Trend Watch: More Music Tech Startups Are Turning To Crowdfunding
It should come as no surprise that music tech startups that need funding are turning to crowdfunding as an alternative approach. Most are Indiegogo-style campaigns though I'm starting to see some equity/investment crowdfunding as well in the U.K. where that's already established. But the challenges of rewards-based crowdfunding for a music tech startup are huge particularly if one hasn't launched and has no users. One particular challenge is that crowdfunding is now established as a funding source so a campaign is not in and of itself newsworthy because isn't every startup seeking funding?
Just to be clear, I do write about music tech startups and I write about crowdfunding. But as some musicians and publicists now recognize, I rarely write about crowdfunding campaigns in progress unless they represent a trend of some sort and generally only write about successful campaigns after the fact so that we can all learn from what they discovered.
The following music tech crowdfunding campaigns are currently in progress. I follow with a more general take on such efforts rather than discussing the pros and cons of any individual campaign. I include Music Gateway as an example of equity crowdfunding though I'm focusing my comments on rewards-based crowdfunding.
Music Tech Startup Crowdfunding Campaigns In Progress
"Sub Stars is a music competition hosted by Grammy-nominated R&B star Eric Benét, where the most talented artists compete underground!"
"TuneGO helps aspiring artists and musicians succeed by giving you everything you need to reach your full potential!"
"The ultimate Music Curation, 100% Human Powered. Already available in Beta version. Join & help us go public and develop awesome new features!"
"Calling all music & video lovers! FMGEM needs your help to go mobile!"
"Music Gateway streamlines the way musicians connect globally. The company, which offers a low cost, scalable solution, has gained 10,000 users, 600 projects and 2,800 pitches since its launch in August representing a 62% growth. With low overheads, proof of market and a high gross margin, Music Gateway plans to grow and scale further through volume user acquisition."
The Challenges of Crowdfunding Music Tech Startups
The big successes in crowdfunding tech startups in general have been hardware companies focusing on funding a single product. In fact, Kickstarter doesn't allow company funding, only project funding.
Product campaigns generally have either a prototype, graphics or a video that shows the potential that a product has for being a great tool or a fun item to use. Music gear campaigns are the closest parallel and some have done well.
Music crowdfunding campaigns focused on an album or related project generally don't have a way to reach people that don't already know about the band. Publicity can help mobilize the troops but if you don't have a fanbase and don't match your campaign to the interests of your fans, you're probably going to fail.
Music tech startups focusing on music services are an incredibly hard sell if they haven't launched and haven't already built some baseline of awareness.
A publicity campaign for a unique service that the potential user can testdrive may well attract new supporters. Even a great idea might work if pitched in a convincing manner.
But ask established music tech startups how difficult it can be to get musicians or music fans to sign up even for free services and you'll recognize that getting them to provide funding, no matter how small, is unlikely in many cases even if the project is quite worthy.
This is particular true for copycat companies, even those providing a better mousetrap, unless they have well-known names attached. Having a cosign from a respected professional or a music star is definitely helpful but, again, many companies have launched with that support and ultimately failed so the luster was wearing off even before crowdfunding was an option.
That said, some of the above companies are doing better than I expected. That's great. Hopefully we'll be able to learn from them in the future.
Until then, if you're seeking Hypebot coverage, you might want to pitch the company before you do the crowdfunding campaign or at least recognize that the campaign is a hook but the company itself is the basis for coverage.
[Thumbnail image courtesy Rocio Lara.]
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Hypebot Senior Contributor Clyde Smith (@fluxresearch/@crowdfundingm) also blogs at Flux Research and Crowdfunding For Musicians. To suggest topics for Hypebot, contact: clyde(at)fluxresearch(dot)com.