From Mozart to the Mark K
Without crowdfunding we'd have less Mozart and no Statue of Liberty. Here's why.
What we said (more or less...)
Tony: Last week Matt had and I had a chat about the new product we’re launching and released the first details of the plans for filming the Kickstarter video in Italy. If you’re keen on catching up you can find a record of all our past episodes by searching Thomas Clipper on iTunes or visiting thomasclipper.com/kickstarter
Matt: This week we’re preparing for our trip out to Florence on Sunday. We’re heading out to film our Kickstarter video.
Tony: For those of you new to the idea of Kickstarter, or who just wanted to know a bit more about the history of how it came into being, we thought we’d go through a potted history of crowdfunding. So Matt, to kick us off, what exactly is ‘crowdfunding’?
Matt: well the simplest way to explain it as to use the music you’re listening to now as an example. It’s by Nate from Solomon’s Hollow.
He wanted to make this record, but to do it he needed time in a recording studio, which costs money
He could have gone to a bank to take out the cash to hire the recording studio. That relies on my having a clear business model for selling the record, which he didn’t have - he’s a musician, not an accountant.
He could also have gone to a record company. But that would require signing away his rights to the record, and giving away some creative freedom. Which he wasn’t really interested in doing - he’s a purist.
Kickstarter let Nate engage with his fans directly and ask them to fund the album in advance. People like Tony and I paid a small fee up front, Nate went to the studio with the cash, recorded the album, and six months later we all had a great record. Everybody wins.
Tony: The Kickstarter model is part of the world of ‘alternative finance’.
‘Alternative finance’ means ways of raising money which are...well..alternative to ‘normal routes’. In the case of Nate that meant a record company, in our case it’s banks. Since the funds come from people - the crowd - it’s called crowdfunding.
People tend to think of crowdfunding as being very recent, and predominantly driven by the internet. There’s actually a history of crowdfunding that stretches much further back than that which we’ll come onto. But let’s start with the ‘modern’ incarnation of crowdfunding. Remember Marillion?
Tony: me neither. Well, Marillion were a British rock band and in 1997 they got their US fans to raise $600,000 online to pay for a US tour. They really wanted to see them.
Matt: wow. So they were the pioneers. And then of course you have a few ‘platforms’ cropping up after that, such as ArtistShare in 2000/1 which raised money online for music, and in 2008 you get Indiegogo which is a platform for raising funds for people to make stuff, and Kickstarter in 2009, which does something similar.
We’re not just talking about small projects though. The Pebble smart-watch raised over $30m for example. All of this was enshrined in law as part of the Crowdfund Act by Obama in April 2012, encouraging more crowdfunding and giving incentives for it in the US.
Here in Europe crowdfunding is a bit newer...
Tony: Well actually that’s not quite true Matt. There was a European pioneer of crowdfunding you might have heard of. In 1784, Wolfgang Amadeus Mozart raised funds for his concerts and gave invitations and special manuscripts as ‘pledges’ in return. But actually people think the first instance of modern crowdfunding was even earlier in 1713 when Alexander Pope raised money for his translations of Greek poetry into English (and got an acknowledgement in his book in return).
A hundred years later America got in on the crowd funding act in a big way. The now long defunct New York World newspaper ran fundraising for the base of the Statue of Liberty (because New York state government wouldn’t pay for it), raising $101,091 from 160,000 people.
Matt: So we’re in good company. But a couple of things strike me. One is that what’s special about this form of fundraising is that in most instances, people are getting something back (pledges, concert tickets, admiring the statute) that isn’t financial. That’s different from a normal investment, and in some ways is more satisfying.
And two is that the characteristics of the pre-online world of crowdfunding and post-online are the same: money for a non-money return channeled through a single ‘platform’ (or person, in Mozart and Pope’s cases). The only difference was the internet made it easier to reach more people.
Tony: Absolutely right. And with a little luck, dear listener, you’ll be the great beneficiaries of this historical development which has gone from Mozart to Marillion, via the Statue of Liberty, to Thomas Clipper.
Matt: Tune in next time when we’ll be recording from Florence, Italy. Remember to subscribe to be the first to find out about how the filming went.
Tony: In the meantime I’ve been Tony.
Matt: And I’ve been Matt.
Tony: We’ll be back next week, hopefully with some exciting news on the crowd funding campaign. Until then, goodbye and thanks for listening.