Crowdfunding: The public knows best?


Are big investors still needed when it comes to publishing music or books? Why can’t you gather your fans around you and convince them to invest a small amount of money in your talent. If you become successful, they make money as well. Everybody’s happy!

But what makes this concept of crowdfunding so brilliant? Are there other products or services that can be crowdfunded and how can this concept be successful time and time again?

SellaBand

In one of my previous posts I wrote about an initiative called SellaBand. That site made it possible to invest a small amount of money into an upcoming artist. Together with a lot of other shareholders (or ‘believers’), you could make it possible for the artist to have enough budget to record and distribute an album or EP. When the recorded material made a good sale, investors also received a little profit from it. This idea is brilliant. Who knows better what music to invest in than the public that listens to it? Unfortunately SellaBand went bankrupt last week. Luckily a German group of investors jumped in and continues the company and website.

In an interview on Dutch Radion 1, one of the founding people made clear that he believed that the project failed partly because the artists sold physical CD’s. The fact that artists also recorded a complete album, and therefore needed to find a total of $50.000 invested from ‘believers’, made it even worse he says. Nowadays, artists should record just a couple of songs and sell them on iTunes. This saves a lot of money, and cuts the ‘risk’ of investing (in only a couple of songs at a time) a lot smaller.

Invest in a book

Another Dutch initiatives (yes, we’re good at this!) is called TenPages.com. It works the same way SellaBand works, but now with books. The name of the website refers to the number of pages writers publish to convince shareholders to invest in their manuscript.

The power of crowdfunding

These initiatives make me wonder why crowdfunding is so brilliant? People invest small amounts of money in a band or a writer, because they admire the artist’s work. Investors also hope to make a little profit from the money they invest. People who consume the product a writer or musician makes, knows best what they like. Not the big publishers or record labels.

I invested some money in 2 artists from SellaBand myself, as an experiment. Both artists, Civilized Tears and Inge M, reached their target and are now recording their album. I believe that changing the distribution model into a digital one can revolutionize the music industry. The same goes for the books at TenPages.com. Distributing a digital file is much cheaper then creating physical CD’s or books and sending them around the world to your investors.

Conclusion

What other products can be funded by the crowd? Movies? Already has been done. TV or fashion maybe? Has been done as well. Investing in a great idea or invention can be worth your money. People have to be able to prevent their unique idea from being stolen though. I truly believe ideas like SellaBand and TenPages.com can work. Giving the power of investing back to public is a very logical step in this online age of transparency.

9 comments so far

  1. capibaro on

    Why sell music (beit on CD’s or through iTunes)? Why not give away the music like handing over your business card and earn money by performing live?

    • krvermeulen on

      Good point, but it still has to be the artist’s choice to give away his or her music for free.

  2. Vlad on

    Very interesting post. At RocketHub.com we take a slightly different approach. We view crowdfunding as somewhere between a charity and an investment – but neither of those – we believe crowdfunding is the foundation for a new type of economy.

    • krvermeulen on

      Thanks for your comment. Interesting website as well. Why do you see it as a part charity?

      • Vlad on

        I think that the trust required to give is similar for all of these websites – thus the trust required for me to give to a charity is similar to the trust for me required to give to a Creative (especially if I don’t know the Creative). So the gifting element of crowdfunding relates to the gifting element in charities.

        Otherwise I think the concepts are quite different.

  3. Janie on

    Or use the ArtistShare model. People are not spending the money for just the music. They are spending it to see how the music is made- the creative genius…

    • krvermeulen on

      Interesting concept! There are a lot of possibilites, besides this one, RocketHub (post above) and SellaBand I mentioned. Thanks for your comment.

  4. peter on

    Interesting article… is this the new way of investing in creative artists? I am lauching the irish version at http://www.groupvesting.org will be interesting to see if it takes off.

  5. buskerdoo on

    I think it’s a great idee to make it easier for people to site invest a small amount of money into an upcoming band or artist. I too like Janie above like the ArtistShare model.


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