When it comes to crowdfunding artistic endeavors, most people immediately think of Kickstarter or Indiegogo. However, the success rate of these two sites is quite low, with Kickstarter claiming 55% of projects reach their goal, and the number for Indiegogo is even lower.1 However, one site seems to do it better. PledgeMusic, which launched in 2009, claims a success rate of 90%, with most artists raising an average of 140% of their goal.2 What makes PledgeMusic, which calls itself a direct-to-fan, not a crowdsourcing platform, have a higher success rate than some of its peers?
On the whole, the platform allows musicians to reach out directly to fans (which they call Pledgers) to pre-sell, market, and distribute music projects. Through the marketplace, fans get to experience unique offerings and limited-edition collectibles. The platform has created a community of 3,000,000 fans and over 50,000 artists.
The platform allows for two different types of campaigns. In direct-to-fan campaigns, pledgers are not charged until the project target is reached. If the target is not reached, fans are refunded, a feature that is unique to PledgeMusic versus its competitors. In preorder campaigns, pledgers are charged immediately, and the artist is paid directly upon project completion, much like a traditional online transaction.
To compensate for their work, PledgeMusic takes a 15% commission, which is higher than most of its peers.
For fans, PledgeMusic provides a way for them to go behind the scenes and participate in the creative process. Fans also get the opportunity to buy custom-tailored offerings and experiences not available outside of the platform. Pledgers get AccessPass, which gives them access to demos, private videos, photos, creating a more direct connection with the artists.
For artists, PledgeMusic is supposed to create a much more direct connection with fans than other platforms. In addition, the PledgeMusic team is very hands on and works with every project on the platform. One way this hands-on approach has worked is that the most second campaigns outperform the first, and the platform has helped 50-60 artists signed to record deals, a result of the company having a robust A&R arm.3 The platform does not retain any ownership rights to music created through its funding and absorbs all processing costs involved in the pledging process.
Success to Date and Future Growth
The platform has seen success to date. It recently acquired two similar platforms NoiseTrade and Set.fm, increasing their fan base and boosting backend technology.4 The company was also recently named one of the Top 10 Most Innovative Companies in Music by Fast Company. And, many big artists have used the platform, including Rob Zombie, KT Tunstall, BB King, Interpol, Lindsey Stirling, The Libertines, Rufus Wainwright, and The Flaming Lips. When it comes to funding, the platform has raised at least $32M, likely more as they will not disclose the actual number.
However, there are real challenges to growth. The first is that the value proposition of the site is still quite similar to other, larger platforms, which have larger user bases to draw potential funds from. While sticking to music only helps create a more specific (and hopefully passionate) funding base, it still limits the addressable audience that artists can cater to. In addition, the company faces another threat from music labels, who do not want to be disintermediated from the music creation process. Labels, which have arguably the closest relationship with artists, can easily replicate the rewards and experiences that fans get on PledgeMusic. In fact, the labels could probably do this without charging a pledge, understanding that creating a greater connection with fans will only help record and concert sales in the future.
The hedge against the above is that artists increasingly want to be independent and outside of the traditional music ecosystem, to better capture revenues themselves. If PledgeMusic can be a platform to facilitate artist independence, they could become a leader in artist to fan engagement.
1 “PledgeMusic Looks To Change The Future Of The Album Release,” Ari Herstand, 1/30/14, https://www.digitalmusicnews.com/2014/01/30/pledgemusic/.
2 “PledgeMusic Looks To Change The Future Of The Album Release,” Ari Herstand, 1/30/14, https://www.digitalmusicnews.com/2014/01/30/pledgemusic/.
3 “PledgeMusic Looks To Change The Future Of The Album Release,” Ari Herstand, 1/30/14, https://www.digitalmusicnews.com/2014/01/30/pledgemusic/.
4 “PledgeMusic to Acquire NoiseTrade and Set.fm,” https://s3.amazonaws.com/assets.pledgemusic.com/press_clips/184/attachment.pdf?response-content-disposition=inline&X-Amz-Algorithm=AWS4-HMAC-SHA256&X-Amz-Credential=AKIAIIDOIQXEXY5NQDZA%2F20180326%2Fus-east-1%2Fs3%2Faws4_request&X-Amz-Date=20180326T153215Z&X-Amz-Expires=60&X-Amz-SignedHeaders=host&X-Amz-Signature=c9bb52cb81e3a11218c857bdb9fa2f74b277f580be113933b2d2b5131649061d.