©2020 Canadian Journal of Communication 45(2), 241–263  doi: 10.22230/cjc.2020v45n2a3469


Crowdfunding Music and the Democratization of Economic and Social Capital

Sara Bannerman, McMaster University

Sara Bannerman is Canada Research Chair in Communication Policy and Governance and Associate Professor in the Department of Communication Studies & Multimedia at McMaster University. Email: banners@mcmaster.ca .


ABSTRACT 

Background  Does crowdfunding democratize access to economic and social capital for musicians? This article discusses inequality in the distribution of economic and social capital, drawing on the concept of “networked governance.”

Analysis  The article examines the ways in which crowdfunding distributes economic and social capital, drawing on a content analysis of Kickstarter profiles in the music category as well as surveys and interviews of Kickstarter users, policymakers, and music industry representatives. 

Conclusion and implications  The article concludes that Kickstarter’s successes in democratizing economic and social capital for users are modest. The networked governance of cultural funding facilitates the appropriation of economic and social capital by Kickstarter’s owners, deepening, rather than ameliorating, the inequalities of cultural production.

Keywords Crowdfunding; Music; Networked governance; Social capital; Cultural capital; Kickstarter

RÉSUMÉ 

Contexte  Le sociofinancement rend-il l’accès au capital économique et social plus démocratique pour les musiciens? Cet article discute de la répartition inégale du capital économique et social, se fondant pour ce faire sur le concept de « gouvernance en réseau ».

Analyse  L’article examine les manières dont le sociofinancement distribue le capital économique et social. Pour atteindre cet objectif, il recourt à une analyse de contenu des pages de profil dans la catégorie musique sur Kickstarter ainsi qu’à des sondages et entretiens avec des utilisateurs de Kickstarter, des stratèges et des représentants de l’industrie de la musique.

Conclusion et implications  Cet article conclut que les succès de Kickstarter sont modestes en ce qui a trait à la démocratisation du capital économique et social pour ses utilisateurs. La gouvernance en réseau du financement culturel facilite plutôt l’appropriation du capital économique et culturel par les propriétaires de Kickstarter, ce qui a pour effet d’augmenter les inégalités dans la production culturelle plutôt que de les diminuer.

Mots clés  Sociofinancement; Musique; Gouvernance en réseau; Capital social; Capital culturel; Kickstarter


Introduction

Crowdfunding (soliciting funding for a project through an open call, often via an online platform) is promoted as a tool for mobilizing grassroots, small-scale funding for people who might not otherwise have access to the start-up capital to carry out their projects and ventures (Bannerman, 2013). Crowdfunding’s proponents in the tech sector claim that crowdfunding is “democratizing” in that it shifts capital allocation from “the province of a relatively small and entrenched minority” to something available to and guided by “the collective wisdom of our now 7 billion people” (Lawton & Marom, 2013, p. 1). In other words, proponents claim that crowdfunding “democratizes” capital by making it available to anyone who launches a crowdfunding campaign, while also facilitating broad investments in and contributions to start-up projects. At the same time, crowdfunding can contribute to the casualization of labour, reducing resources and supports available to creators (Agrawal, Catalini, & Goldfarb, 2014). This article asks whether crowdfunding “democratizes” capital for musicians in Canada: Does crowdfunding make capital available to a broader range of Canadian musicians, compared to traditional arts granting programs?

Canadian content quotas and grant programs are designed to make funds more available to Canadian cultural producers to foster domestic Canadian cultural and music industries (Anderson, 1992; Edwardson, 2009). Some have asked whether crowdfunding might perform a similar role; the Canadian government and other music funding agencies in Canada have taken steps to explore crowdfunding as an alternative or supplement to state and private subsidies of the arts (Anonymous, 2017d; Nordicity, 2012; Roberts, 2017). It is important to understand what such a shift would mean. Does crowdfunding broaden access to economic and social capital for musicians when compared to federal granting programs? In order to answer these questions, this article draws on a qualitative and quantitative content analysis of Canadian Kickstarter profiles; an online survey of Canadian Kickstarter users; and interviews of Kickstarter users, policymakers, and music industry representatives. It compares the demographics of Canadian musicians with Kickstarter campaigns against the industry demographics and traditional popular music grant recipients. It concludes that while Kickstarter may broaden access to economic capital, financial resources, and social capital for musicians, it does so in highly limited ways. White male musicians benefit disproportionally, even more than they do in traditional music funding. Kickstarter, on the other hand, benefits exponentially; it is, on the whole, an engine for the appropriation of economic and social capital by corporate owners. 

