Kickstarter Bands: Can Uncle Sam Touch Your Money?

Categories: music-biz shiz
all star weekend.jpg
Allstar Weekend need to consult their accountant

By: Tessa Stuart

Boy band Allstar Weekend are Poway's answer to One Direction. The San Diego county-bred group got its start on the Disney Channel music competition Next Big Thing back in 2009. They took second place on that show, but the exposure helped the band ink a four-album deal with Hollywood Records, book a tour with Selena Gomez and score a few spreads in J-14 magazine.

Two albums into their record contract, though, Allstar Weekend and the label ran into "creative differences." The latter wanted to continue milking the younger demographic, the former wanted to make more mature music, and they parted ways.

To fund their next work, this summer Allstar Weekend turned to Kickstarter. The trio, now living in Burbank, made a video asking fans for help and compiled a list of rewards for donating.

A $15 pledge was good for an early digital release of the new album. For $5,000, one received a slew of autographed merchandise and a full day hanging out with the band at Disneyland or Universal Studios.

The campaign was a huge success, raising some $96,000 -- more than three times its $30,000 goal -- including three fans who ponied up $5,000 apiece.

"It's cool," 23-year-old lead singer Zach Porter says of one top donor who recently cashed in her reward. "She was just a really big fan, and we got to hang out with her all day."

It's hard to imagine something like this happening even as recently as a few years ago. But nowadays this type of crowd funding, along with licensing, can feel like the only things keeping the record industry afloat.

Because of illegal downloading, it has grown increasingly tough to make a profit selling music; industry experts once suggested that full-time musicians could make up their losses via touring performances in front of ... all the fans who stole their music.
But so far that doesn't seem to be doing the trick, so platforms like Kickstarter, Indiegogo and PledgeMusic -- which is sort of like Kickstarter but exclusively for musicians -- have stepped in.

Artists now can ask fans directly: How much is our music worth to you? To many, the answer is, "a lot." Since the platform launched in 2009, Kickstarter has helped fund more than 30,000 creative projects -- records, films, graphic novels, inventions -- raising a whopping $400 million.

Although it has the reputation for being the domain of unknowns, Kickstarter increasingly is becoming the first choice of the famous, too: Amanda Palmer raised more than $1 million there this year. PledgeMusic funded Kate Nash's new record. Ben Lee, Here We Go Magic and 10,000 Maniacs all have campaigns in progress on the site.

But crowd funding might not be a panacea for the industry, and in fact it's not nearly as easy or cost-effective as it sounds. Unseen costs, fees and taxes can take a big bite out of a band's big payday.

For starters, the IRS wants in on the action.

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