The most unexpected thing about the spectacular implosion of PledgeMusic in 2019 is that no one went to jail for it. After halting payments and becoming mute when confronted about it, we soon learned the music crowdfunding platform had been dipping into the money raised by artists from their fans. You can guess what happened next: artists grabbed pitchforks, and the company blew up in one of the smelliest garbage fires in industry history (which industry exactly — music or tech — take your pick).
PledgeMusic’s demise was one of the weirdest stories 5 Mag covered that year, with our reporting encouraged (and sometimes manipulated) by various insiders and Deep Throats whispering in our ear. White knights arrived on the scene with lances at the ready, only to bail out when they saw the extent of the financial fuckery engulfing PledgeMusic’s accounts. A lot of albums were paid for but never released, a lot of merch wound up stuck in warehouses or pulped, and after three years nobody got paid — or paid for it.
It’s interesting that no challenger has risen yet that has taken PledgeMusic’s place in the music ecosystem. Crowdfunding is a pretty mature concept at this point, and musicians in particular are constantly in need of start-up cash for new projects they can’t otherwise fund. Plenty of our friends ran successful campaigns on PledgeMusic before their demise, essentially using pre-sales to cover up-front costs for music production and manufacturing.
Building a PledgeMusic clone (albeit without the scandal) is not exactly re-inventing the wheel: you need a website (they all function pretty much the same way), a customer service department and a payment processor. There’s more to it than that but not that much.
Sonicly’s business model is bold. It may also be madness. There’s a large body of evidence now that suggests running a crowdfunding site is only a little less frustrating and perilous than running a crowdfunding campaign on one.
Sonicly.com is a new company entering the space, aimed specifically at the musicians that once would have been drawn into PledgeMusic’s orbit. To be clear, they have little connection to the smoking crater that once dominated the music crowdfunding space. If their promises hold out, they’ll have a few safeguards in place to ensure artists and fans on their platform won’t wind up in the same sketchy situation.
Sonicly was founded by Andrew Eisele (according to his LinkedIn, previously with TargetSpot and SportsGrid) and Brian Camelio, who is a musician (he won a Grammy last year as a producer on the Maria Schneider big band jazz album Data Lords) in addition to being one of the founders of proto-crowdfunding site ArtistShare. A pioneer in this space, ArtistShare actually held a kind of patent on “crowdfunding” until it was invalidated seven years ago in a lawsuit with Kickstarter.
Press for the site claims it will be more than capable of handling “the big projects which many people associate with crowdfunding.” They also say they’re more interested in establishing an ongoing relationship with artists than a one-off campaign. Sonicly proposes that artists can perform better and avoid burnout by producing “a series of projects of varying sizes” which are launched on a timeline “conducive to their own creative workflow.”
There aren’t any models up to better describe exactly what this would look like, but it’s an interesting take on the perils of fan-financed projects. Probably everyone has heard of someone whose career has gone into a tailspin after failing to deliver on a “successful” Kickstarter campaign. If you haven’t, there are numerous examples of the malady, to the point that a small industry has even emerged aimed at preparing creators for the perils of “Kickstarter success.”
None of these people, each with extensive experience in crowdfunding, have been able to figure out how to make the numbers work.
As far as fees, this is where Sonicly is attempting to stand out in the crowdfunding space. The company promises to “cut out the middlemen” and slashes fees down to the bone. It’s free to start a project on the platform, and the company is only taking 5%, plus transaction fees collected by Stripe. (Stripe is, uh, pretty much a middleman, one that handles payment processing, but also one that delivers funds directly to the recipient without the platform holding it in the way that PledgeMusic did.)
Sonicly’s business model is pretty bold. It may also be madness. There’s a large body of evidence now that suggests running a crowdfunding site is only a little less frustrating and perilous than running a crowdfunding campaign on one. For one thing, it is a notoriously low margin business. Patreon once took a 5% cut of subscriptions; after realizing they were going to go broke, the company introduced various tiers, each taking a higher bite up to 12%. PledgeMusic itself was attempting to escape certain doom by opening a massive music marketplace rather than relying on a cut from crowdfunding fees alone.
It turns out that while investors may have drooled over the notion of building a crowdfunding platform and then taking a percentage of all revenue forever, there’s a lot of work involved that can’t be automated, and it’s not cheap.
Kickstarter itself has been transformed into a “public benefit corporation,” a kind of for-profit business that recognizes a mission beyond shareholder value. The company claims fairly meager profits for how much revenue they turn over. In another case study, Kickstarter spent a few years attempting to reboot drip.fm, a music crowdfunding platform initially founded by the same people who run electronic music label Ghostly International. Drip was invite-only for a year, with about 100 creators on the platform before Kickstarter announced it was winding down. It was replaced by a successor project with the people behind the XOXO event company, with seed money from Kickstarter. That project too was eventually put to rest even before it launched.
None of these people, each with extensive experience in crowdfunding, could figure out how to make the numbers work. As a statement from Kickstarter said after shuttering Drip, in every model they thought up, the resources required to support a large number of “lower-volume creators” always outpaced revenue.
The math is hard. But there’s still an obvious niche for a music crowdfunding site, and we wish Sonicly the best of luck. The platform is functioning now on an invite-only basis, but you can ask for an invite at sonicly.com.
[…] source […]