firm quote of the exact expenses involved. While you may have a price to book a studio for 5 days, will you need extra money to cover the travel cost to it? Do you need accommodation there? If you run out of time and need an extra day to finish the mix, will you be able to afford it?
If you have physical rewards, you will also have to factor in the shipping and manufacturing costs of these into the overall sum as well as the Kickstarter/Indiegogo/etc fee. You will find that these will probably take up more of the final sum than you expect.
The other side of this question is, Is it a reasonable goal? I'll come back to this later.
Are You Prepared for What You Want to Do?
You may think that things will be easier with financial backing, but that only goes so far if you are not prepared with a long term plan on how to complete the project. If you are looking to fund a music video, you will probably need to make sure you have a film crew and director ready as well as locations sourced in advance.
If you are asking for money to complete an album, are your songs written? As soon as fans are supporting a crowdfunding campaign they are invested in the outcome, if you get funding for a CD then 6 months later you still aren't in the studio recording it because the writing is still underway, they may get rather annoyed. The best way to approach the situation is to think "If we got the funding, could we start right away?"
What Are Your Rewards and Are They Good Value for Money?
A big incentive for people to back a crowdfunding campaign is the rewards, if you are funding a CD then it is usually a good idea to make that a reward tier, however it is important that the CD is offered at a price that somebody would purchase a CD at. While to you the Kickstarter is a fundrasing platform that serves to help you record the CD, many people will do the CD tier as sort of an early pre-order.
Other projects such as a music video are slightly harder, as the end goal is a video that presumably will be distributed free online, there isn't much of an end product to give away. You might be able to give away tickets to a show, behind the scenes updates and videos or maybe even an old release, but it is important that the person supporting the project feels like they will get their moneys worth or they wont support the project no matter how much they like you.
Understand That in Most Cases Crowd Funding Is Not a Form of Marketing
One of the most common misconceptions I hear about crowdfunding that can be rather fatal is artists making the mistake of thinking that having a crowd funding a project is a viable way to market it, in fact, it is the exact opposite. While you might be able to rouse up some donations through people sharing it to support you, you will need to market the campaign rather well in order to get people to donate money to a hypothetical end goal.
In general people looking for new music are not going to crowdfunding websites to find it, most the traffic drawn to the campaign will be traffic you bring to it yourself. Unless you are a big name artist that would get major website coverage for launching a campaign, chances are you are still on your own.
Ask Yourself What the End Goal for the Project Is?
This is very important to consider before going into crowdfunding and applies mainly to artists looking to fund a full CD. A common route new artists take is they will self finance an EP then look to crowdfunding for a full length release. While this is a great method, it generally only works if you are happy to remain an independent artist.
If we look at a situation where you do a Kickstarter for a debut album, imagine the whole campaign kicks off really well and all your fans rush out to pre-order the CD through it, you meet your goal and you are ready to go into the studio knowing that hundreds or thousands of people have already bought it, you might then approach a label with this being able to show a great track record from the sales pre-orders, however this is actually rather unappealing for most labels, if most your fans already have a CD pre-order and lots are already sold in the Kickstarter, there is less incentive for them to pick up the release as they will get nothing from those sales.
This might encourage a label to sign the band for a second CD later depending on overall sales but if you are recording with the intention of a label release down the line, you might be making things a little bit harder for yourself if that is your end goal.
Are You Investing the Money in the Right Place?
When you are planning the campaign, it might be tempting to use the money to buy the microphones to record the album, or a camera to shoot the video, after all, in theory you could use these later to produce more? If that is the case you will need to be transparent with the people investing that you plan on doing this, you will also need to be sure that the end result will be good enough. If you are getting funding for a music video and decide to buy a camera, will you be able to produce a video high enough quality to please the fans that backed it that would rival investing the money to hire somebody else to do it? If you use the money to buy gear to self record, would it rival a studio at the same price?
Do You Have the Fanbase to Support It?
The last and most important question of them all, if you started it, would you have people willing to donate? While having lots of Facebook fans look great, the number of people who will like your statuses and photographs is very different from the number of people that would support your crowdfunding campaign. While you can take the approach of starting the campaign under the hopes of meeting the goal and just writing it off if you don't, this could be very harmful to the brand you are creating should the campaign end with 5% of it's funding achieved as these are all very publicly available to view.
It is best to look at the results of past releases and live shows to gauge how much interest there would be in the campaign in advance and work from there, if you have only sold 100 EPs in the past, but you need 300 people to pre-order your new CD to reach the goal, then you would either need to rethink the campaign or cut overall expenses. Some crowdfunding platforms allow you to get the money even if you don't reach the goal, in theory this seems great as it gives you something to work with rather than nothing, if people buy into that in anticipation for a CD as a reward tier and the CD never gets made, it is hurtful for everyone involved.
So Is It Right for You?
Before you launch into this venture you need to take a critical and honest look at how much your fanbase would probably be willing to invest in your project and work out what the bare minimum you need for your project to go ahead will be. While you might like that great mastering engineer to work on your release, would it be the end of the world if he couldn't? If the money you can expect your fans to invest is under the minimum amount needed for the project to happen in any form, then it might be better to wait, but who knows? Remember, these campaigns do not have an upper ceiling, so if you set your goal realistically, everything above it can go into the luxury parts of the production. The most important thing is that you can make it happen.