Crowdfunding and Independence in Film and Music

Blanka Brzozowska, Patryk Galuszka

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000415810
• Edition: 1
• Topic: Mezzi di comunicazione e arti performative
• Subtopic: Arti performative e business

This book explores how independent film and music artists and labels use crowdfunding and where this use places crowdfunding in the contemporary system of cultural production. It complements an analysis of independence in film and music with the topic of crowdfunding as a firmly established form of financing cultural activity.

In the second half of the 20th century, the concept of artistic independence was vital to classifying and distinguishing artists, their works, and labels or publishers who released them. However, during the last three decades, this term has become increasingly blurred, and some commentators argue that independence is in crisis. Can crowdfunding be the answer to this crisis? Some believe that it is, whereas others argue otherwise, seeing crowdfunding instead as just the next manifestation of this crisis. This dilemma is a starting point for the analyses of the relationships between crowdfunding and artistic independence conducted in this book, and will be of great interest to people looking for a deeper understanding of crowdfunding, how it can influence artistic independence, and what it means for artists and audiences.

It will be a stimulating read for scholars and students with an interest in media and cultural studies, digital humanities, fandom, sociology, economics, business studies, and law, while also offering insights to artists and practitioners in the creative industries.

1    Introduction

In 2012, Amanda Palmer raised $1.2 million on the Kickstarter crowdfunding platform, 12 times more than the campaign’s target. Her campaign was hailed as a breakthrough (to this day, no musician has raised as much on this platform), and it attracted substantial media attention, drawn both to the artist herself and to the idea of musicians using crowdfunding. Palmer repeatedly emphasized that she considered crowdfunding a great tool, one that enabled an artist to function independently of the (traditional) recording industry. However, after the success of the campaign, and partly as a result of it, Palmer faced a series of public relations failures. One of the largest of these resulted from an invitation via social media to musicians in cities that she visited during the promotional tour for her new album to perform on stage. The proposal was worded as follows: “We will feed you beer, hug/high-five you up and down (pick your poison), give you merch, and thank you mightily for adding to the big noise we are planning to make” (Ronson 2013, n.p.). It did not include remuneration, which, given the awareness that the initiator had just beaten the Kickstarter collection record, caused considerable controversy. Palmer’s explanation that she “immediately spent all that money on the packaging and the mailing, and it was all gone six weeks later” (Ronson 2013, n.p.) was not accepted with understanding.

The case of Amanda Palmer is a spectacular example of the use of crowdfunding and highlights concerns associated with this form of financing for creative activity. How should Amanda Palmer’s Kickstarter campaign be understood? As a fulfillment of dreams of artistic independence after a two-year battle with a record label to terminate her contract? Or perhaps as an attempt to capitalize on a fan base built earlier, while working with the label? Were the controversies that arose after the success of the campaign merely public relations errors, or were they a manifestation of a disagreement as to how creativity should be financed in the increasingly dominant social media?

Finding answers to these questions requires looking at the space crowdfunding occupies in the current ecosystem of creative industries and considering how it can be used. However, we should emphasize here that the use of crowdfunding by Amanda Palmer, although fascinating, should not be considered an illustration of every aspect of the use of crowdfunding by artists, as there is no single type of crowdfunding, and not every artist using it is in the same situation as Amanda Palmer was. Crowdfunding is an umbrella term that includes different approaches to raising capital on platforms that are often governed by different rules. There are also significant differences among the cultural products financed by crowdfunding. For example, crowdfunding of a music project differs from that of a film project – in most cases, differences lie in the amount of money sought and the ways in which campaigns are run by their initiators. It is impossible to draw far-reaching conclusions from a single case for such a diverse and rapidly changing phenomenon as crowdfunding. Therefore, though we will return to the case of Amanda Palmer, we will focus on a broader context, illustrated by lesser known but analytically significant examples of the use of crowdfunding.

The objective of this book is to analyze how crowdfunding is used by independent artists, with particular focus on two areas of activity, film and music, and to reflect on the place of crowdfunding in the contemporary system of cultural production. Two issues should be clarified here. First, why focus on independent artists, given the ambiguity the term “independence” has acquired over the last two decades? Abandoning the term “independent” would allow us to take more cases into account and to avoid the need to discuss the ambiguous and difficult-to-define concept of artistic independence. The answer to this question can be divided into two parts. On the one hand, crowdfunding is superb at financing projects that most experts would agree are independent. Crowdfunding gives artists, or those who want to keep as much control over their work as possible, possibilities that their predecessors in the 1960s and 1970s could only dream of. On the other hand, the independence of crowdfunding is often idealized. Crowdfunding imposes significant restrictions on artists who want to maintain their independence, sometimes in ways that are different from those used in the traditional corporate-financing model. What is more, this form of financing is not the exclusive domain of independent artists; it is also used by mainstream artists and corporations. Although crowdfunding is a vital tool for many independent artists, its relationship with artistic independence is complicated.

