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Many YouTubers, musicians, and companies have recently started using crowdfunding as a way to support themselves and their products without using a bank. But some people have no idea what crowdfunding even is!
Crowdfunding is when you use social media and your fans to help raise money for your cause, business or art. It's that simple. You use a website like Patreon, Indiegogo, Kickstarter, or GoFundMe to create a campaign page and with that page, you explain to your "investors" why you deserve their money. You then set a goal and hope that people will donate. It is a really simple concept but not every artist uses it to their advantage. Getting donations on a crowdfunding platform is much more low risk and a lot less hassle than using a loan from a bank.
I personally find that Patreon is the best option for people that make content on a regular basis (journalists, YouTubers, bloggers, artists, etc.) because Patreon works in a very simple way. You have your fans donate either monthly or per-post. You can set the tiers to however much you want the donations to be and also set the rewards for each tier. An example of a successful Patreon is Philip DeFranco's DeFranco Elite. You can see on the page how he keeps regular contact with his fans, he has rewards that keep fans interested and he makes exclusive content. These are the keys to a successful crowdfunding campaign.
Indiegogo, KickStarter, and GoFundMe are websites that have you set a one-time goal and a stretch goal. Say you need money to fund an album, you go to GoFundMe and set up a campaign, and once you have the page set up, you have to wait until the last date of your campaign in order to deposit the money into your account. The stretch goal is an amount that is past your initial goal. Say your initial goal is $100,000, your stretch goal could be $250,000. You use your stretch goal to fund extra content; if the initial goal is for an album, then the stretch could be for merch and a tour!
An advantage to using crowdfunding is you don't need to take out a loan at a bank. Taking loans is a high risk; if your business or album flops, you still need to pay back the loan and are at risk of losing any collateral that you had to put up. It also saves you from taking money from a record label and being stuck in the catch 22 that is recoupable money. Using crowdfunding also makes your fans feel like they are helping create something; they may feel like they are part of your creative process and that will help you keep fans for a longer time!
Here are some tips I learned in my marketing class for setting up a successful crowdfunding campaign:
- Always start with a clear goal. This will help encourage people to donate.
- Make sure to create an introduction video that explains WHY people should donate to you. Try to come across as happy, nice and welcoming, but don't overdo it and come across as fake.
- Have rewards that are easy for you to get to your customers (I'll be writing another article about good rewards). Always make sure that the rewards are easy to deliver on, but help keep people interested in your campaign.
- Reach out to the media BEFORE you launch your campaign. The media will be able to help you out and drive more traffic to your campaign if they have enough notice.
- Engage with your donors on a regular basis and keep them updated on the campaign's progress. This is especially important if using Patreon since the donations are taken on a monthly basis.
- Make sure you deliver on your rewards. If you paid for something and then didn't get it you would be mad; your customers are the same way!
- Save some of your money for taxes, not all crowdfunding sites take the tax off the top. Make sure to do some research on what site will work best for you before you start your campaign. Always read the terms of service before you commit to a site!
- Make your goal a realistic one. Remember that you need to pay taxes, some sites also take a percentage off the top of what you make. If you need $2,000 dollars to create an album, set your goal to $3,000 just to be safe.
- Plug, plug, plug! Tell all your friends and family, post it all over your social media accounts, make YouTube videos, tell all your co-workers. Don't shut up about it until you've reached your goal!
You may be asking yourself after reading this as to whether or not you should use crowdfunding. The short answer is yes. Crowd funding is a great way to connect with fans and make them feel like they are part of the process in creating your music. It also helps you stay out of debt. Campaigns also keep you in control of the creative process and keep record labels out of your hair if you don’t want to deal with one changing the sound of your music. Thanks for reading and feel free to check out my blog and my Patreon.