An overview of funding options for musicians
Updated: Nov 26, 2020
On this blog we talk a lot about marketing, but I’d like to focus on another critical issue faced by pretty much every artist out there.
A magic money tree.
At the start of 2019, when we were researching the problems faced by musicians, we interviewed quite a few artists at various stages in their careers. The two biggest issues that came up were almost always the same:
It’s tough to get your music heard and build an audience
Funding is really hard to come by
As both a musician and an ex-investor, I encourage independent musicians to think of themselves as a startup, or an entrepreneur. Your product is your creative output, your art, and - assuming you don’t have a big team on board - you’ll need to figure out how to manage the ‘business’ side of things too.
At Feed we’re all too aware that a startup needs funding (see our Crowdcube!), and really it’s no different as an artist. You need that bit of startup capital to get things off the ground before you can become self-sustaining and make a living from your music.
This isn’t unusual at all, nor is it specific to music. It applies to all types of creators, entrepreneurs and businesses. In fact, you might even be at an advantage as a musician because you can keep your costs pretty low at the beginning. Assuming you’re the only ‘employee’ to start with (a ‘sole trader') the minimum profit required (your income minus your costs) is simply the amount you need to live on.
In future, we will write about each aspect of being a ‘creative entrepreneur’ in more detail - however, right now I’m going to bring this back to focus on funding, or your startup capital. It’s worth noting that this is different from your revenue (or income), which will come from ongoing ‘sales’ from tickets, physical records, merch, publishing & recording royalties from streaming and radio, commission income and sync.
There are three main sources of funding, assuming you haven’t got a lucrative label or publishing deal yet: traditional ‘fan funding’, an emerging ‘fan investment’ option and the tried and tested grants route.
Below I take a look at the pros and cons of each category and the main options available.
(N.B. This article is meant to be a summary of the options available, to help you figure out which might make sense for you. We’ll be writing in more detail about some of these down the line. I mention some Covid support funds in passing, but check out the ISM’s more comprehensive list).
Raise money from your fans in exchange for rewards or exclusive access. Simple, in theory! Fan funding can be broken down into project-based crowdfunding and ongoing subscriptions.
Having a really engaged audience who actually pay for your music (gasp!) can be a powerful way of generating income without needing a huge audience. Think 1,000 true fans rather than 1,000,000 monthly listeners. We have some ideas about how Feed might be able to help you make the most of this strategy in the near future too.
Who better to support you than those who love your music?
Open to anyone, no ‘rivalry’ for funding
You remain in control of the process
With subscriptions, recurring monthly income is (in theory) very attractive
You don’t have to give away rights
You need something of a loyal fan base already in place
Can be tough for to raise larger amounts of funding
Often need to offer perks/rewards to fans, and creating ongoing bespoke content is time consuming
Probably the best known membership/fan subscription site. Fans pay a monthly subscription in exchange for exclusive content and insight, and Patreon has just raised quite a lot of money so they’re here to stay. The monthly recurring revenue is certainly an attractive prospect, though the big drawback is having to create a new tier of ‘exclusive’ content on an ongoing basis… on top of what you would usually post on social media or to a mailing list. Patreon will charge 5–12% of your monthly income as an ongoing fee.
A few musicians have been using Feed to drive fans to their Patreon page which could be a winning strategy in the future: combine the immense reach of digital advertising with the income generating potential of fan-funding.
Built specifically to fund creative projects. Rather than the monthly subscription Patreon model, you raise funding on a project-by-project basis. The upshot of this is that all the work is done upfront, with no ongoing commitment to your pledgers; the downside is that for a new project or release you’ll need to do it all over again. Kickstarter charges 8–10% of your funding total. Kickstarter is ‘all-or-nothing’ funding, meaning your project must meet its fundraising goals within a set period before you receive any funding.
Other notable options include Indiegogo (similar to Kickstarter, 5% fees) and GoFundMe (0% fees, more of a charitable focus). artistShare is one of the longest-running platforms out there, with similar fees to Kickstarter - the differentiator being that you can complete a fundraising even if you don’t hit your target through ‘unconditional backers’.