In part one, the article discusses inequality in the distribution of economic, cultural, and social capital. Utilizing the concept of “networked governance,” it discusses the ways in which private companies such as Kickstarter, under regulatory capitalism, take on formerly public roles to become sites of networked individualism. In part two, the article discusses the ways in which crowdfunding distributes economic and social capital and financial resources. Drawing on a content analysis of Canadian Kickstarter profiles in the music category and a survey of Kickstarter users, it compares the demographic distribution of crowdfunding funds with the demographic distribution of a traditional funding agency: The Foundation Assisting Canadian Talent on Recordings (FACTOR). FACTOR, selected for this study because it is the foremost Canadian national English language music granting agency for popular music, is a public-private partnership and a nonprofit organization funded by the federal government’s Canada Music Fund and private radio broadcasters (Anonymous, 2017c; Spalding, 2008, 2016; Straw, 1993). The Canadian Radio-television and Telecommunications Commission (CRTC) requires private radio broadcasters to contribute to the fund, which operates numerous funding programs that support new and established Canadian artists and music companies, and the Canadian music industry more broadly (FACTOR, n.d.-b; Sutherland, 2015). Programs include the Artist Development program, which offers $2,000 to support recording, touring, and other activities, as well as larger grants for established artists and music companies (FACTOR, n.d.-a). Then, drawing on interviews conducted with Kickstarter users who conducted crowdfunding campaigns in the music category, Canadian policymakers, and music industry representatives, this article examines the economic capital, financial resources, and social capital made available through the use of Kickstarter, drawing comparisons with the economic capital and financial resources made available by FACTOR.

Inequality and cultural funding 

Journalist Jeff Howe (2006) coined the term “crowdfunding” in the June 2006 issue of Wired magazine. Early research into the emergence of online crowdfunding platforms was optimistic (Frissen & Slot, 2009; Lawton & Marom, 2013; Luka, 2012; Markey, 2011), situated within a broader exuberance about the potential for social networking to launch new economic (Benkler, 2006; Tapscott & Williams, 2008), organizational (Shirky, 2008), and artistic forms (Bach, Cohendet, Penin, & Simon, 2008). 

Crowdfunding may improve the accessibility of economic capital and financial resources for those who have insufficient access. While this does not eliminate the tendency of capital accumulation, or the production of inequality, it could spread the ability to accumulate capital more broadly. For example, whereas venture capital tends to be concentrated geographically, successful crowdfunding campaigns (those that meet their funding goal) are more geographically dispersed and tend to attract venture capital to new geographical spaces (Sorenson, Assenova, Li, Boada, & Fleming, 2016). As well, “the crowd” sometimes funds projects that experts shy away from, thus spreading capital to projects that may not have been funded by traditional means (Mollick & Nanda, 2015). It is equally possible that crowdfunding could create mechanisms for the greater concentration of capital through the ownership concentration of crowdfunding platforms; through the use of crowdfunding platforms in campaigns operated by centres of capital; and by allowing existing investors to capitalize not only on their own capital but also on the capital of others, appropriating it as their own. As well, studies have demonstrated that crowdfunding replicates, rather than breaks down, barriers of racialization; success rates tend to be lower for Black fundraisers than for White and Asian fundraisers (Rhue & Clarke, 2018; Younkin & Kuppuswamy, 2017).

Optimism continues to be exhibited in some studies (Safner, 2015), but a darker side of crowdfunding (Bannerman, 2013; Sørensen, 2012) has become apparent. Crowdfunding can contribute, as more recent literature has noted, to the transfer of public responsibility (such as for cultural funding) to individualized private actors, and to depoliticization and individualization through the use of platforms that conduct commodity-like transactions, while failing to facilitate broader forms of political community (Bannerman, 2013; Beck & Beck-Gernsheim, 2002; Gehring, 2015; Morris, 2014; Sørensen, 2012). A discourse that associates crowdfunding the arts with the “democratization” of arts funding could contribute to neoliberal efforts to defund the arts (Brabham, 2017) while favouring the privileged (Davidson & Poor, 2015; Rhue, 2015; Sheppard, 2017). 

Some accounts have begun to examine crowdfunding’s contributions to, or failure to contribute to, the broadening of access to not only economic capital but also to social capital. Those studies that examine crowdfunding as a generator of social and cultural capital (Lehner, 2014) have found these to be a significant part of what crowdfunding offers.

Social capital 

Social capital can, similar to economic capital, be unevenly distributed within various social arenas or fields (Bourdieu, 1986, 1989; Siisiainen, 2003) such as media and cultural production (Benson, 1999; Couldry, 2004; Hesmondhalgh, 2006). Pierre Bourdieu (1986) defines social capital as 

the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition—or in other words, to membership in a group—which provides each of its members with the backing of the collectivity-owned capital, a ‘credential’ which entitles them to credit, in the various senses of the word. (p. 51) 

Social capital can be used to generate profit or surplus value—especially by the dominant class, but also, to a lesser degree, by the masses. In Bourdieu’s theory, social capital is often held in closed groups or by the dominant class and is used as a tool to reproduce dominant class relations (Lin, 1999). At the same time, social capital can, to some extent, be accessed and used by the marginalized (Lin, 1999). 

