Crowdfunding: Towards a redefinition of the artist’s role – the case of MegaTotal

Crowdfunding type

Since crowdfunding is at an early stage of development, all classifications are temporary in character. They may be reformulated as the phenomenon develops. This analysis assumes the benefits received by contributors as the criterion differentiating the various types of crowdfunding. Thus we can identify donation-based crowdfunding (where contributors do not receive any tangible benefits), reward-based crowdfunding (where contributors ‘receive some kind of reward in return for their contribution’), lending-based crowdfunding (where contributors receive payment and/or interest on their investment), and equity/royalty-based crowdfunding where contributors receive ‘equity-like shares’ or ‘a share of revenue earned in return for their investment’) (crowdsourcing.org, 2013: 19). ³ This classification encompasses all possible types of crowdfunding, including those that are not a subject of interest on the part of cultural and media studies (e.g. lending-based crowdfunding). In the case of our analysis, it is a comparison between reward-based crowdfunding represented by Kickstarter and equity/royalty-based crowdfunding represented by MegaTotal that is the key. The most important difference between them is the uni-directional flow of money in the case of reward-based crowdfunding (exclusively from the contributors to the project initiator) as compared with equity/royalty-based crowdfunding (where the flow is in both directions and if the project begins to turn a profit then contributors are promised a share in that profit).

Size and structure of the pre-existing fanbase

As was noted in the introduction, to date, the bulk of attention on the part of researchers and the media has been attracted by major projects supported by well-organized groups of fans in existence prior to the launching of the project, for example, Veronica Mars (Booth, 2015; Hills, 2015; Scott, 2015). This is understandable. However, it should be remembered that they may proceed differently from projects implemented by artists who are little known and who have a small fanbase. It is for this reason that, in analysing any crowdfunding campaign, it is necessary to ask, each and every time, if the relation is based on a pre-existing ‘cult’, where the artist makes reference to already existing ‘emotional capital’, or not (Jenkins, 2006). It is in this context that Scott points to specific fan-ancing type projects, that ‘directly solicit production capital from pre-existing fan bases of either a medium … or specific media property … [or] projects initiated by a creator or performer with a cult following’ (2015: 170, emphasis added). This description would also encompass campaigns such as the Veronica Mars one or projects such as Amanda Palmer’s. They assume a specific type of engagement on the part of the creator who identifies him- or herself as a member of a community, not someone who is above it. The best example is provided by the stance of Rob Thomas who, from the very onset of the Veronica Mars campaign, presented himself as a partner of the fan community (hence, the term, ‘our’ film, references to a specific film language when communicating with fans, and declarations of concessions made in the final form of the film, even if at the expense of the author’s vision). What obviously remains is a question as to the degree to which such a stance is ‘honest’ (Hills, 2015; Scott, 2015). Thus the paratextual activity surrounding the campaign becomes a form of what Scott, quoting Hills, calls ‘brand fanagement’ (2015: 176), while Hills, quoting Marwick (2013), writes about ‘self-brand’, which ‘requires frequent, ongoing emotional labor to maintain … but the benefit is that Thomas is positioned as fan-like rather than as an archetypal industry insider’ (Hills, 2015: 186). In this context it is the difference in projects undertaken by artists without a large fanbase that should be stressed (see below).

Project initiator’s opinion on the role played by contributors

Artists have a whole plethora of views on the role that should be played by fans (Baym, 2012). Some wish to maintain full control over their works and see the role of fans as that of receivers-consumers. Others give fans the capacity to remix their works (e.g. Nine Inch Nails [Jarvenpaa and Lang, 2011]) or even enter into collaboration with them on a creative level, for example inviting them co-create the lyrics to songs (Gamble and Gilmore, 2013). In the context of crowdfunding, a significant element of the discussion on fan–creator relations is the matter of the ‘rights to the work’. Not only is copyright a problem (Henry Jenkins [2006] describes examples of conflicts between producers and fans in his earlier work, where the most famous involved George Lucas and the fans of his saga), but also the more general question of perceiving the social role of the artist and the rights this entails. In examining this subject, it is necessary to ask if the changes are perceived and accepted to an equal extent by both parties and how, if at all, artists are trying to adapt to the changing situation. At the same time it should be remembered that, depending on the type of project, relations in crowdfunding can be extremely varied and these differences are based on tiny nuances. There are still no developed rules, either on a social level or legal one. Thus, the above problem is often settled on the basis of an informal agreement in which both parties strive to adapt to their mutual expectations.

It may also be assumed that the shaping of the project initiator’s opinion on the role played by contributors is also influenced by the type of project being undertaken. Even within the framework of projects in the area of media and entertainment it is possible to find certain differences relating to potential for intervention on the part of fans. As demonstrated by Smith (2015), in as much as fans of games can relatively easily take part in creative work on a crowdfunded game financed through them (for example forwarding comments of a technical character as well as regarding the game scenario), in the case of musical recordings this may be somewhat impeded for technical reasons (a lack of knowledge on the part of the audience as to the process of composing and recording music) or because of ‘conventions of creativity’ characteristic of a given genre that do not favour the creative participation of receivers (Negus, 1995: 334).

