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SPEA UNDERGRADUATE HONORS THESIS

Profitability in the Digital


Age Music Industry

Katherine Calvert
Spring 2013

Paul Sturrm
Adjunct Faculty, Arts Administration, IU School of Public & Environmental Affairs
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Abstract

With the advent of new technologies, especially those of streaming and file sharing, the
music industry is experiencing the rise of new methods of making profit. At this point, the industry
is in a period of change in which many different ideas for ways to make money are surfacing, and
my paper will evaluate the most promising ideas to see which will be robust enough to become
staples for a new model in todays industry.

The first profitability model that I will analyze is the increasingly popular model of crowd
sourcing, which is an online process through which users of sites like Kickstarter, Pledgemusic and
Indiegogo use small donations from other users to fund a project. This method allows up-and-
coming artists to generate the capital necessary to get started without being signed by a record
label. Typically, labels provided the upfront funding for albums and tours, but with the crowd
sourcing method, artists can raise money to put out an album or start a tour on their own. This will
open the door for more artists to be on the market due to the removal of record labels as a
gatekeeper to the industry.

The next model that I will analyze is that of the rising importance of revenue gained from
touring. As the music industry continues to adapt, profits from touring will become the primary
source of revenue and profits from albums and other recordings will become a thing of the past.
With the advent of online streaming and file sharing, fewer and fewer albums are being bought, so
we can already see a fairly clear trend in the making. I will explore this trend, and seek to illustrate
how the industry is shifting to focus on the experience of live music rather than recorded tracks.

Lastly, I will analyze how licensing songs can become a stable source of revenue for artists.
From mechanical to synchronization licenses, there are many different types of licenses that are
available to increase the value of a song. Each license has its own advantages and disadvantages,
which will allow me to explore the merits and profitability of each versus how much control an
artist must relinquish. Through this research, I will then recommend the licenses that have the best
payoff-control balance that can be used by artists in the future.

Overall, I hope to illustrate that the industry can still be profitable, but just in a different
way than it has been in the past. By determining the feasibility of various ways to make money, I
hope to show that there is a way for artists to continue to make a living doing what they love.
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Table of Contents
Introduction ... 4

Crowd Funding ..... 9


Types of Crowdfunding....................................................................................................... 11
Kickstarter................................................................................................................................ 12
IndieGoGo.................................................................................................................................. 15
Pledge Music............................................................................................................................ 16
Risks of Crowdfunding........................................................................................................ 17

Touring.................................................................................................................................................... 20
Merchandise............................................................................................................................. 22
Meet and Greets...................................................................................................................... 23
Exclusive Events..................................................................................................................... 23

Licensing................................................................................................................................................... 25
Master Recording License.................................................................................................... 26
Performance License.............................................................................................................. 27
Mechanical License................................................................................................................. 29
Synchronization License....................................................................................................... 30
Issues with Licensing............................................................................................................. 32

Conclusion............................................................................................................................................... 34

Appendix A: Jesse Lacy Interview................................................................................................... 35

Appendix B: Survey Results............................................................................................................... 36

Bibliography............................................................................................................................................. 39
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Profitability in the Digital- Age


Music Industry

0
DRM Report
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Introduction
Since the advent of the internet, the mp3 file format, and file sharing technology,

many industry executives have proclaimed that the music industry is failing, and that

making money from recorded music is a thing of the past. The Recording Industry

Association of America (RIAA), major labels, and journalists have been lamenting the so-

called death of the music industry as if this creation of digital music technology is

something from which the industry will never be able to recover. However, they are not

looking at the advantages that this new technology brings. The internet has allowed a vast

network of musicians, fans, and industry executives to be connected more quickly and

easily than ever before, and sharing music online is also becoming increasingly simple with

websites like YouTube, MySpace and SoundCloud. While the major labels are declining, as

are CD sales, overall profits in the industry are not disappearing; rather they are simply

being made in different ways.

CDs are certainly on their way out, due in large part to the advent of the iPhone and

other mp3 players that make purchasing and listening to digital music so simple. The

compact disc format had its 30th birthday in October 2012, which is the typical amount of

time that any sound medium has stayed in vogue. 1 Former head of the recorded sound

division at the Library of Congress Sam Brylawski explains this trend: "If you look at the

last 110, 115 years, the major formats all have about 20 to 30 years of primacy." 2 The cost

of producing a physical CD is so much greater than the cost of putting that same music

online for an unlimited number of people to download with no marginal costs, and

1 Rose, Joel. "The CD, At 30, Is Feeling Its Age." NPR. NPR, 01 Oct. 2012. Web. 06 Mar. 2013.
2 Ibid.
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therefore, the medium is going out of style primarily from an economic standpoint.

According to an eMarketer Global Music report, worldwide recording industry revenues

from physical sales have been steadily declining from $33.1 billion in 2006 to $19.9 billion

in 2011, showing yet again how the CD is being replaced by digital sales. 3

On the other hand, the same eMarketer report shows worldwide recording industry

revenues from online showing remarkable growth from $1.9 billion in 2006 to $7.3 billion

in 2011. 4 Digital downloads also offer a degree of ease that CDs dont because thousands of

songs can be held on a tiny memory card, whereas a CD can only hold 80 minutes of music.

The fact that consumers can conveniently carry a significant amount of music wherever

they go makes digital formats the most popular form of recorded music at the moment.

Additionally, the added ease that smart phones provide as well as the capability to

download music on the go with an internet connection satisfies the desire for

instantaneous gratification that so many consumers now seek.

In the digital era, the music industry is certainly not dying, but rather the old models

of making profit are slowly crumbling, and are being replaced with new ones. There are

many indicators that show that the industry is, in fact, thriving. The most important

indicator is the consistent increases in total music industry revenues and concert revenues

worldwide, as well as a dramatic increase in worldwide digital music revenues. The total

revenues for the music industry worldwide totaled an astounding $67.6 billion in 2011,

which has steadily grown from $60.7 billion in 2006 and can be seen in Figure A. 5 Along

3"Global Music: Tuning Into New Opportunities." EMarketer. N.p., May 2011. Web. 6 Mar. 2013.
4Ibid.
0
Moore, Frances. "Digital Music in 2012: Optimism Jusitfied. Complacency Not Accepted." Digital Music Report
(2012): 4. Web. <www.ifpi.org/content/library/DMR2012.pdf>.
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with total revenue, concert revenues worldwide have also seen steady growth. Figure B

shows that in 2006, revenues from live music performances were at $16.6 billion and

reached $23.5 billion in 2011, signaling healthy growth. 6 Lastly, there has been a dramatic

increase in digital music revenues worldwide since 2006, when the total revenues in this

area were $2.9 billion. From 2006 to 2011, revenue from digital music has increased more

than five times, resulting in profit of $14.8 billion, shown in Figure C. 7 All three of these

revenue patterns are very good indicators that the industry is still quite profitable and is

continuing to grow.