Bourdieu’s concepts of cultural and social capital have been adopted in studies of musical taste and in various fields of music-making and amateur music production (Cole, 2011; Elafros, 2013; Frith, 1998; Hesmondhalgh, 1998; Prior, 2013; Scott, 2012; Thornton, 1996). In the context of crowdfunding music, social capital includes the network of financial backers of the project (though not the money itself), and the online and offline networks of economic, professional, musical, artistic, and social supports. Such networks have been acknowledged as particularly important to music industry development (Cummins-Russell & Rantisi, 2012). These networks are used both by individual musicians and by Kickstarter.

Crowdfunding, even where it does not make economic capital more accessible, may make social capital more accessible to its users. It has the potential to help individuals meet their personal goals and carry out their projects (Fuchs, 2011). At the same time, crowdfunding may fail to make accessible the same level of social capital that is available to artists who use other forms of cultural funding, such as in-person networks or traditional record labels (Bannerman, 2013). Crowdfunding may either reify or alter the patterns through which social capital is made available to musicians.

While there are a few studies indicating that crowdfunding provides somewhat increased access to financial resources (Kim & Hann, 2013), including for musicians in particular (Agrawal, Catalini, & Goldfarb, 2011), there is little empirical data to support the claim of broadened access to economic capital or financial resources for musicians through crowdfunding. On the other hand, numerous studies examine crowdfunding sites’ contributions to social capital (Bourdieu, 1986). 

Othmar Lehner (2014) shows that social capital “is the key to success” (p. 485) in crowdfunding. Support of the project by a “tier 1” group of direct and closer contacts was found to be necessary to attain the support (financial, moral, and feedback) of a second tier of more distant and dispersed supporters whose willingness to contribute also depended on the cultural and symbolic capital associated with the campaign. Lehner (2014) also found that the networks and social capital gained through crowdfunding were significant, as funders provided not only financial backing but also ideas and connections to diverse networks of funders, not to mention free services. Other studies have also found that social capital is important to crowdfunding success (Skirnevskiy, Bendig, & Brettel, 2017). 

It may be that crowdfunding is more useful for generating social capital, in terms of publicity, networks, feedback, and ideas, than it is for generating economic capital. As Lehner (2014) observes, “social ventures seeking the crowd for funds may well find much more than just financing. [Crowdfunding] seems an ideal match for entrepreneurs seeking for ‘societal’ value more than for economic gain” (p. 495). This article explores the empirical reality of these claims, exploring musicians’ experiences of using Kickstarter to generate economic and social capital. 

Economic capital 

Economic capital is “material or financial wealth, accumulated by an individual or a company, that can be used to generate income” (Black, Hashimzade, & Myles, 2012, p. 48), or money that is used to generate more money, as opposed to money that is used to purchase things (Marx, 1887). Thus, it is important to ask whether the money raised in a crowdfunding campaign is used to generate a profit; money that is raised to spend is not “capital.” In this article, money that is not used to generate a profit is referred to as “financial resources.”

Three different groups of people can generate economic capital through crowdfunding. 

  1. Crowdfunding platform owners and operators: Companies operating a crowdfunding site can generate income. Most crowdfunding platforms charge fees by claiming a percentage of the amount contributed by funders in addition to other service and transaction fees. Thus, crowdfunding almost always involves the generation of capital for platform operators. 
  2. Cultural creators/campaigners: Crowdfunding site users who initiate a crowdfunding campaign can use the funding generated to attempt to earn a profit or generate income.
  3. Funders: Those who donate or invest funds in a project (funders) can transform their money into capital by attempting to earn a profit or generate income by investing their money in a crowdfunded project. In the case of Kickstarter, this does not occur; while some crowdfunding models do allow funders to invest in projects, Kickstarter is a rewards-based crowdfunding platform. That is, funders receive a reward such as a T-shirt or CD for contributing to a crowdfunding campaign; they do not gain shares or earn a profit or income. 

Crowdfunding campaigns can also generate financial resources that are not used to generate a profit; the money raised can be spent on a project that fails to generate a profit, or that was never intended to generate a profit.

Kickstarter, similar to many other crowdfunding sites, was a start-up supported by venture capitalists. The owners are entitled to profit from the funding collected by charging five-to-ten percent in fees on every successful campaign (Kickstarter, n.d.-b, n.d.-d). As Tiziana Terranova (2013) notes, this appropriation of profit by owners from cultural workers is typical under late capitalism, where music and information are produced as “a form of collective cultural labour” but where “profit is disproportionately appropriated by established corporations” (p. 41). 

Rather than returning profits with users, Kickstarter has adopted a veneer of de-privatization; after the company was founded in 2009 as a privately held company, it re-incorporated in 2015 as a public-benefit corporation. Whereas most corporations are legally bound to act in shareholders’ best interests, public-benefit corporations must also consider the public interest in their decision-making (Coble, 2015). 