Type of crowdfunding

In contrast to Kickstarter MegaTotal applies equity/royalty-based crowdfunding. In practice, this means that each and every payment (except for the first) is subdivided into two equal parts, where one part goes to the project initiator and the other is distributed among earlier contributors in proportion to their participation in the project. In effect, every contribution increases the account of the project, but also determines the position of the backer on the list of project ‘shareholders’. As successive deposits are made, each person who supported the project at an earlier point receives ‘a share of the revenue earned in return for their investment’ (crowdsourcing.org, 2013: 19). The flow of resources takes place in real time, which means that ‘profits’ are transferred to the accounts of contributors in the service the moment the given project attracts successive contributors. As a result of this mechanism, contributors have additional motivation that is not present in donation-based and reward-based crowdfunding. One of the respondents described this as follows:

Indeed, I made investments in many artists whose creativity was not what interested me, but in order to be able to immediately put any profits into artists with whom I had good contacts and whose work was closer to my heart. (Cx) ⁴

Another respondent, when asked how important the investment aspect of the platform was, presented a similar opinion:

Rather important. At the very beginning it was support for artists. Selfless. However, there comes a moment when ‘investing’ opens up a road for financing certain artists at the expense of others. There is this point in time when it becomes a fun game: Who gets how much money for continued support? Sometimes you end up in the black and sometimes in the red. A zero sum was a good predictor that perhaps, at some point in the future, the project will take off and there will be further profits. There even came a moment when I wrote myself an investment calculator that allowed me to check the profitability of an investment at a given phase of the collection process. (Ce)

These two quotes show the difference between equity/royalty-based crowdfunding and the model applied by Kickstarter. However, in order to properly interpret this difference, it is necessary to take a look at the communication tools available at MegaTotal. It is these tools, in addition to the investment mechanism, that define the character of the service. Before changes to the platform were made in January 2012, the MegaTotal page had been equipped with a forum and a shoutbox that had been actively utilized by the service community. ⁵ It was the central point of the service, the site of discussions among platform users as well as where project initiators encouraged investment in their projects. One respondent described the functioning of the MegaTotal communication tools as follows:

A lot of things were going on. The forum was very vigorous and discussions in the shoutbox were under way at almost all hours. The community was alive. People shared their thoughts on the projects, but they also discussed all manner of other matters. Internet friendships were forged that, sometimes, were carried over into real life. (Cq)

It may be stated that, in a sense, this process was the opposite of the process taking place at Kickstarter. In the case of MegaTotal, participants made contacts as a byproduct of supporting projects. At times, these contacts were transferred outside the platform. With Kickstarter, it was a situation where supporting a project was the result of knowing someone (belonging to the group of fans). ⁶

Size and structure of the pre-existing fanbase

The combining of the investment mechanism with active use of social network tools is the reason MegaTotal should primarily be treated as a platform characterized by an active group of users linked by mutual ties. While Kickstarter, as a platform, used project initiators as a way for them to attract their fans so they could support a given project, MegaTotal is a platform where artists go in order to convince the community already functioning there to make deposits. Although it is true that some artists who were successful in attracting the funding goal had managed to do so thanks to the support of their own fans, family and friends invited to the platform, it was also thanks to convincing the steady users of MegaTotal to support them. The dominant view among respondents is that it is that second group that was the key to collection success. One of the respondents indicated that ‘90 percent were people whom we did not know at all’ (Aj), although it is, of course, very difficult to make generalizations on this basis. A key element is that most project initiators on MegaTotal are artists in the early stages of their careers. In many cases they did not have a fanbase sufficiently large for deposits made on that basis to be adequate to issue any recording whatsoever. Thus, in comparing actions undertaken by initiators regarding projects on Kickstarter that attract the attention of the media (e.g. Veronica Mars, Star Trek Renegades), with efforts undertaken by the initiators of projects at MegaTotal, it may be stated that they differ in their utilization of the platform. In the case of the largest projects at Kickstarter, the project initiator, enjoying the status of a star, promoted his or her project using paratexts directed at fans – such as ‘launch video, campaign Frequently Asked Questions [FAQ], project update emails, creator interviews, and official statements/apologies’ (Scott, 2015: 168) – aimed at ‘establishing a tacit understanding of the balance of power between producers and consumers that would be paratextually reinforced throughout the production process’ (Scott, 2015: 176).