Figure A: Worldwide Music Industry Revenues

$70.0
$68.0 $67.6
Revenue (in billions)

$66.0 $66.4
$65.0
$64.0
$62.6
$62.0
$61.5
$60.7
$60.0
$58.0
$56.0
2006 2007 2008 2009 2010 2011

5TF Market Research. "GLOBAL MUSIC: TUNING INTO NEW OPPORTUNITIES, MAY 2007" May 08, 2007.
Alacra Store. Feb 27, 2013. <http://www.alacrastore.com/storecontent/markintel/EMARKETER-50127904>

6 TF Market Research. "GLOBAL MUSIC: TUNING INTO NEW OPPORTUNITIES, MAY 2007" May 08, 2007.
Alacra Store. Feb 27, 2013. <http://www.alacrastore.com/storecontent/markintel/EMARKETER-50127904>
7 Ibid.
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Figure B: Worldwide Concert Revenues

$26
$24
Revenue (in billions)

$23.50
$22 $22.20
$20.80
$20
$19.40
$18 $18.10
$16.6
$16
$14
$12
2006 2007 2008 2009 2010 2011

Figure B: Worldwide Digital Music Revenues

$16
$14.8
$14
Revenue (in billions)

$12.9
$12
$10.7
$10
$8
$7.0
$6
$4 $4.5
$2.9
$2
2006 2007 2008 2009 2010 2011

As Frances Moore, the chief executive of the International Federation of the

Phonographic Industry, explains, in the current music industry, you see a striking paradox:

on one hand, there is the innovation and drive of a business that has led the way for

creative industries in adapting to the digital age; on the other hand, the extraordinarily

difficult environment in which these changes are taking place. 8 This difficult environment

is the product of technology adapting very quickly, which had created problems for which

8Moore, Frances. "Digital Music in 2012: Optimism Justified. Complacency Not Accepted." Digital Music Report
(2012): 4. Web. <www.ifpi.org/content/library/DMR2012.pdf>.
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solutions have yet to be found. When mp3 file-sharing first became an issue, records labels

used the RIAA as their primary weapon to defend against sites like Napster and Limewire

distributing music that was owned by their artists for free. Napster, as a peer-to-peer

system, caused great controversy on the music scene, and is currently still defined as one of

the greatest sparks igniting a change in technology, SPEA graduate Brittany Buckley

describes. 9 Major record labels looked for any way possible to combat this file-sharing

technology with new technology of their own, such as audio watermarking or digital rights

management (DRM) protection, but none of their efforts were effective enough to end the

rampant piracy that was occurring online.

Once major record labels found that fighting piracy was an uphill battle that cost

them more time and money than it was worth, they declared the industry dead. 10

Eventually, industry executives began looking for alternatives instead of continuing the

futile battle against piracy, and found that they could shift their reliance for revenue from

recorded music to other areas, such as touring or licensing. Both artists and record labels

are discovering these new revenue streams from crowd funding, touring, and licensing. All

three of these new methods of making money are promising, and therefore have the

potential to be stable enough to shift artists reliance away from the revenue that used to

come solely from selling recorded music, and look towards a balanced portfolio of revenue

streams.

9 Buckley, Brittany. "Digital Takeover: The Reality of Music in the Twenty First Century." Thesis. Indiana
University, 2012. School of Public and Environmental Affairs. Web. 27 Feb. 2013.
10 DeGusta, Michael. "The REAL Death Of The Music Industry." Business Insider. N.p., 18 Feb. 2011. Web. 27

Feb. 2013.
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In personal financial planning, having a balanced portfolio of assets is highly

recommended and widely used. Many consumers create an investment portfolio that

includes a variety of stocks, bonds and other assets from a variety of industries to mitigate

their risk of losing money. As SmartMoney.com explains, one way to reduce the volatility

of a portfolio is to add some alternative assets. 11 In the setting of the music industry,

artists should add additional revenue streams in place of assets as they create their

balanced revenue portfolio. By taking a portfolio approach to earning income, musicians

can protect themselves from future changes in the industry that may cause a shift in the

profitability of certain revenue streams. Sales from recorded music can no longer be relied

upon as a single source of revenue, therefore artists should look to crowd funding, touring,

and licensing as ancillary streams of revenue.

Crowd Funding
The creation of the internet and the dawn of the digital age allowed artists to reach a

large network of people in moments. This helped artists to broadcast their music to a far

larger audience than ever before, which in turn allowed them to create a larger awareness

base and fan base. In addition to being able to reach more fans, artists were suddenly

exposed to a bigger pool of consumers from whom they could receive funding. In the pre-

digital model of the music industry, bands needed to be signed to a record label in order to

have enough financial support to produce their album or tour. The record label acted as a

gatekeeper for the industry, only signing acts that either had enough talent or charisma to

11 "How to Create An Investment Portfolio." SmartMoney. N.p., 9 May 2011. Web. 26 Apr. 2013.
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be profitable for the company. In the post-digital model, this gatekeeper idea is essentially

gone, allowing anyone who considers themselves to be a musician to generate funding for

themselves and release their music online.

In the post-digital model, major record labels are declining because musicians need

for them is decreasing. In place of record labels, a rising number of artists are using crowd

funding as a method of generating money for tours, albums, or both. Crowd funding by

definition is a collective effort by people who network and pool their money together,

usually via the internet, in order to invest in and support efforts initiated by other people

or organizations. 12 By collecting a series of small donations instead of getting a large

advance from a record label, the artists are not liable to pay any portion of their profits

back to their benefactors on the back end, except typically a small fee or percentage to the

website that was used to host the campaign. As successful crowd-funded artist Amanda

Palmer explains, artists can reach out fans directly without the machine, [they] are

empowered to call the shots and keep whatevers leftover not the labels. 13 This is a

major advantage for artists, because often profits are whittled away by the fees that are

owed to the record label.