As a public-benefit corporation, Kickstarter has pledged to donate five percent of its after-tax profit “towards arts and music education, and to organizations fighting to end systemic inequality” (Kickstarter, n.d.-c). Of that five percent, half is pledged “to arts and music programs for children and young adults, with a primary focus on underserved communities in New York City. Funds will be distributed to 501(c)(3) organizations, public schools, or via programs developed by Kickstarter” (Kickstarter, n.d.-c, par. 15). The other half of the five percent “will be devoted to organizations addressing systemic inequality. Kickstarter will primarily focus such contributions on 501(c)(3) organizations fighting to end prejudices against and increase opportunities for people of color, women, and LGBTQ individuals” (Kickstarter, n.d.-c. par. 18).

Kickstarter’s status, nonetheless, as a public-benefit corporation gives it the status of a “hard case” (Bennett & Elman, 2007, pp. 173–174) in this study. If a public-benefit corporation fails to broaden access to economic and social capital and financial resources, then similar crowdfunding platforms operating as traditional corporations will also likely fail to pass the public good test. 

Several studies have interrogated the claim that crowdfunding broadens access to financial resources (Lawton & Marom, 2013). These studies found that crowdfunding does make funding more accessible to those who have difficulty accessing credit from banks and to those in smaller towns where banking is more remote or less competitive (Kim & Hann, 2013). In fields where women are traditionally underrepresented, such as technology, women are more successful than men in crowdfunding campaigns (Greenberg & Mollick, 2015). 

As was the case with the literature on online social production, the research on crowdfunding music exhibited, early on, optimism about the opportunities that crowdfunding would provide to musicians (Frissen & Slot, 2009; Markey, 2011) and the ability of musicians to enroll more geographically remote investors in their ventures (Agrawal et al., 2011). This optimism has been tempered by later skepticism about the immaterial and unpaid labour involved with crowdfunding music (Morris, 2014) and other projects (Hui, Greenberg, & Gerber, 2014), and the possible lack of professional and social supports for musicians using crowdfunding rather than more traditional sources of funding (Bannerman, 2013). A mix of relative optimism (Luka, 2012; Safner, 2015) and pessimism (Hills, 2015) about crowdfunding the arts, in general, is evident in the literature on crowdfunding for music and cultural production (Heresco, 2017).

Networked governance and networked individualism 

In a world of networked governance and regulatory capitalism (Braithwaite, 2008), private corporations play a role in governance, either displacing or working with states to regulate behaviours. Optimistically, John Braithwaite (2008) argues that neoliberalism has been accompanied by the “publicization of the private—progressively more potent infiltration of public law values like transparency into what is expected of public companies” and “hybridity between the privatization of the public and publicization of the private” (pp. 7–8). 

Kickstarter appears to recognize, to a limited extent, its public role by reincorporating as a public-benefit corporation. Government and other funding agencies have taken steps to explore forms of hybridity, examining crowdfunding as an alternative or supplement to state and private subsidies of the arts (Anonymous, 2017d; Roberts, 2017). A number of crowdfunding initiatives have been established that merge government funding and crowdfunding by matching government funding to crowdfunded projects.1 While there does not appear to be any similar initiative in Canada, such initiatives have been considered by government and granting organizations as a possible way of reducing reliance on subsidy (Anonymous, 2017d). But, how far does the “publicization of the private” go in combating inequality?

In adopting the status of a public-benefit corporation, and in highlighting its efforts at transparency in annual “transparency reports,” Kickstarter (2015, 2016)participates in the “publicization of the private,” but in a limited way. Its transparency reports are extremely brief, less than 1,000 words, dealing with copyright, trademark, and law-enforcement requests. They say nothing about Kickstarter’s profits, how it allocates its funds, or how it spends the five percent of after-tax profits dedicated to charities and public causes.

Crowdfunding sites, including Kickstarter, are private regulators that take on a role sometimes performed by states: funding culture. They regulate users and campaigners/artists through their ownership and fee structures, their terms of use, and the affordances of their technologies. Traditional government regulation produced the Canadian content system, which FACTOR is a part of, in order to foster the Canadian music industry, including economic and social capital that has benefitted Canadians at micro and macro levels, including individual musicians, music companies, and the music industry in general. Crowdfunding focuses on individuals, offering services and opportunities for generating economic and social capital primarily directed at individual musicians and small musical groups; it does not offer an industrial or national strategy for generating economic and social capital to be held by an industry or country. Crowdfunding platforms, while constructing networks, do so in ways that individualize; they are sites not of collective action so much as of networked individualism, where the rules and technologies that govern cultural funding are not the product of public or collective decision-making but instead the product of individualizing ideology (Beck & Beck-Gernsheim, 2002; Gehring, 2015). In networked individualism, people “meet their social, emotional, and economic needs by tapping into sparsely knit networks of diverse associates” (Rainie & Wellman, 2012, p. 12), acting as connected individuals rather than as embedded members of groups or collective bodies. The responsibility of conducting a crowdfunding campaign and taking on the risk associated with financing and carrying out the project, or of funding a campaign as an individual and accepting the risk that the promised rewards may not materialize, individualizes both the responsibility and the risks of cultural production. 

