Crowdfunding - PROMUS · What is crowdfunding? Funding Video of the dutch hardcore-punk band John...

Crowdfunding // RAM Aarhus

26.02.13 Malte Graubner //

SellaBand

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Crowdfunding

Master Class Lecture – Royal Academy of Music Aarhus 26.02.2013

Malte Graubner – Artist & Product Manager SellaBand

"SellaBand is the new frontier and will completely redefine the way the music business operates"

- Chuck D, legendary Hiphop icon



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SellaBand

Online since 15.08.2006

100 successful projects

about 2 Million EUR have been paid out to projects

about 3,5 Million EUR have been invested into projects

Average funding sum2011 until today: 8500,-- EUR

SellaBand will release new systems in 2013

https://www.sellaband.com/



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Gliederung

Block 1: Crowdfunding as a alternative to traditional Financing What is crowdfunding? What kind of artist is can profit from a crowdfunding project ? Block 2: How to build a succesful funding campaign



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What is crowdfunding?

Brief historic overview



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1885: Base of the freedem statue in NYC is financed via crowdfunding 1997: Marrillion collects around 60K online to finance a tour 2000: artistshare.com is founded by Brian Camelio 2006: on August 12th Michael Sullivan invents the word Crowdfunding 2006: SellaBand online on August 15th 2008: Indiegogo online in USA 2009: Kickstarter, Pledgemusic and others are online 2010: February: SellaBand acquired by german investors 2011: around 1,500 Million USD paid out to project worldwide, about 1 Million

succesful projects 2012: in April around 452 CFPs are online, over 500 predicted by 2013 2012: around 53 million USD were paid out to music projects only, around 100

CFP‘s that deal somehow with music… Since the beginning of Music-Crowdfunding about 10.500 sucessful project that

collected about 90.000.000 USD


Brief historic overview



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Funding Video of the dutch hardcore-punk band

John Coffey

Definition

http://www.youtube.com/watch?v=kILqTBzEnQc



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Definition

Crowdfunding is a webbased and participative financing model, which is financing projectideas through a

unlimited number of people. (…)

Quelle: Das co:funding Handbuch Mai 2012



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„Crowdfunding is nothing less

than the next step of ‚Social Media‘, the

methamorphis of the like button into money.

Until now you could not live from likes and love, but the slow rise of crowdfunding will

demonstrate, if the Fan is called Fan for a reason or if he was just part of a I-Pad-giveaway-excited

click hord.“ Sascha Lobo (SPIEGEL, 20.03.2012)

Definition



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SellaBand thinks of Crowdfunding

as a community-based approach

to finance music-related projects

and to built strong artist-fan relationships!

Definition



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Definition

Overvie of the differen definitions…

Crowdsourcing

Crowdfunding Crowdtesting

Equity-Based (Unternehmensanteile)

Lending-Based (Zinsen)

Reward-Based (Produkte)

Donation-Based (Spendenquittung / reines

Gewissen)

Crowdinvesting Crowdfunding

It is possible to mix all variables on all levels!

Crowdvoting …

Quelle: eigene Darstellung in Anlehnung an Crowdfunding Industry Report May 2012, crowdsourcing.org & Das co:funding Handbuch Mai 2012



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Forms of Crowdfunding

There are 2 general project-categories: Keep it all (e.g. Indiegogo (flexible Funding campaign) All or nothing (e.g. SellaBand, Kickstarter)



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What kind of artist can profit from a cf-project?

What kind of artist is can profit from a crowdfunding project ?



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Self-marketing-consicence

Internet/online-affinity

Fans (At least: wanted sum : 42)

What do artists have to bring along?



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Possible funding sum: 3000,-- bis 10.000,-- EUR

Use crowdfunding to: finance a recording session and the CD

Advantages:

Early Bird Fans are bound deeper

Viral marketing effect through the funding itself

Additional marketing argumets with a extreme high funding sum

Newcomer



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Midlevel / AAA

Possible funding sum: ab 10.000,-- EUR

Use crowdfunding to: special marketing tool to provide for example before release timeframes with special communication; Product: Concert-DVD, Album, Tour. But also: catalouge exploitation, comebacks… Advantages: Activation of die-hard fanbase by special action Viral marketing effect (Amanda Palmer) Most times money is not needed, thus it is not a must to reach the funding goal



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Gliederung

Block 1: Crowdfunding as a alternative to traditional financing

What is crowdfunding? What kind of artist is can profit from a crowdfunding project ?