On the investors end, the fact that the money is accrued through a series of micro-

donations means that each person's risk is low because he or she is part of a crowd of

investors, as professor of marketing at Bocconi University Andrea Ordanini explains. 14

12 Ordanini, Andrea, Lucia Miceli, Marta Pizzetti, and A. Parasuraman. "Crowd-funding: Transforming

Customers into Investors through Innovative Service Platforms." Journal of Service Management 22.4 (2011):
443-70. Print
13 Palmer, Amanda. "Where All This Kickstarter Money Is Going." The Official Website of Amanda Palmer. N.p.,

22 May 2012. Web. 05 Mar. 2013.


14 Ordanini, A. (2009), Crowd funding: customers as investors, The Wall Street Journal, 23 March, p. r3.
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This makes this funding model ideal for both investors and artists because it mitigates the

risk on both ends: if a project flops, investors only lose a small amount of money, and

artists arent liable to a record label. Additionally, because the investors are consumers of

the product as well, they have a vested stake in the project being completed. Their interest

in seeing the project be successful will likely spur them to act as promotional agents and to

encourage others to donate. The new active roles that the consumers play in the crowd

funding model are a major shift from the passive role that they played in the pre-digital

model, further blurring boundaries between marketing and finance in this new model. 15

Types of Crowdfunding

Crowdfunding takes on two distinct forms: ex post facto crowdfunding and ex ante

crowdfunding. 16 The first, ex post facto, is a model in which financial support is offered in

exchange for a completed product, which is most commonly seen in the music industry. 17

This model can be found on many crowdfunding sites where musicians ask consumers to

pledge money in order to receive a hard copy of the album once it is finished. The second

type of crowdfunding, ex ante, is less commonly seen in the music industry, yet there still

are some who choose this model. In the ex ante model, financial support is given on the

front end to assist in achieving a mutually desired result. 18 This model more closely

resembles the stock market, where consumers invest to help a musician that they like to

make a new album, with a promise of a share of the profits that is proportional to their

15 Ordanini, Andrea, Lucia Miceli, Marta Pizzetti, and A. Parasuraman. "Crowd-funding: Transforming

Customers into Investors through Innovative Service Platforms." Journal of Service Management 22.4 (2011):
443-70. Print
16 Tim Kappel, Ex Ante Crowdfunding and the Recording Industry: A Model for the U.S., 29 Loy. L.A. Ent. L. Rev.

375 (2009). Available at: http://digitalcommons.lmu.edu/elr/vol29/iss3/3


17 Ibid
18 Ibid
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investment in the project. For the purposes of this paper, well mostly be looking at the ex

post facto model of crowdfunding.

Vehicles for Crowdfunding

There are several sites that allow musicians to set up campaign pages to ask for

financial support, including but not limited to Kickstarter, IndieGoGo, and PledgeMusic.

Each site has its merits as well as its detriments, and each is better suited for different

types of artists and campaigns.

Kickstarter

Kickstarter was founded in 2009, and is likely the best known crowd funding site on

the internet. In 2012, 2,241,475 people successfully backed 18,109 projects, and raised

more than $274 million from crowd funding alone. 19 Kickstarter takes a 5% commission

from projects that are successful, allowing them to earn more than $13 million dollars last

year. 20 Kickstarter funds projects that range from dance to comics; from film to technology.

Its wide breadth of fields make it suitable for a variety of campaigns and backers to use, but

it also means that music is only a part of its focus. Unlike crowd funding sites that are

specifically designed for music, the functionality of the site is not set up solely for musicians

to use, and therefore functionalities such as adding songs to the site are muddled by other

functions for other types of projects. This makes the site less intuitive than other sites to

19 Blattberg, Eric. "Kickstarter in 2012: The Numbers You Need to Know." Www.crowdsourcing.org. N.p., 11
Jan. 2013. Web. 14 Jan. 2013.
20 Ibid.
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use, though the way that Kickstarter walks project creators through the steps of creating

their campaign makes other aspects of creating the campaign very simple.

Donating to the site is also very simple. Potential investors can quickly and easily

see how much money the campaign is seeking to raise, how much progress has been made

towards the goal, and how much time the campaign has left to reach their goal within

seconds of arriving to a campaigns site. Additionally, Kickstarter requires artists to offer

rewards for each level of donation that they request, which can be viewed easily by

investors on the right sidebar of the page. Some musicians choose to keep their rewards

simple, like a copy of the new album, a meet and greet, or private show, while others offer

more quirky rewards like baking cookies for investors, or offering them exclusive visual art

works created by the musicians themselves. This makes the site feel less donation-based

and more like an investment due to the fact that consumers are getting something in return

for their donation to the artist. It also benefits the artist because people are more likely to

give them money when they can understand the physical product that they will be

receiving.

Kickstarter has an all-or-nothing policy regarding fundraising for the projects that

they host, which they describe on their website: If the project succeeds in reaching its

funding goal, all backers' credit cards are charged when time expires. If the project falls

short, no one is charged. Funding on Kickstarter is all-or-nothing. 21 This is a major

detriment to the site because if artists get close to their fundraising goal and miss it, they

get nothing. For many musicians, any money to fund their project is better than no money.

21 "Kickstarter." Basics: Frequently Asked Questions (FAQ). N.p., n.d. Web. 06 Mar. 2013.
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A campaign that is almost successful and barely falls short of its goal will leave the

musicians with no money and can be demoralizing and unhelpful. Kickstarter defends this

policy with the ideas that It's less risk for everyone. If you need $5,000, it's tough having

$1,000 and a bunch of people expecting you to complete a $5,000 project, and that It

motivates. If people want to see a project come to life, they're going to spread the word. 22

While both ideas are valid and have the best intentions to help artists and donors alike, it is

not practical for musicians. Musicians can work around this policy by setting their

fundraising goals beneath what they actually need to raise. As Kyle Andrei of Idealware

explains, The important trick to Kickstarter is to figure out what the bare minimum you

need to fund your project, and post that as your goal, so you increase your chances of at

least getting enough. If you aim too high, and your project doesnt succeed, youll end up

with no funding. 23 For this strategy to be effective, musicians need to make it very clear in

the campaign description that additional money needs to be raised, because the first

number that investors will see is the lower goal that theyve submitted. Overall, the all-or-

nothing has its theoretical merits, but is generally detrimental to musicians in a practical

context.

