ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Fan-Funding in the Music Industry

Updated on September 20, 2011
Source

Grabbing the concept of The Digital Age

More and more fundraising websites aimed at revolutionizing the music industry have been popping up recently, some of which have had one or two successes and have drawn in a profit for investors, with these investors usually being fans who have helped to finance an album.

These business models are ultimately helping to shift the music industry on to a new digital age and to boost the online economy in the music retail sector and it is true than fan-financing has a major future in the evolution of the music industry. However, as already discovered fan-funding alone is not enough to financially support such a music business and generally investors seem to be overestimating the digital download market by a huge extent.

For music businesses it looks like consumer filtering and analytics are the way forward and for investors a small success is nice but the fact remains that even only one artist in every twenty that gets signed to a record comany ever manages to recoup their advances and just costs the company money and these statistics should be kept in mind whatever the business model.

The problem is that fans and investors are looking for financial returns, they are looking for a return on their invesments and whilst this is certainly possible, though unlikely in most cases, they are still not quite grabbing on to the whole concept of fan-funding itself with most of them looking at it from a Dragon's Den style business angle. Despite the fact that consumers are either given a download of an artist's album or even the album on CD in return for their payment they still see the music as being free and expect the entire cost of that album to be recouped in the return on their investments plus a bit of profit on top. For businesses the fan-funding concept is not about ensuring consumers can make a profit from music, albeit giving them a very small chance to do so, it's about turning the tables and letting the consumer choose what they want - before it's produced. It's about ensuring that the music they produce has already been paid for by the fans and investors, it's already sold enough copies to investors to cover the cost of production so as soon as it hits the retail sector the first sale makes a profit for both the company and the artist. It takes the risk out of financing music while giving fans what they have already willfully paid for, the cost of production has collectively been shifted onto them.

If not enough fans invest in (or pre-order) the album then it simply doesn't get made, there's not enough demand for it and it's unlikely it will sell. The ideology is 'tell us what you want, pay for it up-front and we'll give it to you, if not you don't get anything'.

Fan-funding in the music industry doesn't just eliminate most of the risk for record labels and similar business models, it's also a fantastic way to prevent filesharing and copyright infringement. If enough people want an album by a certain band and there's enough demand then they get it by helping to fund it, they've paid the cost for it and therefore are not likely to go looking for it on filesharing networks. If there's not enough demand for the album then it doesn't get financed and doesn't get made therefore it's not going to be available on filesharing networks anyway.

Fan-funding and filtering and analytics combined with streaming and subscription services are the way forward for the music industry and it can only happen digitally. For an example of a musician who is taking advantage of the digital revolution then why not take a look at Ryan Inglis.


Related Hubs:

Best New Music: Ryan Inglis

How The Music Industry Is Changing

Making Money And Music Online

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)