Spotify also recently experimented with a ‘tipping’ feature letting fans donate to artists or a cause of their choice… which was seen by many as a tacit acknowledgment that the streaming model doesn’t pay most artists.
This is quite a new area - at least nobody has completely cracked it yet - but worth keeping on the radar as it has huge potential. Instead of a label or publisher advancing you money in exchange for a cut of your royalties, you can crowdfund from your fans who themselves will receive a share of royalties.
You can attract investors, not just fans, which widens the potential pool of funding
Fans can share in your success: an added incentive to invest
Still a very new area
You might have to give away rights (or income, at the least)
Some companies see recoupment for investors
Fan investment can be done in a focused way (raising money in exchange for recording rights in specific releases) or much more widely, similar to startup funding (asking people to invest in your whole business as an artist, including live, merch etc). Most current players are focused on the former, though we hear whispers of people doing interesting things on the latter… more to come soon.
Corite is a Stockholm-based platform where investors ‘advance’ money to the artist in exchange for a revenue share of streams from that track. Similar to a traditional label deal, investors recoup (get their money back) before the artist sees any revenue. As the artist, you choose how much money you want to raise as an advance and what % your ‘backers’ will get after they recoup. The platform then works out your streaming goal target to make your backers a return (which tends to be a very large number even for small raises). This will be an interesting one to watch - I suspect many artists will never fully recoup their advances from only streaming income… but the jury’s out.
Across the pond, Amplify X is a new company that allows “fans and investors [to] fund your music—no label necessary” by offering them rights (similar to Corite). Another sort of crowdfunded record label deal, but way more favourable terms and the artist stays in control. We have spoken to their team, and they’re about to begin trials with their first artists. As far as we’re aware they’re the first player with the clearance needed to create this ‘artist investment’ structure in the US.
There are other startups in this space like ANote, though they are more focused on ‘secondary’ transactions - buying & selling royalties a while after the music has been released - so not (yet) quite as relevant for musicians looking to raise funding for their current projects. Similarly with Songvest which assumes you already have royalty streams to sell.
Non-repayable funding issued by government & government-related entities, foundations, charities, individuals and other organisations. Google is your friend here - a lot has already been written online about these - and I’m only listing the key UK ones here, but we’re planning to share a fuller list in the future.
One source of funding that could potentially fund an entire project
You don’t have to give away rights
Lengthy and opaque application processes with poor or non-existent feedback
Limited availability means a low success rate
Often quite restrictive eligibility criteria
Often skewed towards classical music & ‘the arts’ rather than pop
One of the main funders in the UK and perhaps the least restrictive in terms of genre and the stage you’re at. They have a number of funds, ranging from the (hyper competitive) Open Fund to more specific funds tailored for early careers, emerging artists, international opportunities and women only. They also have a covid-support Sustaining Creativity Fund, now targeted at black artists and black-led organisations specifically.
A charity generally focused on musicians who are studying, training or in the first few years of their career. Again, they run various funds including the Do It Differently Fund (adapted for covid), a joint MOBO Fund, a Jazz Award, awards for pop study and postgraduate study... and many more. Their Hardship Fund has already paid out more than £11m since the start of the pandemic, and they are extending the fund until the spring of 2021 following new donations.
“The national development agency for creativity and culture” who between 2018 and 2022 “will invest £1.45 billion of public money from the government and an estimated £860 million from the National Lottery”. Grants can be sizable (up to £100,000) and there are a variety of funds to choose from. The Project Grants are most likely the ones for you - individuals can apply and music is one of the key funding areas. The Scottish, Welsh and Northern Irish versions are separate from ACE.
The most common criticisms of ACE are the incredibly long-winded and opaque process, as well as a general feeling of ‘exclusivity’. If you’re a composer of ‘new classical’ music with friends working at ACE you might be in with a chance… but if you’re a pop musician with no contacts there it might be a little harder.
There are also a bunch of more classical-focused funds (as that particular industry is very much supported by wealthy donors) including GEMMA Classical Music Trust, Hinrichson Foundation, Leche Trust, Nicholas Boas Trust, RWV Trust and Sound and Music.