Additionally, because Kickstarter is a haven for all creative projects, that indicates

that backers who are on the site are not solely dedicated to investing in new musical

projects. This acts as an advantage and a disadvantage simultaneously. On the one hand, it

attracts consumers who may be more interested in investing in an area other than music,

but these consumers could discover a music project that theyd like to support. On the

22Ibid.
23Andrei, Kyle. "Nothing for Nothing: Kickstarter vs. IndieGoGo." Idealware. N.p., 10 May 2011. Web. 06 Mar.
2013.
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converse, those who are solely interested in investing in music projects may be distracted

by other creative projects on the site. The wide scope of projects that Kickstarter has to

offer makes it the best known crowd funding site on the internet.

Overall, Kickstarter is fairly easy to use for musicians and consumers alike, but its

major downfalls are that it is not solely focused on music projects, as well as its all-or-

nothing policy.

Indiegogo

Indiegogo is a crowd funding site that is very similar to Kickstarter in the sense that

it is used for a wider variety of projects than just music projects, and gives artists a

platform to pitch their campaigns to potential investors. The site also provides perks the

same way that Kickstarter does rewards for those who invest at different levels.

Unfortunately, Indiegogo also has the same detriment of not being very music-friendly that

Kickstarter has, especially because they do not allow musicians to embed their music in

their description, so artists have to link to another site in order to allow potential investors

to hear their recordings. Indiegogo is set up to accept contributions from more than

creative projects; they also allow for charitable and entrepreneurial contributions, making

their focus much more broad than that of Kickstarter, though it has not quite reached the

level of popularity that Kickstarter has.

The main advantages of Indiegogo over Kickstarter are their international funding

base and their flexible funding policy. Currently, Kickstarter is only equipped to accept

funding from the United States and the United Kingdom, while Indiegogo allows anyone
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with a bank account to start or fund a campaign. Their only limitation is that they do not

allow campaigns from countries on the U.S. OFAC sanctions list. 24 This opens up a much

larger funding base, allowing campaigns to reach potential donors on an international level.

Additionally, their flexible funding policy is much more advantageous for artists.

Indiegogo takes a fee of 4% when a campaign reaches its goal, and a 9% fee when a

campaign does not reach its goal, but it allows the artists to still keep 91% of whatever they

were able to raise. 25 With this policy, musicians are penalized for not reaching their goal,

but they are allowed to retain the majority of the money that they raised. Indiegogo also

offers a fixed funding plan that resembles Kickstarters all-or-nothing policy. In the

Indiegogo policy, the site takes a 0% cut if a campaign doesnt reach its goal, though no

money is disbursed to the artist. Indiegogo gives musicians the opportunity to choose the

level of risk that they want to assume by offering two policy options for funding. These

policies give Indiegogo a distinct advantage over Kickstarter.

Pledge Music

Pledge Music is another crowd funding site similar to Kickstarter and Indiegogo, but

it is geared specifically towards musicians. Though it is less popular than both sites, it is

similar to them in that it gives musicians a platform to reach potential investors, shows

project progress, and shows investors what perks they would get from pledging money to

each artist. Pledge Music uses the same all-or-nothing model that Kickstarter does, for

similar reasons. Once a project is successful, the site receives a 15% commission, which is

24 "Indiegogo FAQ." Indiegogo. N.p., n.d. Web. 06 Mar. 2013.


25 Ibid.
P a g e | 17

high, but they boast that they have no hidden fees and absorb all credit card processing

fees and overheads. 26 Again, this all-or-nothing policy can act as a major disadvantage to

the site, for the same reasons that were found with Kickstarters policy.

A major advantage for Pledge Music is its focus on crowd funding solely for

musicians because it creates an environment in which like-minded investors and musicians

can meet. The site has embedded tracks and videos as part of its basic functionality, as well

as band bios and pictures. It is much more cut out for musicians, and therefore it is a much

better option for those who are focused solely on furthering their career in music.

Additionally, Pledge Music is very liberal with what money from campaigns can be used

towards. While sites like Kickstarter and Indiegogo want to see a final product like an

album or a tour, Pledge Music allows musicians to use money towards anything that helps

them to advance their careers, such as radio promotion campaigns, studio time or video

recording sessions. Pledge Music is a great option for musicians because while they will

face a higher commission, their campaigns can be much more flexible.

Risks of Crowdfunding

While all three of these sites are great channels for raising money, there is always

the risk that an artist will not raise the money that they need. In this case, the funds raised

act as a good indicator of how successful the project would have been upon completion. If

the funds are not raised on the front end, though it may hurt an artists ego, at least the

artist is not liable to a record label on the back end of the failed project. Although this is a

major benefit of crowd funding, artists still bear some risk because they still need to invest

26 "Pledge Music FAQ." Pledge Music. N.p., n.d. Web. 06 Mar. 2013.
P a g e | 18

some of their own money at the beginning of the project to get it running. Unfortunately,

the main risk with crowd funding is that it can be quite costly to run a campaign. In order to

run a good campaign, artists need to realize that patrons expect to see videos, sound

recordings, and/or pictures to explain the project and convince them to donate to it. As

progress being made on the project, patrons also expect to see pictures and videos of

updates on the projects status. All of the expenses associated with recording quality work

will need to be paid out of pocket before the musicians ever see a cent from the crowd. To

make high quality videos, artists will need to purchase quality equipment with which they

can record themselves, or pay someone who has the equipment to record them. On top of

this, the artist is responsible for purchasing instruments and accessories to be able to play

their music. Crowd funding campaigns take a significant amount of time and money to get

running, but once a good campaign takes off, the results can be very gratifying.

Amanda Palmer is a musician who became a famous example of a successful crowd

funding campaign. Palmer just one example of many musicians who sought funding

through a campaign on Kickstarter: one of 9,086 musicians in 2012 alone to be exact. 27

After being part of the alternative rock duo the Dresden Dolls, a band that achieved cult

popularity, she broke away from the major label to pursue a solo career. 28 In order to fund

this career, she circumvented the major-label ecology, and asked fans to become more or

less direct investors, through crowd funding. 29 Though her campaign was ultimately

successful, she had to invest quite a bit of money into the campaign upfront. She explains

27 Blattberg, Eric. "Kickstarter in 2012: The Numbers You Need to Know." www.crowdsourcing.org. N.p., 11

Jan. 2013. Web. 14 Jan. 2013.


28 Clover, Joshua. "Amanda Palmer's Accidental Experiment with Real Communism." The New Yorker. N.p., 2

Oct. 2012. Web. 05 Mar. 2013.


