Can Crowdfunding Eventually Replace Record Labels? Or Can Labels Use This Tool Themselves?

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Some people may or may not be aware of what crowdfunding actually is, in short it is the set of a project that asks for people to help fund in advance in exchange for some kind of reward. In music it can be the funding to record a new album in exchange for a pre order of release or more.This process is essentially cutting out the middle man of the record label and doing business straight between fan and artist, and this is an opportunity for fans to get closer to the artist, to actually feel like they are a part of the process.

Over the last few years this has been a process that has grown more popular, even with established acts like Ash joining in and having a campaign through PledgeMusic. What makes this approach different to the average pre-order option? you are still putting money up front and making a commitment to pay for something that is yet released. But the difference being you are committing to a project that may or may not happen depending if enough funds can be raised.

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Screenshot of Jarrod Alonge’s campaign on Indiegogo

This does give the opportunity for artists to do some unique things with fans, of course there are the standard reward systems, a copy of the release physically or digitally, t-shirt bundles, gig bundles perhaps, but some campaigners have decided to do things like have option to party with the fans, have lunches, fans being in videos, have skype conversations. Jarrod Alonge even set up the option to literally walk a mile in someone elses shoes which at least 2 people out of 30 claimed for $75 towards his album recording fees. A bit silly bit a silly act that made him $150 none the less.

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Skype Date and Walk A Mile In Your Shows reward options

This all sounds rather fun for artists and even fan, but where does this leave labels? The prospect of a band that can fund an album without having to give up a percentage per sold item to someone else is a definite incentive for any artist to go straight to crowdfunding instead of a label. You might argue that what about all the other stuff that labels can provide? All the P.R and marketing to maximise sales during release, the connections with studios and producers. Even the most DIY acts may find such things useful.

Well even some of the websites that deal with crowdfunding can help here, PledgeMusic is one of these. A crowdfunding website that is purely designed for music fans to help fund an artists release, they don’t take a cut in royalties but what they do take is a one off percentage cut from the funds made from the pledge campaign. Once the campaign has finished PledgeMusic has people that can advise on what to do next, what producers to use and more, essentially doing some of what a label can do without being a label, and what does happen is that the artist keeps all creative control, no restrictions from the label.

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Screen shot of Ash’s simpler reward system on PledgeMusic

What can labels really learn from this? for the moment crowdfunding doesn’t look the threaten the majors like Warner or Universal but given time, bigger acts could just sense that they don’t need the big guys anymore. Imagine if Ed Sheeran gave the finger to Atlantic and decided to fund his next release from crowdfunding. Being one of the biggest acts in music at the moment he is definitely established enough to have a large backing from fans, and with a few releases under his belt already he would already have a few producers he could go to. Essentially he could could go completely DIY and still be very successful now that he has already made a name for himself.

Of course the main idea for artists to do this is pure creative control and a way to escape having the labels take away some royalties, though I can see a way that Labels can join in and capitalise from the use of this platform. Replacing the old way of recording advances and just having an album crowdfunded instead, potentially making a profit from the campaign, sell special “crowdfunded” editions as a unique selling point to hook the buyer amongst other things. Of course this is all speculation of “it coulds” and “it mights” but there is definitely a way for labels to adapt to this model.

It would be a great way for labels to take less of a risk on the less established artists on their roster. In the current way of doing things if the album is a flop and doesn’t really sell after it’s release? then they have failed and lost money, though if they get it crowdfunded, tough, the label has already take the customers money to fund the recording and hasn’t lost any of their own money in the process.

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Taken from a blog post by B’as Kruijssen on the subject, he also agrees that labels should adapt, stating :

“I suggest another evolution for record labels. Label managers: feel free to embrace a crowdfunder instead of fearing it. Try keeping a close eye on crowdfunding sites; high quality music is all around. These bands and artists could be new signings in the future.. If you look at it that way, you can even say ‘artist happy, fan happy, crowd funder happy… and Record label happy’.

I see it as a great opportunity to take music business to a next level: if more good music is discovered, more people who love it will be touched by it. Which leads to more people wanting to Skype chat with a band, buy a signed guitar or pre order an album. Happy faces all around!”

Future labels should really take note, maybe the arrogance of the older labels will stare at it and say it won’t take off like they do with all new things “napster won’t change things” “Streaming won’t change anything”. But they would be fools not to look into this as an option.

What do you guys think? Can labels benefit from entering the world of crowfunding? or will crowdfunding be better off without labels interfering?

The Bas Kruijssen post can be found here

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Could Apple Possibly Owning A Label Change The Face Of Streaming?

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As some of you may be aware that there are rumours of Apple apparently to strike a deal with Big Machine, the record label that owns Taylor Swift. This sparked talk of potential exclusives of Taylor swift and other Big Machine to apple and their future streaming prospects.

It is quite safe to say that exclusives to one streaming site will force others to follow suit. Spotify, Pandora and Deezer will all be in the market to get exclusive artists to their site too. Exclusive is not a word I like, it means that you can only get it in once certain place, and usually you have to pay extra to get it. It is a clever but evil marketing system, Sky Tv have been the masters of that for years.

Battling for the rights of certain artists could be key to attaining customers and keeping old ones, Spotify losing Taylor Swift from their ranks would have been a huge blow, and if Apple do get the rights to her music that is a massive gain for them and would surely sway some people to want to use their streaming service. Even though this is a powerful tool in gaining customers, do Apple really need to do it?

Personal opinions of how much I hate Apple aside, you can’t deny their presence in the music industry based on their history of successful hardware and software. From reading an article by Josh Constine on Tech Crunch on the topic, he states that:t

“iTunes is said to have over 800 million credit cards on file and is available in nearly 150 countries. Compare that to the Spotify’s 15 million paying subscribers and roughly 60 countries of operation

Then there’s those 1 billion iOS devices sold. If iTunes’ streaming app comes pre-installed in the next generation of iPhones and iPads, it could leapfrog Spotify’s user base over night..” 

Numbers really speak for themselves, there is a far superior number of Apple loyalist to how many people use Spotify, that is quite a daunting figure for Daniel Ek (owner of Spotify) to look at I would imagine. In reality it is Ek who would likely need to secure exclusives to Spotify to keep up with Apple’s streaming service. As Constine also states, Apple may be late to the party where streaming is concerned, but their usual MO is to enter it with superior fire-power like they did in the phone market.With the potential exclusive artists and the apparent price plan at $7.99 a month which undercuts Spotify’s $9.99, Apple already look like they will steamroll the streaming market.

How does this affect customers? We won’t know until it happens but from clear speculation I expect chart names to be the types of acts that services would try to get to sway customers minds towards them. Bigger names will be the targets, your Sam Smiths and One Directions. Customers will then have to decide if they can afford multiple services or choose a priority one based on their music preference. I personally listen to acts on Spotify that aren’t exactly in the limelight, no major labels, these are the sort of acts i expect to be on several services and I doubt there will be streaming sites that will want their exclusive rights. Assuming that will be the case then if all I want is on Spotify I wouldn’t need to use Apple’s service, though if they start buying up the rights to someone’s favourite artists and it is no longer on Spotify, they are likely to switch over.

What do you think? Will apple dominate the streaming world?

here you can find the article I read

http://techcrunch.com/2015/02/08/exclusive-streaming/