Empirical analysis: Does crowdfunding broaden access to capital? 

Method 

Step one of this study entailed identifying all successful (campaigns that met their fundraising goal) Canadian English language Kickstarter campaign pages with campaign dates ending between February 2016 and May 2017 (n= 127), excluding four campaigns where the same user had conducted two campaigns within that period (n= 123). A random sample of 108 campaigns was selected for a content analysis. The publicly available list of recipients of FACTOR grants for the same dates was also identified. This data was used to conduct a comparative content analysis; data from each campaign was compiled in a spreadsheet to tabulate the amount of funding received, and the gender, location, and experience level of each crowdfunding campaigner. 

In step two of the study, all of the population members who could be located through publicly available contact information (n= 103) were invited to take part in an online survey. Thirteen full responses were received, for a response rate of 13 percent. This low response rate is an important limitation of this study. 

In step three of the study, all of the Kickstarter users who participated in the survey and indicated a willingness to participate in an interview were invited to do so. Four Kickstarter users agreed to be interviewed. Three representatives from traditional granting agencies were also invited—one representative of a research organization that had conducted a study of crowdfunding for Canadian granting agencies, and two music industry representatives—for a total of ten interviews.

Demographics 

Women are under-represented in the music industry; just 23 percent of top-40 Billboard songs in 2016 were sung by women (McKinney, 2017) (Figure 1). This study collected the publicly available names of the Kickstarter users who ran the Kickstarter campaigns and the publicly available list of names of people who had won FACTOR grants over the study period. Based on an automated analysis of the names used in the campaign or grant application, women were found to be under-represented both among FACTOR grant recipients and successful Kickstarter campaigns, but women were more severelyunder-represented among successful Kickstarter campaigns (see Figures 2 and 3).2 Kickstarter did not improve access to capital for women, when compared with the FACTOR funding process.

Figure 1, 2, and 3

While accurate data is not available, an examination of Kickstarter profiles offers a rough impression that people of colour are under-represented among the data set of Canadian Kickstarter users who ran a successful Kickstarter music campaign.3 The under-representation of women and people of colour is also reflected in the demographic composition of the musicians who accepted the survey and interview invitations; all but one of thirteen survey respondents and all of the interview respondents used male pronouns. This accords with previous studies that have found lower success rates for African American Kickstarter users (Rhue, 2015; Sheppard, 2017) and suggests that Kickstarter does not significantly broaden access to financial resources for people of colour, despite its purported interest in addressing inequality (Kickstarter, 2016).

Compared against the provincial population, Ontario and British Columbia were somewhat over-represented among both Kickstarter users and FACTOR recipients, while Manitoba and Saskatchewan were somewhat under-represented on Kickstarter (see Figure 4). Québec was under-represented among both FACTOR recipients and Kickstarter campaigners, which is expected because the study did not include French language campaigns and because Québec has a counterpart granting agency to FACTOR: MusicAction. Kickstarter, similar to FACTOR, tends somewhat to centralize the financial resources it provides in the most populous provinces.

Figure 4

Many of the Kickstarter users in the content analysis were debut artists who had not yet released an album (see Figure 5). Thirty percent of the debut Kickstarter users in the content analysis received $2,000 to $4,000, but the remaining 70 percent of debut campaigners received between $4,000 and $60,000. By comparison, very few FACTOR grants above $2,000 are given to independent debut artists. Thus, Kickstarter may broaden access to economic capital and financial resources for debut musicians.

Figure 5

Employment and the need to work significantly impact musical production; people who are economically, culturally, or socially privileged have additional time and other resources to work on musical projects (Dyck, 2017). Many of the Kickstarter users surveyed for this study were employed full or part-time outside the Kickstarter project or were seeking additional work. Several were working solely on the Kickstarter project and were not seeking additional work (Figure 6). Most had an income of under $35,000 (Figure 7).

Figure 6

Figure 7

Some musicians made use of both traditional grants and crowdfunding. Fourteen percent of the Kickstarter users that were included in the content analysis had received a FACTOR grant in the past. Some additional number of Kickstarter users had applied unsuccessfully for a FACTOR grant: two of the musicians interviewed had applied unsuccessfully for a FACTOR grant; two had never applied for a FACTOR grant.

Economic capital

Campaigner economic capital 

It is said that Kickstarter has raised more money for artists than the National Endowment for the Arts (Boyle, 2013). The same is not true for music granting in Canada; this analysis shows that the FACTOR program grants far more money in total to Canadian musicians than Canadian musicians raise through Kickstarter (Anonymous, 2017b). Through 624 grants, FACTOR invested more than six million dollars in Canadian musicians between February 2016 and May 2017, whereas Canadian musicians raised about $715,000 on Kickstarter over the same period (see Figure 8).4

Figure 8

This differential is even starker for other media, while some Canadian television and film projects have raised several hundred thousand dollars on Kickstarter, no Canadian film or documentary has raised more than a million dollars on Kickstarter as of this writing. The Canada Media Fund, however, contributes millions of dollars to some individual film and video productions (which, in some cases, is recuperated) (Anonymous, 2017d; Canada Media Fund, n.d.)