29 Ibid.
P a g e | 19

the full extent of her investment: I had to pay my staff and crew to get this album ready as

well as keep the ship afloat and headed in the right direction. I also needed to come up with

the cost of the recording itself (which was pretty whopping), and any other expenses the

band racked up in the meanwhile. To put a number on all of that behind-the-scenes stuff,

which just got us to DAY ONE of Kickstarter: $250,000. 30 All in all, Palmer was only asking

to raise $100,000 at the beginning of her campaign, but ended up investing more than

double what she was aiming to achieve. By the time that her Kickstarter ended, Palmer

raised $1,192,793, so in the long run, her initial investment did pay off. 31 Though she did

raise a sizable amount of money, she explains that it didnt all go straight into her music

right away: first Ill pay off the lovely debt stacks of bills and loans and the like

associated with readying all of the stuff that had to happen BEFORE I brought this project

to Kickstarter. For the past 8 months or so, I wasnt touring and therefore wasnt making

much income but every step of the way, there were expenses. So, during that time, I

borrowed from various friends and family who Id built up trust with over the years. 32

While Palmer did invest heavily on the front end of her campaign, she used crowd funding

very effectively and successfully to begin her career as a solo artist, and came out with a

very profitable Kickstarter campaign.

Palmer ran a fairly extensive and large campaign, which clearly required sizable

funds to promote, but not all campaigns follow this pattern. Bloomington, Indiana musician

Jesse Lacy ran a much smaller campaign, only seeking to generate $1,500 to produce his

30 Palmer, Amanda. "Where All This Kickstarter Money Is Going." The Official Website of Amanda Palmer. N.p.,

22 May 2012. Web. 05 Mar. 2013.


31 See her Kickstarter page here: http://www.kickstarter.com/projects/amandapalmer/amanda-palmer-the-

new-record-art-book-and-tour
32 Palmer, Amanda. "Where All This Kickstarter Money Is Going." The Official Website of Amanda Palmer. N.p.,

22 May 2012. Web. 05 Mar. 2013.


P a g e | 20

new album. 33 His experience was the same as Palmers in the sense that he had to invest a

considerable amount of time into planning and executing his campaign. As Lacy explains it,

Preparing for the campaign involved a lot of creativity, professionalism and serious

organization. The Kickstarter page itself was not hard to put together and release, but pre-

campaign work is huge and proved to be essential to our success. We had to calculate our

overheads and decide on how to present and market the campaign. 34 In order to complete

the planning stage for the campaign, Lacy decided to create a time-release outline to show

potential donors exactly how the money will be being used and when. Once the campaign

was up and running, Lacy found that the funding was definitely front-loaded and he

raised 76% in the first 6 days. 35 His rationale for this early flood of donations was that

gracious fans that really wanted us to succeed would pledge early. 36 In the end, Lacy did

reach his fundraising goal, and was therefore able to create his album through donations

from fans. Both Palmer and Lacys experiences demonstrate how crowdfunding can be

successful for small and large campaigns alike.

Touring
Another revenue stream that will help to diversify a musicians income portfolio is

revenue generated through touring. The experience of live music is not an experience that

one can replicate and relive over and over again, so it provides for a more long term source

33 See his Kickstarter page here: http://www.kickstarter.com/projects/1897714678/jesse-lacys-first-album-

first-steps?ref=live
34 "Jesse Lacy Kickstarter Interview." Online interview. 18 Mar. 2013.
35 Ibid.
36 Ibid.
P a g e | 21

of revenue. Touring also opens up additional sources of revenue such as exclusive events,

meet-and-greets, and merchandise sales, which act as additional sources of income that

make touring a far more promising revenue generator than relying more heavily on

profiting from recorded music.

Though recorded music is still a profitable enterprise, the revenue that the touring

industry is making still surpasses that of the recorded music industry. According to

eMarketer, worldwide live music/concert revenues have grown from $16.6 billion in 2006

to $23.5 billion in 2011. 37 Additionally, From 1999 to 2009, concert ticket sales in the US

tripled from $1.5 billion to $4.6 billion, vastly exceeding the growth of inflation and

population growth in the US alone, according to Forbes magazine. 38 Additionally, in a

survey of Indiana University students, 40% of students said that they attended two to four

concerts per year, and paid an average of $25-$50 per ticket. 39 In comparison, 60% of that

same population purchased zero or one albums in the past six months. Both of these

indicators show that the touring industry is healthy, thriving, and continuing to grow.

Touring revenue is traditionally thought of a just being a product of ticket sales, but

there are also several auxiliary revenue sources that come with touring. Merchandise sales,

exclusive events, and meet-and-greets are all additional ways that musicians can augment

their tours. Each of these avenues allow artists to reach their fan bases in a new way while

increasing both revenue and marketing simultaneously.

37 Ibid.
38 Lee, Timothy B. "Why We Shouldn't Worry About The (Alleged) Decline Of The Music Industry." Forbes.
Forbes Magazine, 30 Jan. 2012. Web. 23 Jan. 2013.
39 See Appendix A.
P a g e | 22

Merchandise

The first way that artists can increase their revenue while on tour is through selling

merchandise. T-shirts, posters, and other promotional materials for the musician can be

sold to fans, which is a win-win situation because the fans are paying the musician to

market for them. Additionally, CD, vinyl and other special edition physical copies of music

can be sold at merchandise booths to generate more sales of the musicians recorded

music. These tactics can be used effectively to generate revenue for smaller musicians and

more established musicians alike, and major labels are beginning to see their value. Labels

traditionally did not reap the benefits from ancillary revenue streams surrounding touring,

but now labels are appreciating their value both as a promotional tool and now

increasingly as an increasingly important source of revenue. As a result, labels have been

asking artists to sign on to new 360 deals that encompass more than just releasing

albums.

As the name suggests, 360 deals allow record labels to help their musicians in all

facets of their career. In return for their additional work, the labels also take a percentage

of ancillary revenue streams. Lady Gaga is a famous example of an artist who has used this

model, and has made shrewd use of new digital platforms, while still leveraging the clout

of a major label, an institution deemed obsolete by many proponents of DIY culture. She is a

product of a new kind of recording contract which goes beyond just selling records to

encompass everything from touring, merchandiseeven her make-up deal. 40 These 360

deals show that the industry is finally aware that they cant fight piracy any longer to

40Jurgensen, John. "The Lessons of Lady Gaga." WSJ.com. The Wall Street Journal, 29 Jan. 2010. Web. 6 Mar.
2013.
P a g e | 23

increase sales of recorded music, but rather they have to find new methods to make money,

and they have found touring to be promising.

