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Could a microfinance platform upend the entertainment industry?
Artists of all shapes and sizes frequently lament the current state of the entertainment industry, which adheres to a centuries-old patronage tradition whereby the few and the powerful get to decide the meaning, context, and future of art. This has become particularly prominent in the book publishing industry, where a war is being waged between publishers, retailers, and consumers over the price of books, e-books, and the future of digital literature. But what it really comes down to is a flawed system wherein a handful of execs are putting up the money to peddle a select group of authors whose literature most closely matches trending consumer choices in books.
This is the way it is in most artistic fields, such as music (think American Idol), movies (think lame action flicks with lotsa 'splosions), and more. But what if we experimented with different platforms?
Meet Microfundo.com, a website that uses a microfinance platform to support musicians from around the world. Microfundo, which launched in April, uses crowd-funding to not only support musicians and help them gain exposure, but also introduce users to different musical flavors and emerging (but underexposed) artists as well.
So here’s how it works: you go on Microfundo.com, browse around, check out some artists, sample some of their work (all artists have at least a couple of songs that can be downloaded for free), and then if you find an artist that you like, you can make a contribution to help finance that artist’s studio recording, tour, and more.
What’s interesting about this model is how it differs from traditional microfinance in terms of “repayment.” While founder and CEO Brad Powell (who likes to go by the title Chief Inspiration Officer) took the idea for Microfundo from the Kiva platform, he noted that there is virtually no relationship between the lender and the borrower. Powell’s idea for Microfundo was to take the traditional micro-lending model and tweak it to encourage more connection between musicians and users.
For example, Alex Alvear, one of the first musicians to work with Microfundo, is raising funds for his band’s (Mango Blue) album recording. For $9.99, a user can download a copy of Mango Blue’s live album; for $25 a user can get the live album plus a signed CD once it’s released; for $250 a user can get a backstage pass to the next Mango Blue concert; and for $1,000, Manguito (a smaller offshoot of Mango Blue) will perform at a private party or event.
So far, Alvear has raised $8,550 of his $10,000 goal. In the six months since Microfundo launched, the website has raised $50,000 for the dozen or so active projects running on the site. The user base remains somewhat sparse, with 1,200 registered members, but Powell hopes to increase that number by partnering with other music organizations around the world.
Recently, Microfundo partnered with PeaceTones, a non-profit organization that went to Port au Prince, Haiti in search of undiscovered musical talent. The group ended up finding 19 original artists, who wrote and recorded their own songs for Microfundo’s Haiti Sings contest, which just went live. Users can go online and vote for their favorite artist until December 10. The winner will be flown to New York City to record their album and open for the legendary Haitian group, Tabou Combo, which Powell described in an interview with VatorNews as the “Rolling Stones of Haiti.” One quarter of the artists competing in Haiti Sings were displaced by the earthquake.
What I really find interesting about this model is its potential to turn the entertainment industry as a whole on its head. One could easily apply this model to a wide range of different artistic genres. Take the book publishing industry, for example. What if one were to simply set up a platform that removes the middleman (the publisher) and allows readers to support their favorite (or emerging) authors directly? Instead of querying a publisher or literary agency, the author could literally query the world of Web-using readers, posting a synopsis, outline, summary, credentials, etc., so that readers can gauge for themselves if it’s a story they would want to read. Funds raised could go towards editing services and author compensation.
It’s Web 2.0 meets art!
You might be asking, “But isn’t that what self-publishing does?” Yes and no. Self-publishing allows authors to market their own work directly to readers, but it’s a fairly unorganized system. Authors might take a note from Kiva just like Powell did and create a unified, organized platform that allows readers to invest in literature, thereby establishing a model that allows the author to gain exposure and raise money.
Some academic groups have also been testing out crowd-sourcing when it comes to evaluating academic papers. The academic journal Shakespeare Quarterly is presenting four not-yet-published academic papers on its website for open review.
But Powell sees unique elements in the music industry that allow for greater connection between artists and consumers. “Music fans want to be part of a vibrant music scene, they want to be connected to the artist and other members of that music scene.” Admittedly, not all art forms work in the same way, and truly, music is a collaborative process. Powell emphasizes the artistic power of relationship building.
Indeed, Microfundo was, itself, crowd-funded. The only fundraising that the organization did was through crowd-funding, in which it raised $5000 in ten days.
Ultimately, what Microfundo proves is that just as peer-to-peer lending eliminates the middleman in entrepreneurial endeavors, so too can it eliminate the middleman in other projects, like recording an album, or publishing a book, or perhaps creating a movie.
Image source: Microfundo.com
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Microfundo has taken Kiva’s microfinance template and extended it to music, in hopes of turning the hit-driven American Idol system on its lame head and engaging fans to fund artists directly.
Crowdfunding has become a recent cause célèbre for funding creatives and entrepreneurs. Sites like Kirva.org and Kickstarter.com have set the standard for online platforms that let entrepreneurs obtain funding from groups of people who make small contributions. For example, in its first three years Kiva successfully raised more than $100 million US, and is currently raising over $1.5 million US each week, in microfunding for entrepreneurs from developing countries.
These new crowdfunding platforms prove that groups of people are willing and capable of providing significant funding for a wide range of small business enterprise and artist projects. Taking its cues directly from the early success of Kiva, Microfundo has launched a specialized crowdfunding service for international musicians.
However, successful fundraising has always been about long-term relationship building, and this key ingredient is largely missing from the Kiva and Kickstarter sites. By adapting crowdfunding to music, Microfundo is capitalizing on the strong desire among music fans to create deeper, relationships with favorite artists and with other fans.
Microfundo is changing the way the world funds music through an online crowdfunding platform that enables musicians to solicit funding directly from fans. Microfundo is a musician-friendly alternative to the funding role traditionally played by music labels.