While the economic impact of Kickstarter crowdfunding may be limited compared to that of the FACTOR grant program, this study explored whether the funds raised through crowdfunding were more accessible to musicians than other sources of funding. The analysis revealed that Kickstarter is, in some ways, a more accessible source of funding than traditional grants.

Most Kickstarter users surveyed reported no ability to earn a profit or cover day-to-day living expenses from project monies, but some users reported receiving amounts of between $1 and $5,000 for their salaries and living expenses, or those of their team members. Others reported that they had received amounts between $1 and $5,000 that they planned to use for future projects (Figure 9). One interview respondent felt that his recording career and his guitar teaching business were established as a result of the economic and social capital he built using Kickstarter to crowdfund two professional albums (Simon, 2017). Platform users on Kickstarter can raise economic capital and (more often) financial resources, but the money raised is very modest.

Figure 9

The Kickstarter users interviewed for this study considered Kickstarter to be a more accessible source of funding than traditional granting agencies. The process of setting up a Kickstarter campaign is labour-intensive, often requiring significant up-front work on things such as demo tracks and videos to make the campaign attractive. Some reported that running a Kickstarter campaign was as much work as writing a grant application (Anonymous, 2017e; Dyck, 2017; Roberts, 2017; Simon, 2017), though one user reported that the grant application was much more work than a Kickstarter campaign, with the grant requiring a much longer timeline (Perrin, 2017). Everyone interviewed found the process of setting up a campaign to be more welcoming and accessible than the process of writing a grant application. Grant applications, they noted, are sometimes “invasive” and full of “legalese,” whereas the Kickstarter interface (in which the terms of use are tucked away behind click-through agreements and on a separate Web page that users may neither read nor visit) was considered easy to use and straightforward (Perrin, 2017; Tait, 2017). 

Navigating the grant application process is especially difficult for independent musicians; musicians working with Canadian music labels are often supported by FACTOR grants under FACTOR’s Comprehensive Company program, and music label staff, who are professionals and experienced with the grant application and reporting process, take care of the application and reporting processes (Dyck, 2017). In Canada, many music labels receive FACTOR grants that are considered predictable sources of funding, as long as the application and reports are put together properly and the project is eligible (Dyck, 2017). In this sense, Kickstarter may offer a middle ground between the difficult grant application process that independent musicians experience and the smoother granting experience of musicians with music label support. 

All the interviewees were happy with the speed with which they received their crowdfunded money. One respondent also received traditional grant money quickly (within four weeks) (Perrin, 2017), while another found the process of receiving funds from a traditional granting agency to be much slower compared to crowdfunding (Anonymous, 2017e).

Kickstarter makes funding more available for non-traditional and non-commercial musical projects. Whereas applicants to FACTOR programs are required to commercially release their work as a condition of the grant (Anonymous, 2017b), about 25 percent of the Kickstarter users surveyed here intended their project to be not-for-profit (Figure 10). Many, but far from all, of the campaigns in this analysis, had made their music commercially available. This analysis shows that Kickstarter may make financial resources more available to independent musicians working on nonprofit projects.5

Figure 10

Kickstarter may also make economic capital and financial resources more available to independently minded musicians and musicians taking greater artistic risks. One respondent commented, “Kickstarter was my grant to myself” (Simon, 2017). Another noted that he had used Kickstarter rather than turning to traditional funding because he felt it would give him more creative freedom to spend money outside the parameters of what a traditional granter might allow. He felt, for example, that he could use funds to pay a recording studio outside of his province, which might not be permitted under some provincial grants (Anonymous, 2017e). Crowdfunding can permit a level of artistic risk that traditional funders might not be willing to take (Anonymous, 2017a). In that sense, Kickstarter may bolster both artistic independence and independent production models (Hesmondhalgh & Meier, 2014).

Kickstarter may fill a gap for medium-level funding (between $2,000 and $10,000) that FACTOR does not fill. Of all the Kickstarter campaigns analyzed for this study, 29 percent raised between $2,000 and $4,000, 49 percent raised between $4,000 and $10,000, and the remaining 22 percent raised over $10,000, with the maximum amount raised by a single Kickstarter campaign being $60,255. FACTOR grants, by comparison, cluster around grant amounts of $2,000, $10,000, and $40,000, matching up with the various granting programs, with the largest grants (up to $75,000) made to established musicians (see Figure 11).

Figure 11

Kickstarter is seen as a less lucrative and more precarious source of economic capital and financial resources (Anonymous, 2017a). Multiple interview respondents felt that using Kickstarter was similar to begging for money (Anonymous, 2017e), or that using Kickstarter could try the patience of supporters (Simon, 2017). They also observed that, when multiple Kickstarter campaigns turn to the same network of people for funding, people’s willingness to contribute can quickly be depleted (Anonymous, 2017b; Simon, 2017). 

