Asking fans for money can be awkward. It’s like, “It seems I can’t make money on my own, so I’m asking you to give me some.” Anyway, that’s how it feels. Maybe it’s just me. Anyway, in this article I want to talk about fan investments, which are different from fan donations.
* What do I mean by “invest”
When I say “invest”, I don’t mean that fans are interested in your success, because they want to see how you achieve your goals. I mean invest in the sense that they put their money where their heart is.
Advantages of fan investments
There are two clear advantages that I see in investing in fans.
First, you get the money in advance. Just like a startup that is looking for investors, you can raise money to help you create your art.
Making professional-level music can be expensive, unless you do everything yourself, which you may well do. But if you don’t know how to do certain things yet, such as mastering, mixing, or even producing, you may have to outsource these skills. And it will cost money.
Even if you do everything yourself, you probably have things that you can spend extra money on, for example, to upgrade equipment or purchase a new plugin.
The second advantage of investing in fans is that your success becomes the success of your fans. When people invest their money in you, they become emotional. They 1) want you to succeed because they like your music, and 2) they want to get a return on the money spent.
This way they become more committed to your success. They are more likely to share and stream your music, and they are more likely to become your fans for life.
Disadvantages of fan investments
Like any investment, there are risks and disadvantages. Here are a few problems you may encounter when investing in fans.
ROI may fail. Let’s say you have a group of people who invest their hard-earned money in your music. But then things don’t go the way you planned, and your investors lose money. It would suck and could leave an unpleasant aftertaste with your fans.
In all likelihood, fans won’t be too upset because they like your music and they want to support you, even if they just give you their money. They invest in you first, not necessarily in order to get rich. However, in this scenario, they have really lost money and may not want to invest in the future.
Another possibility is that you don’t have enough investors to start with. It won’t necessarily hurt the people who wanted to invest, because you can just give them their money back when you realize you don’t have enough investors.
But somehow it’s a shame. It would be a shame to conduct an investment campaign only for it to fail.
How Fans Can Invest in Your Music
Okay, let’s say you decide that you want to try to get fans to invest in you and your music. Here are some ways to do this…
Crowdfunding is an old form of raising money for a project. But just because it’s old doesn’t mean it doesn’t work.
Platforms like Kickstarter and Indiegogo have been helping musicians raise money for their EP, albums, music videos and concerts for years. And today, artists still collect thousands of dollars for their projects.
When a fan supports your crowdfunding project, you promise to give him exclusive gifts in return. Therefore, they invest in you, you give them something in return and get the opportunity to complete your project.
Patronage is similar to crowdfunding, but fans regularly support you. Every month, your patrons are charged the amount they promised, and you can keep this money for yourself (usually after the patronage platform holds its share).
In return, you give visitors exclusive things like early access to new music, discounts on merchandise and tickets, and behind-the-scenes stuff. You can give these special supporters whatever you want.
The biggest patronage platform is Patreon, but other options include Bandzoogle (which takes a 0% commission), Ko—Fi, and Buy Me a Coffee.
Sell your fees
Some companies will buy or lease your fees. This means that you can receive an upfront payment in exchange for redirecting the royalties for a certain song to the investor(s). And the transaction can be indefinite or for a certain period of time.
This allows you to receive a lump sum in cash to finance your tour, your album or a new merch. Of course, you will already have to receive a lot of royalties for your song, so this can only be suitable for intermediate and top-level artists.
Royalty Exchange is a leader in this niche industry, so you can find out if this is right for you by reading their FAQ.
Sell shares of your song
A new way for indie artists to earn upfront money is to sell shares of their song. This does not mean that you will sell the rights to your songs. This means that you will allow fans to invest in your song the same way they invest in the company.
Let’s say you sold 100 shares of your song for $10 apiece, earning $1,000 upfront. Now, based on the streaming revenue that the song brings, fans earn money based on the shares they bought. As a rule, this deal has a set timeframe so that fans can return their investment or make a profit.
This way you earn money in advance, your fans feel good supporting your career, and they can also make a profit.
Two companies paving the way in this niche area are Fringe and indify.
By allowing your fans to invest in you and your music career, you make them feel part of your success because they are there. In addition, they can make a profit, which increases the likelihood that they will invest in you again.