For its part, at MegaTotal, it is real-time communication between the artist and contributors that is of greatest importance. Communication takes place through the platform and the communicating parties are similar in status. One of the respondents captured this as follows:

What was very important was that it was necessary to make some kind of contact with these potential fans. It was not possible to treat them ‘across a desk’. Direct contact was necessary. It was necessary to write, devote two or three hours an evening, which was very tedious. And talk. (Aw)

The ties that were developed during such discussions translated into support for the projects. The following quote shows precisely how this mechanism worked during the period of MegaTotal’s greatest popularity:

To what extent was the making of an investment important? There are two important aspects around which this should be examined. As a community of people exchanging views – minimally important. What was of greatest importance was the contact, the exchanging of views, and often many friendships outside the portal itself.… On the other hand, the formation of such a close link with these people gave birth to ideas as to who should be supported, who has what kind of market potential, or can these materials achieve market success. It was then that investments were of great importance. They made development possible, which was what we longed for – the development of music. Investments were important, but only in as much as they allowed the transfer of profits to projects that according to us were of value. (Ce)

Project initiator’s opinion on the role played by contributors

Although artists we interviewed in most cases were quite open to engaging in new relationships with users of MegaTotal during the process of crowdfunding (which is more than understandable since otherwise they might well find it difficult to gather the desired sum of money), their perceptions of the roles of artists and fans outside of the context of crowdfunding are quite traditional. Some respondents claimed straightforwardly that they see no possibility of allowing contributors to exercise an influence on their creative process:

the bottom line is that we would have a serious conflict if somebody tells us how we should play or what we should do to make it sell better, or because somebody wants it that way. (Av)

The above statement refers to the hypothetical situation of a fan demanding the right to take part in an artist’s creative process, following Amanda Palmer’s call for engagement and cooperation on both sides. If, however, as the quote suggests, artists find it difficult to accept fans taking part in their creative processes, then from the listeners’ perspective crowdfunding becomes only a way of buying pre-sold records, complemented with the possibility of talking to artists in both chatroom and forums. This is very far from Palmer’s understanding of crowdfunding.

The strong belief that artists are not supposed to be influenced by anybody when recording their music is demonstrated by their quite independent approach towards choosing the final tracklist of an album. One of interviewees said that when his band recorded an album containing different songs than those that were presented to contributors (as demo versions) during the gathering stage, some contributors asked for an explanation why this was done. This demonstrates that although contributors, just like a record label, give artists money to record an album, they are not treated by artists as business partners with whom an artist negotiates the final shape of an album.

Some respondents who theorized about the possibility of fans’ involvement in the creative process declared that they did not see such a desire on the side of contributors:

There’s this dualism of this situation, because on the one hand an artist wants to be fully independent, it’s like signing … a deal with a major record label.… There’s the same dualism with fans. On the one hand they think: ‘There you go, do it. We gave you money and you are free to release whatever you want’, while on the other hand they think that if they invest, then they have their equity, they think about this commercial side, so I just don’t know … but during my projects I never felt that any of the fans, contributors, wanted to intervene. Rather the contrary. (Ao)

Responses culled from contributors suggest that the impression of the artist quoted above is true. Most contributors did not insist on facilitating potential for creative input into the project being implemented. The statement by one of the most active contributors is symptomatic. He described his position as follows:

I don’t know enough about this to give any advice. For the most part, I restricted myself to projecting positive feelings (‘wonderful record’, ‘the fifth piece is the best’, or ‘an excellent concert’) and tended to concentrate on asking about possible direction and objectives rather than demarcating them. Several CD covers ‘passed’ through my hands. I found a few spelling mistakes. (Cv)

The only people who decided to forward more unequivocal judgments regarding the creativity of artists were users who declared themselves as devoted fans of the given artist. One respondent described her relations with one of the groups collecting funds through MegaTotal as follows:

I had almost nothing but remarks for the group ;) Often, I would comment on their musical activities with remarks that were more or less substantive. I had opportunities to suggest the form of the setlist prior to concerts. Direction, as such, was not something I indicated. I only said what I liked and what I didn’t like. At the same time I gave the artists the right to create and develop in any way they themselves thought proper. (Cq)

Thus, it may be stated that only contributors who felt strongly linked to the artists allowed themselves the possibility of more active influence over the artists or even of interfering in their work. However, it is necessary to stress that this is a matter of ties that link the fan to the artist, not an investor to a project initiator. Contributors who were primarily attracted through investment motivation did not seem to be inclined to build ties of a creative nature with artists.

On the other hand, we should also take into account that as much as an artist may find it difficult to admit, by the very decision to seek funding on a crowdfunding platform they are already giving up some of their artistic freedom. One of respondents admitted that a contributor’s decision to invest in some tracks while neglecting others can be perceived as a way of exerting a kind of pressure on artists.

We like our songs so we try [regardless of fans’ opinions] to decide on our own [which songs to include on a recording] but sometimes some contributors’ choices gave me food for thought. It sometimes turned out that a song which was important to me and in my opinion a very good one, got very little endorsement from fans. It made me think about what we are doing and why this was so. (An)

It is possible that the artists interviewed, when declaring that they exclude the possibility of fans’ involvement in their creative process, had in mind behaviour reminding them of the intervention of record label managers rather than the more nuanced involvement of fans which is made possible thanks to crowdfunding. Such involvement takes place to a certain extent automatically, either in the form of influencing artists’ decisions through discussions or the investment mechanism (as explained above), or in the form of the engagement of fans in promoting artists’ works.