Platform economic capital 

Kickstarter is a tremendous source of economic capital growth for its owners and shareholders; the company was estimated to be worth between $286 and $520 million in 2015, with a growth rate of 108 percent (Smith, n.d.). The company began acquiring other companies with the purchase of Drip, a music streaming site and online community for independent musicians, in 2016 (Russell, 2016). 

Kickstarter is also seen as a way for corporate funders to reduce the high level of financial risk associated with musical projects. According to one interviewee who works in a Canadian music industry organization, “it’s a source of capital that the traditional funders don’t have to lay out” (Anonymous, 2017a). In crowdfunding, “the risk is kind of shifted in the value chain away from the traditional areas to a new area—to the fans, in effect … the companies say, ‘hey this is great we can de-risk ourselves here’” (Anonymous, 2017a; see also Szopa, Marek, & Fafrowicz, 2017).

Kickstarter benefits enormously from the social capital of the entrepreneurs, artists, and musicians who use the platform. The front page of the Kickstarter website is almost entirely filled with information about interesting and intriguing Kickstarter projects, making its links to these projects clear. Its “About Us” page draws attention to the famous and influential artists who have used Kickstarter (n.d.-a; see also McGregor, 2013). 

Kickstarter also benefits from its ability to mine data from Kickstarter projects. It gains significant know-how about how crowdfunding works: about how reward levels and campaign duration, for example, affect the fundraising success of a campaign (Strickler & Benenson, 2010). It mines Kickstarter emails and draws on customer service requests to build an automated support system (Doker, 2017). The data of Kickstarter users is ultimately converted into economic capital for platform owners through user fees and growth.

In sum, Kickstarter broadens access to economic capital and financial resources in some minor ways, making funding available to nonprofit projects, debut, and independently minded musicians, and in amounts that might not be available through FACTOR. It is a precarious source of economic capital and financial resources for musicians. However, it is a powerful engine of economic capital for its owners, producing high rates of growth and significant profit. For platforms and for music companies, crowdfunding and the data associated with it can reduce the risks associated with their investments.

Social capital

In addition to examining Kickstarter as a source of economic capital and financial resources, this study asked whether and how Kickstarter generates social capital for its users. Does Kickstarter expand users’ online and offline networks of professional, musical, artistic, and social supports? Did it help users gain new fans, open doors, lend credibility to their project, or help convince people to work with them? How does it compare with other sources of funding in developing social capital?

Campaigner social capital 

This analysis showed that while Kickstarter facilitates communication with networks of campaign backers, the networks of backers, to a large extent, consist of the existing networks of its users and on networking facilitated through other social media platforms. Musicians who already have a following, and who can draw on this following in their Kickstarter campaign, are the ones who can benefit most from Kickstarter (Anonymous, 2017a; MacDougall, 2017). One interview respondent noted: 

Kickstarter, I find, is not very great if you’re not already popular. You need social media to promote that link … or else it’s just kind of a page that random people will stumble upon maybe if they happened to type in certain keywords—so I spread it all over my Facebook. You have to spend a certain amount of money investing in advertising; I boosted my post on Facebook, which is Facebook’s way of advertising. I posted on my Twitter, my YouTube. I made separate videos about it. So, yeah, I definitely had to utilize Facebook the most in regards to my social media. (Simon, 2017) 

Another noted: 

It was pretty much, I think, almost 100 percent my fan base that I had built over 20 years, and I didn’t really see that using that particular platform, other than convenience, really added much advantage to the project or the campaign. (Anonymous, 2017e)

At the same time there is evidence that Kickstarter campaigns may have helped expand the networks of financial backers; most survey respondents felt that Kickstarter helped them to gain new supporters. At the same time, survey respondents were much more mixed on other questions of social capital: whether Kickstarter helped them to gain new fans, open doors, lend credibility to their project, or help convince people to work with them (see Figure 12). One interview respondent noted Kickstarter did not assist with professional networking and opening doors within the music industry in the way that a FACTOR grant might (Tait, 2017). However, the platform opened possibilities for connecting with fans and keeping fans involved on some level (Tait, 2017). Another interview respondent noted that it was sometimes surprising who among pre-existing contacts supported a project (and who did not) (Perrin, 2017).

Figure 12

Kickstarter’s strength, interview respondents noted, was in prompting and assisting campaigners in providing public updates to their backers. While Kickstarter facilitated this process, it was nevertheless a great deal of work for campaigners. Compared to traditional sources of funding such as FACTOR, it was seen as a very public and social platform. Crowdfunding, respondents noted, helps create a stronger bond with an audience: 

There is that kind of social connection that you do have with your audience in crowdfunding where I think people that support it tend to feel like they have some kind of ownership over it, some kind of part in the process. So, I think it can bring your audience into the process a little bit, and help them feel like they’re being part of something, which I think is quite positive. (Anonymous, 2017e)

Artists who are starting to build an audience can also get noticed by artist and repertoire representatives by using Kickstarter and other crowdfunding sites (Anonymous, 2017a). Crowdfunding performance is “another source of data” to use in assessing the potential marketability of musical artists (Anonymous, 2017a).