Meet-and-Greets

Meet-and-greets are also a great way to make a profit from shows on top of the

revenue from ticket sales. They are a low-cost, high-profit activity that only requires time,

patience and a smile on the musicians end. Fans will pay well over $100 on top of the price

of their ticket to meet their favorite artists, and it doesnt cost anything but time for the

artist to greet their fans. Additionally, meet-and-greets build a good rapport with fans

because after meeting their idols, fans feel closer to their favorite artists. Taylor Swift is a

great example of an artist who understands the value of her audience. 41 Swifts manager,

Bill Bennett explains that She's worked hard to keep her country audience. She goes to

every awards show, visits radio, signs countless autographs." 42 This kind of dedication to

her fans has allowed Swift to develop a loyal fan base, which has turned into revenue

through sold out concerts and successful album releases.

Exclusive Events

The last auxiliary method of generating revenue is through exclusive events. These

events go deeper than meet-and-greets, and were created as an extension of that very idea.

Exclusive events allow artists to charge a considerable sum, typically ranging from $200 up,

on top of the ticket price for a chance to get to hang out with the band before or after the
41 Christman, Ed. "What Taylor Swift's Million-Selling Album Means for Music." Billboard. N.p., 05 Nov. 2010.
Web. 07 Mar. 2013.
42 Ibid.
P a g e | 24

show. Typically there is some activity involved that allows the fans to better connect with

the musicians. A great example of a band who has successfully held exclusive events is the

Zac Brown Band. During the summer months, the band frequently hosts eat and greet

events that gives a selected few of their fans a chance to eat some great food and hang with

the band for about an hour before their show. 43 These events are great ways for musicians

to generate buzz because it allows fans to get to know their idols on a deeper level than

they know them just from seeing them on stage, so fans feel more connected to and

emotionally invested in the artist. Also, fans typically take pictures of such events and post

them to social media sites, further spreading the buzz to their friends. Exclusive events

work best for artists who have a larger fan base and are more well-known than they do for

smaller bands because of the fame factor and hype that more popular bands have, which

make the events seem more exclusive and special.

These auxiliary methods of making money while on tour all relate back to the idea of

having a balanced portfolio of revenue streams. While on tour, musicians have a significant

group of their fans in one place, which gives them many opportunities to make money. By

diversifying the ways in which theyre making money on tour, musicians can fully take

advantage of all of the ways that fans will pay for exposure to the band.

43Loesch, Raymond. "Zac Brown Band Eat and Greet Offers Fans a Taste of the Zamily." Country Fan Network.
N.p., 18 Aug. 2010. Web. 07 Mar. 2013.
P a g e | 25

Licensing
Once a musician becomes more established, or has a tune that is appealing enough

to catch the ear of a company that wants to use it, music licensing becomes a promising,

stable, and lucrative source of revenue. However, this revenue stream is not for the

inexperienced. Due to its stability and potential to be highly lucrative, licensing is a highly

competitive field that requires negotiation and careful discussion between the parties to

ensure that both sides are getting a fair deal. There are very specific laws surrounding

copyright, as well as many different types of licenses that each protect a specific facet of a

song or performance. These laws can often be difficult to navigate, so it is advised that

artists get a knowledgeable lawyer to aid them if they wish to license their work for others

use.

There are many different ways that an artist can license their work, and each type of

license comes with a varying level of control. For example, Amherst College graduate

Andrew Plenge describes that for an album, there are generally three different copyrights

the rights for the album as a whole, the performance rights for each of the songs on the

album, and the mechanical rights for the physical copy of each song and each different

copyright generates royalties for various uses of the copyrighted work. 44 Depending on

the artists contract with a record label, they may own one or all of these rights, giving

them varying flexibility to license their music. 45 Throughout this discussion of music

44 Plenge, Andrew C. "Accounting for Ancillary Revenue Streams: The Optimal Level of Copyright Protection in
the Music Industry." Thesis. Amherst College, 2001. Print.
45 Ibid.
P a g e | 26

licensing, we will assume that the artist is the copyright owner for their works for

simplicitys sake, and will therefore use artist and copyright holder interchangeably.

Master Recording License

The first type of license that Plenge mentions is a master recording license. This

license grants the right to include a specific recording of the composition in timed relation

to a picture. 46 While this definition may sound similar to that of a synchronization license,

which will be discussed later, the master recording license differs in that a sync license

gives the license holder the right to re-record a song for use in a media project, while a

master license gives the license holder the right to use a pre-existing recording of that song

in a media project. 47 The master recording license is commonly used with the

synchronization license in media, film, commercial and TV projects. The royalty rates for

master recordings are negotiated on a case-by-case basis depending on the nature and

amount of the song used. This case-by-case negotiation allows for greater control on the

part of the artist, but it also requires more time and frequently a legal team to successfully

design a fair deal.

46 "All Clear? A Music Clearance Primer." International Documentary Magazine. N.p., 2005. Web. 23 Mar. 2013.
<http://www.themusicbridge.com/clearance-and-license/all-clear-a-music-clearance-primer/>.
47 McDonald, Heather. "Master License." Music Careers. N.p., n.d. Web. 23 Mar. 2013.
P a g e | 27

Performance License

Plenge also discusses the performance rights of the album, which, according to

copyright lawyer Shannon Petty, allows one to perform a musical work publicly. 48

Typically, performance royalties are not collected directly by the artists, but rather through

a performing rights organization (PRO) such as ASCAP (American Society of Composers,

Authors and Publishers), BMI (Broadcast Music Inc.), or SESAC (Society of European Stage

Authors and Composers). 49 It is important that musicians register their works with a PRO

so that they can maximize the royalties that they receive, because it is better to have a PRO

to help police performance violations in addition to the artists team. Another advantage of

licensing music through a PRO is that they will grant those who wish to use licensed music

a blanket license, which gives these licensees the right to perform all of the music

represented by the organization. 50 While this is more useful for licensees who wish to

use more than one song than for the musicians themselves, being registered with a PRO

gives the musicians yet another avenue for reaching a greater audience through increased

reach to consumers.

