Out There: Fan Funding Is an Opportunity to Grow and Develop the Artist-Fan Relationship

Bob Mould. (Photo: Getty Images)

Bob Mould successfully funded his 2012 Kickstarter Disney Hall Concert Film. (Photo: Getty Images)

A big part of being a music lawyer these days is about finding money to fund recording projects. As the traditional record label system evolves (or collapses, depending on who you ask), musicians on all levels are exploring creative ways to find funding. That often becomes the challenge of the business team…and often it ultimately falls to the lawyer. There are many more funding options today than there were back in the 1990s, when I was a professional recording artist. (In the 1980’s I founded and played guitar for the influential but criminally underappreciated Indie and Indy bands Blake Babies and Antenna, and also drummed for The Lemonheads.) Because musicians needed physical distribution to get into stores and relied heavily on commercial radio and print media, the basic options were as follows: sign with a big record label and let someone else own your masters for your shot at the big time, or else remain forever obscure in the wilderness. With the rise of digital distribution and the range of promotional opportunities via the Internet, all it takes for an indie to compete with the big labels is a great recording, someone with the know-how to put together a promotional plan, and enough money to pay for everything.

I constantly encounter great projects with dedicated people ready to do “whatever it takes” to “take it to the next level,” and the missing element is almost always funding. So the search begins with a checklist of possible money pots: shop to labels and hope to get lucky; hit up rich friends, fans or relatives for investment capital; maybe even take out a second (or third) mortgage on the house. Or finally, fan funding. Whenever I raise the topic of fan funding, it’s incredible the range of responses I get – most of which are negative.

Older artists – that is, artists from my era or before – tend to shun the idea of fan funding because it feels like begging. They tell me that they respect and appreciate their fans, and they’d never cheapen the relationship by begging them for money. I think this perception is in part because many DIY artists conduct their fan funding campaign in a manner that really does feel like begging. I’ve unfollowed scores of Twitter feeds comprised of relentless, increasingly desperate pleas for donations. Updates like “Come on, we’re at 52%…only FIVE DAYS LEFT to pledge – we NEED your support” several times per hour. This sort of pressure has colored how we feel about fan funding.

I prefer the term “fan funding” to “crowd funding” because in my experience the only projects that succeed in this space are projects that actually have fans. A fan-funding campaign that’s done well is really just the pre-sale of a product that has yet to be produced. Fan funding is simpler than a traditional investment scenario because the fans don’t ever take ownership of the intellectual property or participate in the back-end profits. Therefore, they don’t need to be advised of the risks as they would under federal securities laws. If you pledge a campaign, what you get in return is some sort of good or service, and it usually includes a copy of the recording itself. The funder might get his or her name on the package, or get to be part of the recording process, which to a true fan might be worth far more than the price.

Another attitude that I consider off the mark is to consider fan funding to be the exclusive domain of have-nots They become offended when the rich and/or famous pursue campaigns. A recent example is when Zach Braff decided to partially fund his independent film, Wish I Was Here, from a Kickstarter campaign. The hue and cry that erupted over this announcement focused mostly on the perceived injustice of a rich guy begging for funds, rather than either paying for it out of pocket or relying on some sort of private funding source, such as a movie studio. The presumption is that the rich are somehow taking money away from more needy, therefore more deserving, projects.

Zach Braff. (Photo: Getty Images)

Zach Braff. (Photo: Getty Images)

Of course, Mr. Braff’s Kickstarter blew past his lofty goal of $2 million – 46,520 backers pledged more than $3.1 million. That was in part because of the publicity he received due to the public outcry – but also because he actually has fans who want to be a part of the project. Why should he take all the risk with his personal funds – or allow a Hollywood studio to own and control the product – when he has thousands of willing fans who want to contribute? Furthermore, if someone were to pledge Mr. Braff’s campaign, does that mean they’ve decided not to fund that documentary exposing the international slave trade, or the reunion album by that obscure garage band from the 1980s? It’s not as if each of us has a couple hundred set aside every year for fan funding and we must decide how to allocate the funds or they end up in some black box or in the pocket of the tax man. We fund exactly as many projects as we want to fund. And with the rare exception of the friend or family member we feel obligated to help, most of us will only fund a project if there’s something in it for us. If we really want the product to exist, and we’re convinced that the project won’t be completed unless we pledge. For the most part, fan funding is value-for-value exchange, just like buying a CD from a band at their merch table.

What you don’t hear about with these campaigns is that the campaigns take a lot of work. For example, if an artist raises $20,000 to make an album by pre-selling 2,000 signed, limited edition CDs to fans, they’ve not only committed to recording the album, but also manufacturing those 2,000 copies, personalizing each one, and delivering all 2,000 to the correct individuals on time – in addition to everything they need to do to promote the album to the general public. Remember that those who pledged are mostly the true fans, so if failure to deliver the right item to each fan risks losing face with the people most important to their career. I’ve seen this happen, and it’s tragic.

It’s surprising to me that more big-name artists don’t fan fund. They can afford to hire a team to do the work, and the pre-selling part would be easy. The truth is, very few albums sell 2,000 copies or could recoup $20,000. So although those numbers might seem modest, pre-selling that many albums means it’s a fairly successful project already. We are outraged when Amanda Palmer raises over $1 million in pre-sales, but we’re thrilled when an independent artist sells enough records to earn $1 million. Assuming all of the people who pledged Ms. Palmer’s campaign received the expected value in return, I don’t see a meaningful difference between the two scenarios.

Member of Toad the Wet Sprocket. (Photo: Getty Images)

Members of Toad the Wet Sprocket. (Photo: Getty Images)

I’m particularly impressed by the campaigns that involve the greatest measure of creativity and personal involvement from the artist. Fan funding can – and should – be an opportunity to grow and develop the artist-fan relationship. In my day we purposely kept a safe distance from fans. That was the culture, whether it was to preserve the artist’s mystique or to keep creepy fans at bay (which is still an active consideration). But these days some level of artist-fan interaction is expected, and extensive interaction appears often to increase fan dedication. Funders of Bob Mould’s successful 2012 Kickstarter Disney Hall Concert Film received an autographed Stratocaster and handwritten lyrics for a pledge of $1500 while anyone pledging just $250 to Toad the Wet Sprocket’s new album – up right now and already at 400% of goal – gets an exclusive Album Release Show in the city of their choice plus  a bunch of other crap.

Fan funding should always be considered alongside other potential methods for funding a creative project. It may or may not be a fit for the project, but if done well it isn’t shameful. It’s exciting for me as an artist’s representative, because fan funding is usually an honest way for artists to own and control their own work. When an artist owns their work, they have complete control over the integrity of the work. As it should be.

John Strohm works at the Nashville law firm Loeb & Loeb LLP as Senior Counsel in their Music Industry practice. He is a founder of the indie pop groups Blake Babies and Antenna and wrote the catchiest song ever, “Slip Away.”

Out There: Fan Funding Is an Opportunity to Grow and Develop the Artist-Fan Relationship