Block 2: How to build a succesful funding campaign



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10 steps for a succesful cf-campaign

Ten steps for a succesful crowdfunding campaign



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1 Fancommunity building before the campaign

3 Essentials for a artist: 1 own website with newsletter 2 Facebook 3 Youtube-Channel

FRIENDS, FAN‘s and FAMILY

Less than 5% of a community are giving money…



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2 A good story / define the project

3 hints: Be precise for what you need the money (Album, EP, Tour vs. I want to start my

career)

Always publish a timeline

Always state a clear and simple goal

https://www.sellaband.com/en/projects/johncoffeymusic/incentives



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3 create incentives / pricing

THE hint for creating your incentives: Offer something money can‘t buy (a real value!)

AND 5-10 incentive are mostly enough (KISS Prinzip)

Hint‘s for defining a price: Offer something for every wallet (good mixture of low-price and high-price incentives) Most favoured price: 20,-- EUR (mostly a hand-signed CD with name of buyer) Always ask yourself: would I buy my incentives for that price?

https://www.sellaband.com/en/projects/johncoffeymusic/incentives



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4 Calculating your project budget

SET UP a calculation (you need to obey shipping and manufacturing of the incentives!!! Put in a 10% reserve!!!) Check if you have enough fan‘s (Remeber: less than 5%...) Simple formula: needed money / 42 = number of people that must give money

https://www.sellaband.de/de/pages/set_target_budget



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5 project running time set up

Make up your mind until when you need the money… Different platforms = diverse project running time 30-90 days / ½ year / 1 year

https://www.sellaband.com/en/projects/johncoffeymusic



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6 Project video / pitch video

Erfolgschancen bei Projekt mit Fundingvideo: 50% Erfolgschancen bei Projekt ohne Fundingvideo: 20%

Projekte mit Video erreichen 112% mehr Geld als Projekte ohne Video!




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There‘s no need for a hollywood production, but think about the follwoing: - Who are you? - What is your plan? How far did you get yet? Do you think that your career is moving up to now? - Ask the believers directly for their support; tell them on what you are going to spend the money! - Your incentives! What do they get our of it?!? - Give proof, that you can bring the project to an succesful end! - How can you involve your believers? Tell them what crowdfunding is. Make sure they know that you need their belp! - Be polite! Say thank you!





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http://www.youtube.com/watch?v=aad-H4pSA7w



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7 Project promotion und -marketing

1 Start Close: start with you family, friends and die hard fans 2 As soon as there is a measurable success: start involving your network, Facebook, Twitter etc.. Write posts and blogs, write emails to blogs, special interest communities, fanzines… 3 Set up special events/actions (e.g.: instore gig at your local record shop) 4 Try to involve the local media But: don‘t over do it. Don‘t be „that-guy“ that spams everybody and becomes annoying by being everywhere!

http://legendsarising.com/2011/06/07/interview-john-coffey/



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8 Updates

Share sucess and milestones with your believers Collect ideas and content before starting the project Succesful projects are constantly updating. But don‘t give to much updates…

http://www.youtube.com/watch?v=bfolIS0KC40



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9 Stamina

A CF-project is hard work! Nothing is happening from alone… Even if the project is not going that well: • try to come up with improvements • involve your Believers/Fan‘s • You must stand behind your project!!!



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10 After the active funding

3 important things: Set up a thank you message for your believers as soon as you reached the goal! Send updates to your Believers about your progress Send out your incentives as soon as possible and directly react if there are complaints!

http://www.youtube.com/watch?v=zT2jho7tCqg



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SellaBand Artist Academy

https://www.sellaband.com/en/pages/artist_academy



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Legal advise

Think about: Taxes Other legal provisions There are differences between lending based, equity based, donation based and reward based projects… Read the T&C‘s of the platforms. Where do contracts evolve?



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Questions?

Points need to be discussed?

Contact:

[email protected]

mailto:[email protected]



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Why people spend money on CF-projects?

Motivations of SellaBand Believers Top 4:

Non-financial material remuneration (e.g. product)

Find new products

Support a new business model in the respective Industry

Joy or advantage from product usage (e.g. listening to music)

Weitere:

Financial renumeration

Increase quality of product

Hope for services from the producer (e.g. newsletter)

Personal reputation and social prestige

Social identity (identification with the community, feeling of belonging, emotionally connected with the community)

Involvement (intensive interest in the product e.g. due to direct contact with the producer)

The person supported is a family member or friend

Support an artist because you are an artist yourself

Virtual community compensates for physical disability

Quelle: externe empirisch-wissenschaftliche Untersuchung der Teilnamemotive von Usern auf SellaBand und Akamusic im Rahmen einer Masterarbeit

Crowdfunding - PROMUS · What is crowdfunding? Funding Video of the dutch hardcore-punk band John...

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