The second issue to be clarified is the selection of film and music as the areas of activity for analysis. Why not other creative activities often financed by crowdfunding, such as art or design? The fact that we study these two areas of creative activity in our daily academic work has of course influenced our choice. More importantly, in music and film, independence has for decades been a key criterion in the perception and interpretation of creativity. What is more, in the last dozen or so years the notion of independence has become somewhat blurred, especially in music. If we are to look for a place where independence can be manifested today and thanks to which it can be realized, it is crowdfunding. While independent music and film are not the only activities that are developing as a result of crowdfunding (video games are another example), this form of financing has given them a new impulse that has the potential to partially overcome the dilemmas faced by independent artists.

We have taken these dilemmas into account in the structure of this book. Our task is, on the one hand, to explain what crowdfunding culture is and how it works, using the examples of film and music. At the same time, we address a number of doubts related to perceptions of crowdfunding as a tool enabling artists to maintain or regain their independence. Moreover, our analysis is carried out in a situation where the concept of independence is perceptibly abused. Both Jonathan Coulton, who does not cooperate with any music label and the majority of whose works are released under Creative Commons licenses, and Trent Reznor (of Nine Inch Nails), who built his position through many years of cooperation with a major record label and, after his contract expired, attempted to operate a self-releasing model only to return to a major label (Hesmondhalgh and Meier 2015), are called independent artists. A concept that is used to refer to such different models should be clarified and adapted to contemporary realities, especially in the context of such a diverse phenomenon as crowdfunding.

The structure of the book reflects these aspirations. In the second chapter, we explain and organize terminology related to crowdfunding. Much has been written about this phenomenon, but not always in the context of culture and media. Even if crowdfunding platforms that organize fundraising in fields completely unrelated to culture were omitted, not every project on platforms that are closely associated with culture is cultural in character. For example, on the Kickstarter platform, whose mission is “to help bring creative projects to life,” the technology category is the third largest, and though invention is a creative activity, it does not belong to the area of “culture and media.” Given the quantity of publications about crowdfunding written from the perspective of finance and business studies, only those threads in this rather hermetic literature that are relevant to research of media and culture should be selected. This objective is achieved in Chapter 2. The chapter also challenges the common belief that crowdfunding is an absolute novelty and a revolutionary change. Without questioning the innovativeness of using the internet to raise money, we show that the idea of crowdfunding – a social practice that can be called “collective patronage” – has a long tradition.

Chapters 3 and 4 describe what independence in film and music is all about and analyze the place of crowdfunding in the development and distribution of cultural products, illustrating this with case studies. The structures of these chapters are similar. They begin by exploring the rich literature on independence. In both film and music, this concept has been of great importance to professionals and audiences alike – and has also been of considerable interest to researchers. Since the understanding of independence in film differs to some extent from its understanding in music, and because the issue has been analyzed separately by researchers specializing in either film or music, we devote our discussion of it to two separate chapters. Readers interested only in independence in film, for example, will not have to familiarize themselves with issues related to independence in music. After their theoretical parts, the chapters analyze how crowdfunding is used in film and music and how crowdfunding platforms operate, and cases of crowdfunding campaigns conducted in different countries are presented. Our analyses draw on multiple data sources: campaign websites, interviews conducted with artists and platform founders (available online or conducted by ourselves), and secondary sources such as industry reports.

The last part of the book summarizes these analyses and considers possibilities for the evolution of crowdfunding.

2 Crowdfunding as a new form of financing creative activity

Crowdfunding in a nutshell

Although the first internet-based crowdfunding platform, ArtistShare, was created in 2001, and the first usage of the term “crowdfunding” in internet relations dates back to 2006, the social mechanism of collecting money for predefined purposes has a long history. The practice, which may be described as “collective patronage,” was used, for example, to finance the creation of operas in the 17th century (De Lucca 2011). Another, frequently cited, example of proto-crowdfunding is the Statue of Liberty. The collection of money, announced in the newspaper New York World in 1885, helped finance the erection of the pedestal for the Statue of Liberty. Joseph Pulitzer, one of the people behind the collection, “made a direct appeal to American patriotism and the working-class solidarity, encouraging people to respond to the gift made by the French working people” (Gómez-Diago 2015, 173). What is interesting is that the donors could count on a reward: their name and the amount donated would be placed in a special section of the above-mentioned newspaper. The applied mechanism was quite similar to present-day crowdfunding, the only difference being that the medium used to promote the collection was a newspaper. Another example of early crowdfunding are donations made by listeners to the first radio broadcasts in the early days of this medium in the 1920s (Fernández Sande and Gallego Pérez 2015). Soon after that, advertising and public money became such significant sources of financing for radio stations that today the use of proto-crowdfunding for this purpose seems a curiosity.