Performance rights are a highly debated topic because the definition of a public

performance has changed in the digital age. As copyright lawyers David Oxenford and

Robert Driscoll explain, In the brick-and-mortar context, the definition of public

performance is often relatively easy to applyif a performance is to a number of people in

48 Petty, Shannon. "Music Licensing." Philadelphia Volunteer Lawyers for the Arts. Arts & Business Council of
Greater Philadelphia, n.d. Web. 19 Mar. 2013.
49 Ibid.
50 Ibid.
P a g e | 28

a public setting, it is a public performance. 51 This definition is not so easily applied to the

realm of the internet, because when a website streams a song, many people can access it at

one time. This widespread access fits the number of people in a public setting part of the

public performance definition, but because all of these people accessing the song arent in

the same place at the same time, that makes streaming a song less of a performance. For

this reason, copyright law is still working to define this area of the law.

Oxenford and Driscoll pose an interesting question in regards to where the

boundary should lie on public performances: when a webcasting service sends out one

stream to hundreds of people, the webcaster is operating much like a radio service, so

there would seem to be a public performance. But when the service is interactive, so that

unique streams are served up to each customer, is that really a public performance? 52 As

of now, this question has no easy answer. Copyright law does not include a concrete

judgment on whether streaming constitutes a public performance, though the Digital

Millennium Copyright Act has put some restrictions on streaming music for free online. In a

three-hour period, a streaming service can play No more than 3 songs from one album

[with] no more than 2 played consecutively from one album; no more than 4 songs from a

set/compilation [with] no more than 3 played consecutively, [and] no more than 4

recorded songs by the same artist (live studio appearances are okay). 53 Additionally, the

law states that listeners should not be able to download or call up any particular song on

demand, which is why streaming services like Pandora cannot allow users to toggle

51 Oxenford, David D., and Robert J. Driscoll. "The Basics of Music Licensing in Digital Media." Advisories.

Davis Wright Tremaine LLP, 10 Mar. 10. Web.


52 Ibid.
53 KKFI Radio. Streaming and the DMCA. N.p.: KKFI Radio, n.d. Web. 22 Mar. 2013.
P a g e | 29

between songs except to skip songs that they dont like. 54 These measures attempt to

control streaming revenues in the absence of more concrete public performance laws.

Though these regulations seek to maximize the revenues that musicians receive

each time their songs are played, the amount collected in royalties per play is typically

miniscule. Most artists receive a fraction of a cent for each play, which does not add up very

quickly. Zoe Keating, an independent musician, is a prime example of this concept: when

her songs had been played more than 1.5 million times on Pandora over six months, she

earned $1,652.74. On Spotify, 131,000 plays last year netted just $547.71, or an average of

0.42 cent a play. 55 Overall, public performance licensing is a crucial part of an artists

career, but it is not lucrative enough to be relied on as a primary source of income.

Mechanical License

The last type of license that Plenge references is the mechanical license, which is

defined by the Harry Fox Agency as the licensing of copyrighted musical compositions for

use on CDs, records, tapes, and certain digital configurations. 56 The Harry Fox Agency is

the largest mechanical rights licensor in the United States, and therefore many artists

collect their royalties through the company. Any time that a song is reproduced, a

mechanical license is required. However, the mechanical license only grants the copyright

54 Ibid.
55 Sisario, Ben. "As Music Streaming Grows, Royalties Slow to a Trickle." CNBC. N.p., 29 Jan. 2013. Web. 22
Mar. 2013.
56 "How to Obtain Mechanical Licenses." The Harry Fox Agency. N.p., n.d. Web. 23 Mar. 2013.

<http://www.harryfox.com/public/MechanicalLicenseslic.jsp>.
P a g e | 30

holder the ability to choose the first distributor of a mechanical recording. 57 This means

that an artist may select who first reproduces their work, but after the initial selection,

compulsory licenses are issued. Compulsory licenses permit anyone to make or cover

mechanical recordings for a statutory fee if [they] cannot obtain permission from the

copyright holder. 58 Compulsory licenses give the artist less control over who uses their

works, but also makes licensing easier because the artist does not have to approve every

licensee.

The statutory royalty rates associated with mechanical licensing for physical

recordings and digital downloads are 9.1 Cents per copy for songs 5 minutes or less, or

1.75 Cents per minute or fraction thereof, per copy for songs over 5 minutes. 59 Though

these rates are low, they are much more favorable than the fraction of a cent that artists are

issued for performance royalties. A typical album is about 12 songs, so for each album that

is purchased an artist would receive $1.09 in mechanical royalties. Again, a dollar is a small

amount, but it adds up over time with CD and single sales, covers of a song, and

reproductions of a song on soundtracks or compilation albums. Overall, mechanical

licensing is a more lucrative licensing method than many, and it is an easier method of

licensing because royalties are collected and distributed by an agency.

57 Petty, Shannon. "Music Licensing." Philadelphia Volunteer Lawyers for the Arts. Arts & Business Council of
Greater Philadelphia, n.d. Web. 19 Mar. 2013.
58 Ibid.
59 "Statutory Reports." Harry Fox Agency. N.p., n.d. Web. 23 Mar. 2013.

<http://www.harryfox.com/public/StatutoryReports.jsp>.
P a g e | 31

Synchronization License

Beyond the licenses that Plenge mentions for an album, there are also several other

types of licenses to protect other aspects of a song. A synchronization license, frequently

referred to as a sync license, is a grant from a music publisher permitting a producer of a

visual work to music as an accompaniment. This license is frequently used for television,

film and commercial purposes, and, as mentioned above, is typically used in conjunction

with a master recording license. The synchronization license itself only permits the user to

use music and lyrics of the song, not the recording of the song by an artist. Petty gives a

good example of this when she explains If you want to use RESPECT in a karaoke

capacity you may get a synch license and rerecord the song yourself. But if you want to

use RESPECT by Aretha Franklin, you may need an accompanying master license, 60

Similarly to the master recording license, sync licenses are negotiated on a case-by-

case basis. Each license issued is issued for a specific period of time and stipulates the

terms of how the song will be used. Music industry expert Heather McDonald explains

There is one flat fee involved in obtaining a sync license, and once the license is in place,

the song can be used as stipulated as many times within the license period as the license

holder likes. In other words, if you obtain a sync license and use the song in a film, you do

not have to pay a fee on the sync every time the film is viewed. 61 This fee is considerably

60 Petty, Shannon. "Music Licensing." Philadelphia Volunteer Lawyers for the Arts. Arts & Business Council of
Greater Philadelphia, n.d. Web. 19 Mar. 2013.
61 McDonald, Heather. "Sync License." Music Careers. N.p., n.d. Web. 23 Mar. 2013.
P a g e | 32

larger than any of the previously discussed methods of licensing due to the fact that it

covers a period of time rather than being collected on a per-play basis.

