By Valerie Milano
Anaheim, CA (The Hollywood Times) 1/31/19 – The popular crowdfunding platform is now defaulting on its payments and compromising the musicians it was designed to help.
Artists raising money via their fan base to record new music, or crowdfunding, has become very commonplace over the past decade. Since the decline of the old music industry paradigm, well-known established artists as well as emerging artists are relying on fans to help fund their recordings. In fact, game developers and other startup companies small and large have taken to doing the same through other crowdfunding platforms. Seizing on this trend, there have been companies that have developed platforms to assist the artist in raising money with a more efficient way of communicating with their fans and distributing the premiums.
One such company is PledgeMusic. Launched in 2009, the site quickly became popular: many musicians successfully used their platform. The method is thus: upon signing up, the band/artist is paired with a PledgeMusic coach, and they set up goals and timelines as to when these goals are to be met. The band/artist sets up a page inside PledgeMusic where they offer a variety of premiums for the people that pledge funds to their campaign – anything from a signed CD to a band guitar to a fan becoming an “executive producer” of that CD or project. After the band/artist reaches their monetary goal, the first of three installments is rendered by PledgeMusic. After the premiums are delivered, yet another payment is made. The third and final payment is made when the final product (CD, vinyl, download, video project or any combination) is completed and the artist delivers that new product to the fans. PledgeMusic takes 15% for mediating this transaction.
The artist’s fans give this money to the artist. That is the point of the whole exercise. It is to support the artist in making their music.
However, recently it has become public knowledge that PledgeMusic is either not paying their artists or taking far too long in doing so.
Keyboardist Lao Tizer, who went to PledgeMusic to help support his newest CD/DVD, “Songs from the Swinghouse”, stated that his while his first payment was on time, the second payment was 6 to 7 weeks late. He had to write to his coach numerous times until he finally got paid.
I then spoke with the world guitar group Incendio who was suppose to receive their first payment in September of 2018 and has received nothing. When confronted on the late payments, their coach, Ms. Alyssa Spector, continued to give them stock answers until they threatened to go to social media. After denying that the answers were “stock” (a claim subsequently debunked by other artists who had received almost word for word the same jargon), Ms. Spector then said she was sending them to upper management. The group subsequently emailed Mr. Rob Knight – they never got any response. To date, they have written to the help center who said they would have upper management contact them – they did not. The group left a message on the only phone number available and still, there was no response. The group is currently considering their legal options.
The Nashville-based world music group HuDost originally spoke to the online magazine Hypebot who then wrote a September 2018 article in about PledgeMusic’s behavior towards their musician-clients. After that article was published, HuDost received their initial payment. They have no idea how long it will take to get the remaining funds they are owed, funds that are earmarked for CD and vinyl replication – it is almost impossible for the group to move forward in their carefully laid-out release schedule without the funds that PledgeMusic owes them. In the wake of that article, PledgeMusic CEO Dominic Pandiscia resigned in October, and PledgeMusic acknowledged that they were working on their internal problems.
However, there have been few if any payments forthcoming, and the problems have appeared to become worse. Just recently (starting on Tuesday January 22), the Lefsetz Letter and Billboard Magazine came out with articles critical of PledgeMusic. Their problems have appeared to ensnare the above groups as well as Fastball, Jesus Jones, and a myriad of other bands and solo artists. Many artists in the music community have spoken, but some have not – it is unclear how many bands have been affected.
The platform that was set up to help artists is now undeniably making life far more difficult for them. Not only has PledgeMusic taken money from the artists, but has in effect taken money from their fans. The people that choose to help support their favorite artists are not investing in PledgeMusic – they are not supporting PledgeMusic by giving them money to do with as they please (as one might when one is investing in a company that they expect to do well – PledgeMusic was not an investment opportunity). These fans were lead to believe that the money they donate is going directly to support the artists to whom they are pledging money. PledgeMusic has possibly engaged in unethical behavior – the company has misrepresented itself to the artists and their fans. As a result, artists are having to resort to either begging for their money and/or threatening legal action. Whether intentional or not, PledgeMusic is playing on artist’s concerns about not getting paid – if the artist believes they won’t get anything by going public, they are dis-incentivized from complaining too loudly.
In light of last week’s bad press, PledgeMusic did respond officially for a second time in 4 months to the claims of mishandling of funds:
PledgeMusic has always been committed to serving artist and fan communities. It was established by artists and was born of a need to change the way in which the traditional music industry operated. It was designed to help artists and their teams at every level, and we believe that PledgeMusic has become an essential part of the evolving landscape of the music industry.
That said, we deeply regret that recently we have not lived up to the high standards to which PledgeMusic has always held itself. We acknowledge that many artists have and continue to experience payment delays. These delays to artists are unacceptable–not only to them, but to us.
Since its beginning, PledgeMusic has successfully serviced over 45K artists from emerging acts to some of the biggest names in the industry. We’ve supported 60 Grammy-nominated artists and helped springboard 100s of unsigned bands to successful careers. Our efforts have assisted over 375 artists with chart position on the Billboard Top 200. Our platform has provided close to $100m of revenue to its artist community.
Mid 2017, new investors came into PledgeMusic with the goal of strengthening the company and improving the value proposition for artists and fans. After substantial investments in the business over the past 18 months, we believe we have made good progress to that end, but it hasn’t been enough. That said, the company has cut its operating expenses nearly in half over the past year. We’ve overhauled key parts of our financial and operating systems, while adding talent to our roster and making enhancements to the platform like our Vinyl Store, D2C artist store-fronting and our data analytics.
While the company has made progress, we still haven’t reached our goals. PledgeMusic has been in discussions with several strategic players in the industry who have interest in the PledgeMusic platform. We are evaluating a number of transactions with those potential partners, and we plan to announce details of this in the next 60 days. It is our expectation that payments will be brought current within the next 90 days.
We accept responsibility for the fact that we have been late on payments over the past year. PledgeMusic is working tirelessly on this issue, and we are asking our community for their continued support and patience.
However, and despite the claims above, neither Incendio nor HuDost have been contacted to date with any plan to pay them their money, nor have they remitted any payment.
PledgeMusic appears to have started out with a good intent, but there have undoubtedly been some very poor management decisions that have led to this current crisis. PledgeMusic owes quite a few musicians their money, and artists thinking of utilizing the platform should be informed of the current truth of this company so that they do not suffer the same fate as the bands currently embroiled in the struggle. As Liza Carbe of Incendio states, “there are currently other platforms that offer the same services and live up to their promises by paying the artists the money they have raised.”