Ahhh…crowdfunding. Thou art both the salvation and bane of many bands, whether an indie band with a small following, an international sensation with a huge following or somewhere in between.
As bands, especially indie bands and bands without major label support, we look at crowdfunding as the Holy Grail of being able to do our thing, whether that’s a tour, the next album, a video or whatever.
Unfortunately, it often ends up being only the Grail-Shaped Beacon of Castle Anthrax. Like many of you, I, too have looked hard at crowdfunding.
This will most likely end up being another multipart post, but for now I’ll stick with one of the big questions that Liz Tapia (DarkBeautyMusic.com) and I had while we were brainstorming one day. Why are we stuck with pre-existing
Is there a major benefit to putting your campaign up on Kickstarter, Indiegogo, Pledgemusic, etc.?
Well, let’s take a look.
Almost all crowdfunding sites will charge you between 3% and 10% of what you make. In order for you to cover that, you have to allow for that in your numbers. For example: Your goal for the album is $10K. Your chosen platform takes 5% plus a credit card processing fee of 2.9% plus $0.30 per transaction.
Rounding up, that’s somewhere close to 8%-9% of your take. To be safe, we’ll call it a nice, even 10%. 10% of $10K is $1,000. So you need to raise $11K to get your $10K.
This is in addition to the things you already do, like run a website and a mailing list, etc.
As always, you need to factor in the cost of your perks. If you’re offering a signed jar of peanut butter, then you have to know how much it costs to buy the jar so you can sign it, or at least how much the peanuts cost so you can make it. But those costs remain the same either way.
If you host the crowdfunding campaign on your own website (for which you’re already paying) you save about half of those costs. Running through PayPal will still cost you 2.9% plus $0.30 per transaction, but you’re saving the initial 5%. You can still limit the time, just as you would through any crowdfunding site.
You are already marketing your band. You’re paying for social media ads, trying to drive traffic to your website and trying your hardest to just get your music heard.
Why then would you want your time, effort and money to benefit another business?
Imagine this for a minute: You open a new fast food chain, but only offer your food through McDonald’s. Make sense? Of course not! McDonald’s will absolutely take a cut, but worse than that, there are a million different options (some of which may actually be edible…) that can and will distract your customers from buying YOUR food.
That’s what crowdfunding platforms want. They want all ventures to be successful so they can get a cut.
We’re not wishing anyone ill, here. We want you all to be successful, too, just not for the same reasons.
Plus, even though the “keep everything you make” model is becoming more popular, the fees with those models can be a little higher vs. the “you only keep it if you reach your goal” models.
Any marketing blog out there will tell you that the email list is king. When your social media ads drive people to a crowdfunding site, guess who beefs up their mailing list? Not you.
Once again, you’ve spent your time, effort and money to increase someone else’s business. If you’re driving that business to your website, then you get to keep those leads and you know they’re into what you’re doing.
Now that they’re on your mailing list, you may not convert them this time, but you’ll definitely have them on the list next time around.
As far as I’m concerned, this is the big loser for the big sites. Crowdfunding is a one-and-done deal with them. You do one crowdfunding campaign and it’s over. You either make money or you don’t. It’s over until the next campaign.
If you run the crowdfunding campaign on your own site, you have created a stream of income. People have been there, they have purchased from you and are on YOUR mailing list.
So when your new T-shirts come out or you decide to start working on a new album, you have a ready-made fan base at your fingertips. Even better, if you didn’t get to sell all of those signed jars of peanut butter, you still have an outlet to sell them.
These are the big reasons why my producer, Tim Buss, and I have decided to run our crowdfunding campaign from my website rather than use one of the existing crowdfunding platforms.
Until next time – ROCK ON!