Introduction to Crowdfunding

Crowdfunding is exploding. Independent musicians have a new way to raise funds for their upcoming projects and there are already countless success stories from bands using crowdfunding to get ahead of the game.

What is crowdfunding?

Crowdfunding is a new way to raise money for an upcoming project. The band can create a campaign to raise money for the production of the new product by selling a future promised product and other rewards before it’s produced.

The traditional model for producing a CD requires all the money to be put down up front. The money for recording, mastering and publishing needs to be put down before any sales can be made. Record labels often jump in here to front the money and ask for the lions share of the profits in return.

With Crowdfunding, bands can now begin to sell their music to fans before it’s even been released or recorded. They then use the money they raise to create it and deliver it as promised to the fans. This enables bands to get by without the need for record label funding and keep their music in their own hands.

How does it work?

The concept itself is really simple. You publish a campaign on a crowdfunding website, listing what you’re raising money for, how much you want to raise and what you’ll be delivering if you reach that target. You create a list of rewards you’ll deliver, the more money a supporter pledges the better the reward they’ll get. Publicise, promote, fundraise. If you meet (or exceed) your target, all is fine-and-dandy and you get given the pledged money and are expected to deliver on your promises. And if you don’t reach your target, all money is returned to the pledgers.

There are a slew of crowdfunding websites out there, all designed to make the process as easy as possible. They handle all transaction processing, give you tools to build and customise the campaign homepage and help you with promotion. Kickstarter is a very popular example and has already been used to great success by plenty of independent musicians. You can find a comparison of crowd funding websites on Wikipedia to help with decision making.

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