The breaking point in the development of crowdfunding in its present-day form was utilizing the internet in the money collection process. This helped lower the cost of collecting money, which in turn lowered the barriers to entry – arranging the collection was no longer an activity requiring large expenses. The first attempts to organize money collection with the use of the network were made without the intermediation of crowdfunding platforms – highly specialized entities creating the frames for a collection – and that is why they were similar to the practices of “collective patronage” of earlier days. The difference was that physical letters containing the request for donation were replaced with a website, email, and a mailing list. The collections arranged by the band Marillion were done in 1997 in this way, when they collected $60,000 to finance their North American tour, and in 2000, when they took paid-in-advance orders for their next album, yet to be recorded (Tuomola 2004). Mark Kelly from Marillion recalls the situation: “We emailed the 6000 fans on our database to ask, »Would you buy the album in advance?« most replied »yes.« We took over 12,000 pre-orders and went on to use the money to fund the writing and recording of the album” (Simon 2013).

The first crowdfunding platforms were created in the first decade of the 21st century. After the previously mentioned ArtistShare (founded in 2001) had been launched, others emerged – to mention just a few: Kiva (2005), Sellaband (2006), IndieGoGo (2008), and Kickstarter (2009). Interestingly, Kickstarter, which is known today as a leader in the field of creative projects, was not the first platform of this type. Apart from these platforms, there are hundreds of other entities in the world that can be classified as organizers of the crowdfunding process, and the diversity in this sector is sizable. This diversity is influenced both by the legal regulations and the strategies employed by platforms looking for a niche in specific markets.

It should be also noted that, in most cases, crowdfunding is organized by private businesses, which – as private businesses – can go bankrupt, either because of bad management or deliberate fraud. Despite being engaged in high numbers of financial transactions using other people’s money, crowdfunding platforms in many countries, unlike banks, are not monitored by regulators. Although bankruptcies of crowdfunding platforms specializing in media and cultural projects occurred throughout the 2010s, their magnitude was not remarkable until the bankruptcy of Pledgemusic in 2019. Unfortunately, in this case, a large number of project initiators and contributors lost significant sums of money, estimated to be about $9.5 million in total (King 2019). We should always remember that if a platform is poorly managed or its managers engage in business malpractice – this seems to have been the case with Pledgemusic – then users of the platform, being worse informed parties, are particularly prone to exploitation. Such bankruptcies are also harmful to other platforms as they undermine trust in the whole industry.

The global value of the crowdfunding market in May 2018 was $54.85 billion (Marketing Research 2019, 45). In Europe, it was respectively $14.89 billion (Marketing Research 2019, 48). It should be emphasized that these values include all types of crowdfunding, and creative projects constitute only a fraction.

Typology of crowdfunding and the entities participating in it

Because the literature on crowdfunding, especially in the areas of finance and entrepreneurship, is relatively extensive (see e.g. Brüntje and Gajda 2016; Landström et al. 2019; Méric et al. 2016), it is not necessary that we write broadly about business aspects of crowdfunding. However, considering that crowdfunding (in its current form) is still a relatively new phenomenon, we think that a synthetic arrangement of terminology will help readers better comprehend the further part of the text. Let us start by identifying the entities participating in crowdfunding. They are:

• Crowdfunding platforms – the entities mediating between project initiators and contributors in the process of fund collection;

• Project initiators, or requesters – the entities collecting funds, via the internet, for the implementation of their projects; and

• Backers, or contributors – people supporting the projects with their money.

Platforms

Before presenting the diverse forms of crowdfunding platforms, let us address a more general question: why they are called “platforms,” and not, for instance, enterprises, undertakings, or companies? Actually, platforms take on several aspects of these organizational forms – Kickstarter, for example, is incorporated as a benefit corporation (Kickstarter 2015a). Regardless of whether they are incorporated or not, institutions organizing the process of crowdfunding are called platforms, and this word is associated with them even more than with other new-tech companies that, from an economic point of view, can also be called platforms, e.g. Facebook or Spotify.

The term “platform” has become increasingly popular during the last 15 years, to denote: online sites and services that

a) host, organize, and circulate users’ shared content or social interactions for them,

b) without having produced or commissioned (the bulk of) that content,

c) built on an infrastructure, beneath that circulation of information, for processing data for customer service, advertising, and profit. (Gillespie 2018, 18)

Although the word “platform” suggests neutrality, as if all the involved parties are equal, platforms are institutions with their own interests, business models, regulations they face or attempt to avoid, and terms of use that cannot be negotiated by users. When discussing any type of platform, we should remember that this term hides certain meanings. For example, platforms that are seemingly open to everybody actively moderate the content they distribute (Gillespie 2010). The complexity of a platform’s business is well explained by Prey (2020) and the example of Spotify. While the company is the leader in music streaming, it navigates uncertain waters trying to find a balance between specificities of three markets vital to its existence: the music market, the advertising market, and the financial market. Although crowdfunding platforms specializing in creative products usually deal with smaller players than Spotify (e.g. artists and individual contributors rather than labels), the multi-sided character of markets they operate on should be acknowledged. Taking all this into account, we treat crowdfunding platforms as entities that organize and govern the online process of gathering funds for multiple projects, usually ...