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Crowdfunding – a five billion dollar flash in the pan?

May 14, 2014

From idea to moolah.  Image by Rocio Lara.

From idea to moolah. Image by Rocio Lara.

In 2009, it took Kickstarter 16 months to reach its first 200,000 backers. By 2011, 200,000 backers could emerge in 3 just months. By 2012, there were 582 crowdfunding sites in the world with 2.7 billion in total dollars raised from over one million campaigns. By the end of 2013 those dollars were soaring towards 5.1 billion. Still think crowdfunding is just a fad?

In 2012, the JOBS act passed congress, clearing the way for contributors to directly invest in projects. No longer just a rewards-based structure, crowdfunding could be the path to finding viable partners for your startup music career. Here are a few things to think about:

*Music is the top fundraising category for Kickstarter.
*North America is the monetary leader in crowdfunding campaigns (105% growth from 2012 to 2013, vs. Europe as the next closest volume with 65% growth).
*”People don’t fund projects, they fund people.” Indiegogo Toronto
*The band Murder by Death (Bloomington, Indiana) became the third largest project on Kickstarter, raising $187,048.oo, in 2012 (surpassing their $100K goal).
*The infamous Amanda Palmer raised $1.2 million (over 10x her goal), and despite a bit of scandal along the way, managed to fulfill the behemoth pre-orders of her CD, art book, and other reward obligations.

Whether you look at this as the jumpstart of a project or the jumpstart of a career, there’s no reason crowdfunding can’t be a viable part of your strategy. Here are a few more tips from Kevin Lawton and Dan Marom, authors of The Crowdfunding Revolution:

*Spending time with the campaigner is a very powerful reward.
*Cumulative rewards that build upon one another are easier for a backer to understand.
*Capture big and small rewards. There’s always something you can offer a contributor of any denomination. (Kickstarters’ average contributor donates $25).
*Give financial incentives for volume.
*Creative, exclusive gifts will have an impact.
*The fate of the campaign is highly correlated to the reaction from the first week of funding. Get feedback quickly and adapt the campaign as needed.
*90% of funding ends by week 9. Once you’ve attained 50% of funding, there is a 90% chance that the campaign will be fully funded. Don’t give it!
*You’ll be more successful if you have a track record of previously funded campaigns.

For more information, visit http://www.crowdfundingformusicians.com/ and the 2013 state of crowdfunding report.

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