Businessman Michael Charles wrote a blog about his experience trying to license

music for a 30 second commercial on YouTube that would only run in the Saskatchewan

area. 62 He found that for the Cole Porter song in which he was interested in using, the fee

would be $15,000, and that was on the low end. After speaking further with the licensing

department at Warner/Chappell, he was told that Even for obscure artists the low end

for synchronization licenses was in the $5,000 range. 63 This is significantly more than

most artists make from mechanical and performance licensing, so it has become a very

sought-after revenue stream.

Issues with Licensing

There are several issues that need to be considered before a musician licenses their

work. The first of these issues is the retention of rights. With each various method of

licensing, artists face relinquishing control of their works, whether it is to a record label, a

performing rights organization, an agency, or another company. It is up to each copyright

holder to determine how much control over their music they wish to keep. With more

control comes more responsibility for collecting royalties, so it is advantageous for

musicians to sign over their rights to a record label or other company in return for a

significant portion of the royalties. This is where a good attorney becomes vital to ensure

62 Charles, Michael A. "Licensing Music for Your Online Ad How Much Will It Cost?" Monsters Blog. N.p., 2
Nov. 2010. Web. 23 Mar. 2013.
63 Ibid.
P a g e | 33

that artists are getting a fair deal, and to negotiate with the opposing side until the deal

becomes fair for the artist.

The second issue with licensing works relates primarily to master recording and

synchronization licenses. There is a stigma around licensing songs for commercial

advertisements that artists are selling out by allowing another company to use their

music. Rock duo The Black Keys have experienced this stigma, and explain the tradeoff as

If someone offers you enough money to buy a new guitar and pay your rent for a while,

and you dont have to do anything for itthe only thing you have to do is take the flak. 64

Early on in their career, the Black Keys turned down a licensing deal from a British

mayonnaise company that would have paid $130,000 simply because they were worried

about their image. Soon after, they decided that as long as you can keep in control of your

art, what does it matter where it gets played? Whats the point of going on the road and

touring, trying to promote your record, then turning down the opportunity to have your

music played because of some stigma? Its all in everybodys head. 65 This is a very

important point, because licensing for commercial use does allow for a musicians song to

reach a much larger audience. Instead of a consumer having to seek out a certain song, it is

delivered right to them in a commercial setting in which they are practically forced to listen

to 30 seconds or more of the song. This is a great marketing strategy for musicians, and

another reason to consider licensing music for commercial use.

Overall, these issues are issues of personal taste that can be decided by a musician

or band as they come up. Both issues are a matter of weighing personal control and image

64 Luber, Jade. "The Black Keys Fan Lounge." The Black Keys Fan Lounge. N.p., 13 May 2010. Web. 26 Apr.
2013.
65 Ibid.
P a g e | 34

against convenience in revenue collection and marketing, neither of which have a simple

solution. How certain artists make money is changing, and its less about albums and it can

be more about licensing income, Co-president and COO of Warner Bros Records Livia

Tortella explained; For The Black Keys, that (licensing) is their number one source of

income. 66 While mechanical and performance licensing issue less than ten cents per play,

they require the artist to relinquish less control over their works while still being a stable

source of income. On the converse, master recording and synchronization licenses are far

more lucrative, but they are harder to secure and last for a shorter amount of time than do

other licenses. Each decision about licensing comes down to musicians personal

preferences, and therefore must be handled accordingly.

Conclusion
The music industry is a rapidly changing scene that has always found a way to adapt to

challenges with which it is faced. In the digital era, the current challenge of file sharing has seen

diminishing revenues for artists, but the solution of having a balanced and diverse portfolio of

revenue streams is one that is robust enough to take the industry through tough times. By having

revenues from crowd funding, touring, and licensing, musicians no longer have to rely on one

source to make their living. This gives them greater security and financial strength in a tough

industry. While it is a high ideal to master all three of these areas, any steps that a musician can take

towards diversifying their revenue streams is a positive step that will help to ensure financial

security in their career.

66 Ibid.
P a g e | 35

Appendix A: Jesse Lacy Interview


1) How did you prepare for the campaign? How much money/time/effort did
starting the campaign require?
Preparing for the campaign involved a lot of creativity, professionalism and serious
organization. The Kickstarter page itself was not hard to put together and release, but pre-
campaign work is huge and proved to be essential to our success. We had to calculate our
overheads and decide on how to present and market the campaign. We found that the
easiest way to do this was to create a times-release outline. This involved what we would
do and when, much like a paper. (Being that I studied English in my undergrad, everything
comes back to how I planned a paper, haha) As the campaign wrote itself, we would merely
guide it from bullet point to bullet point and adjust when necessary.

2) How quickly did you see money accrue? Was it mostly at the front end, or did
donations pick up as you got closer to the deadline?
Our campaign was defiantly front-loaded. We figured that the gracious fans that really
wanted us to succeed would pledge early. In fact, we raised 76% in the first 6 days.

3) Did you reach your goal?


Yes, we reached our goal.

To succeed in the music industry or anything with people for that matter:
Building a community and be consistently dependable. Oh, and always know more.
P a g e | 36

Appendix B: Survey Results

How many concerts do you


attend per year?
8%
18%
Zero
21% One
13% Two to Four
Five to Eight
Nine

40%

Of those concerts, how


many different artists did
you see? (Count headlining
acts only)
18% 11%
Zero
One
Two to Four
34%
Five to Eight
37% Nine or more
0%

How many festivals did you


attend last year?
8% 2%
Zero
One
24%
Two
Three
66%
Four or more
P a g e | 37

On average, how much do


you pay per concert ticket?
3%3% 12% $10 or less
$11-$25
15%
$25-$50
$50-$75
$75-$100
67% $100 or more

How often do you pay more


than $100 per ticket?
3% Never

Once a year
37%
Twice a year

60%
Three or more
times a year
Always

How many albums have you


purchased in the past six
months?
3%
18%

34% Zero
One
Two to Four
Five to Eight
19%
Nine or more

26%
P a g e | 38

Were the majority of the


albums that you purchased
in the past six months in
digital format or in physical
Digital
29%
45% Physical

I didn't buy any


26% albums last year

Are the majority of the songs


that you download obtained
legally or illegally?
10%

Legally

Illegally
53%
37%
I Don't Download
Songs
P a g e | 39

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