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 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: 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 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, crowdsourcing.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, 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 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