Master Class Lecture – Royal Academy of Aarhus 26.02.2013

Malte Graubner – Artist & Product Manager

"SellaBand is the new frontier and will completely redefine the way the music business operates" - Chuck D, legendary Hiphop icon

Crowdfunding // RAM Aarhus 1 26.02.13 Malte Graubner // SellaBand 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 2 SellaBand 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 3 SellaBand What is crowdfunding? Brief historic overview

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 4 SellaBand What is crowdfunding? Brief historic overview 1885: Base of the freedem statue in NYC is financed via crowdfunding 1997: Marrillion collects around 60K online to finance a tour 2000: .com is founded by 2006: on August 12th Michael Sullivan invents the word Crowdfunding 2006: SellaBand online on August 15th 2008: online in USA 2009: , 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 Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 5 SellaBand What is crowdfunding? Definition Funding Video of the dutch hardcore-punk band John Coffey

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 6 SellaBand What is crowdfunding? 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 7 SellaBand What is crowdfunding? Definition

„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)

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 8 SellaBand What is crowdfunding? Definition

SellaBand thinks of Crowdfunding as a community-based approach to finance music-related projects and to built strong artist-fan relationships!

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 9 SellaBand What is crowdfunding? Definition Overvie of the differen definitions…

Crowdsourcing

Crowdfunding Crowdtesting Crowdvoting …

Equity-Based Lending-Based Reward-Based Donation-Based (Unternehmensanteile) (Zinsen) (Produkte) (Spendenquittung / reines Gewissen)

Crowdinvesting Crowdfunding It is possible to mix all variables on all levels!

Quelle: eigene Darstellung in Anlehnung an Crowdfunding Industry Report May 2012, .org & Das co:funding Handbuch Mai 2012 Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 10 SellaBand What is crowdfunding? 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)

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 11 SellaBand What kind of artist can profit from a cf-project?

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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 12 SellaBand What kind of artist can profit from a cf-project? What do artists have to bring along?

Self-marketing-consicence

Internet/online-affinity

Fans (At least: wanted sum : 42)

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 13 SellaBand What kind of artist can profit from a cf-project? Newcomer

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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 14 SellaBand What kind of artist can profit from a cf-project? 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, , 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 15 SellaBand 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 16 SellaBand 10 steps for a succesful cf-campaign

Ten steps for a succesful crowdfunding campaign

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 17 SellaBand 10 steps for a succesful cf-campaign 1 Fancommunity building before the campaign

Less than 5% of a community are giving money…

FRIENDS, FAN‘s and FAMILY

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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 18 SellaBand 10 steps for a succesful cf-campaign 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 19 SellaBand 10 steps for a succesful cf-campaign 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?

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 20 SellaBand 10 steps for a succesful cf-campaign 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 21 SellaBand 10 steps for a succesful cf-campaign 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

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 22 SellaBand 10 steps for a succesful cf-campaign 6 Project video / pitch video

Projekte mit Video erreichen 112% mehr Geld als Projekte ohne Video! Erfolgschancen bei Projekt mit Fundingvideo: 50% Erfolgschancen bei Projekt ohne Fundingvideo: 20%

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 23 SellaBand 10 steps for a succesful cf-campaign 6 Project video / pitch video

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!

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 24 SellaBand 10 steps for a succesful cf-campaign 6 Project video / pitch video

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 25 SellaBand 10 steps for a succesful cf-campaign 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!

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 26 SellaBand 10 steps for a succesful cf-campaign 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…

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 27 SellaBand 10 steps for a succesful cf-campaign 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!!!

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 28 SellaBand 10 steps for a succesful cf-campaign 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!

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 29 SellaBand SellaBand Artist Academy

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 30 SellaBand 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?

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 31 SellaBand Questions?

Points need to be discussed?

Contact: [email protected]

Crowdfunding // RAM Aarhus 26.02.13 Malte Graubner // 32 SellaBand 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 // RAM Aarhus 26.02.13 Malte Graubner // 33 SellaBand