It may be that one of crowdfunding’s strengths is that it helps musicians to update and mine their existing social networks by prompting musicians to solicit funds from them. Rather than creating new social capital, or facilitating new musicians’ access to the social capital that exists within the music industry, it allows musicians to mine the social capital they have already otherwise built, drawing on it to raise funds and establish credibility that can be transformed into financial resources and economic capital.

At the same time, crowdfunding has the potential to damage social networks and relationships, and the artist’s public image. Some interview respondents found the process of crowdfunding to be embarrassing or “soul destroying,” and noted that some of the people in their networks were turned off by their crowdfunding efforts (Anonymous, 2017e; Perrin, 2017; Roberts, 2017; Simon, 2017). Interview respondents noted that crowdfunding entailed a risk to their reputations, as the failure of a crowdfunding campaign, unlike the failure of a grant application, is very public. 

There was a sense among interview respondents that Kickstarter opens opportunities to those who do not have the “right” connections to get a grant. One respondent noted:

There’s also this kind of overriding feeling with artists that I know and work and interact with that FACTOR is kind of a bit of a club, and you need certain names and stuff on your application or a certain amount of years of clout in order to get any sort of money from FACTOR. (Tait, 2017)

Another respondent felt that crowdfunding comes with “fewer gatekeepers” and allows users to “control their own destiny” to a greater degree (Roberts, 2017). On the one hand crowdfunding allows campaigners to circumvent the decision-making of FACTOR and corporate funders (Anonymous, 2017a). The success rate for the music category on Kickstarter is about 50 percent, whereas the success rate for FACTOR grants is about 15 or 20 percent (Anonymous, 2017c; Kickstarter, n.d.-d). Crowdfunding may, in that sense, provide a path with fewer gates to pass through on the way to completing a project (Roberts, 2017). On the other hand, were crowdfunding to become a requisite element of establishing oneself as a professional musician, a requisite market test, it could itself become a new gatekeeper. 

Kickstarter’s main contribution appears to be the way it facilitates the process of mining existing networks or social capital for support. It may help gain new backers, but campaigners’ existing fans and supporters are essential. It is perceived as a method of accessing economic capital and financial resources for those who may not have the necessary connections or social capital to win a traditional grant.

Platform social capital 

While Kickstarter currently employs just over 100 people in Brooklyn, New York, the platform has a network of 11.6 million backers, including 3.6 million repeat backers (Kickstarter, n.d.-d). Kickstarter’s brand is built through every project the platform funds. It proclaims these successes in its publicity materials, which point to the six Academy Award nominations, the Grammy awards, and the Billboard chart-topping successes of Kickstarter (n.d.-e) users.

With some frequency, Kickstarter campaigns “go viral” and are featured on social media and in the press. Mainstream media features many stories about Kickstarter campaigns. Such publicity does not originate from Kickstarter; the companies and individuals behind Kickstarter campaigns often issue press releases along with their campaigns. This is a powerful source of platform social capital, creating publicity for Kickstarter as well. Kickstarter’s users bring numerous sources of social capital—new users, backers, and publicity—to the company. While Kickstarter is a source of social capital for its users, its users and their successful campaigns are, to a far greater extent, a powerful and fundamental source of social capital for Kickstarter’s owners.

Conclusion 

Kickstarter may broaden access to economic capital, financial resources, and social capital for musicians, but it does so in very limited ways. White male musicians benefit from Kickstarter even more disproportionately than they do from traditional music funding. Kickstarter, however, benefits exponentially; it is, on the whole, an engine for the appropriation of economic and social capital by the platform and its owners. 

A neoliberal view would laud the opportunity that crowdfunding provides to reduce artists’ reliance on state and private subsidies, understanding the privatization and individualization of investment in music production as a form of liberation (Beck & Beck-Gernsheim, 2002). This approach, however, often contributes to widening inequalities, as it does in the case of Kickstarter; the venture capitalists and investors who profit from Kickstarter campaigns see significant profits, while Kickstarter campaigners achieve a small and precarious form of economic capital or financial resources for projects that do not generate any income. Often little, if any, of the money raised is used for income or against personal expenses. 

While claims are made that crowdfunding “democratizes” access to capital (Brabham, 2017; Lawton & Marom, 2013), crowdfunding could just as easily create mechanisms for the greater concentration of capital and financial resources. Kickstarter does make economic capital and financial resources more accessible to debut musicians and to those musicians who do not have the social capital (connections) to win a grant or music label support. Artists working in small cities, who may not have robust networks of support, can access funds through Kickstarter. However, if it were a “democratizing” force (in the sense of improving equality), Kickstarter might spread access to capital to all, including those for whom capital can be more difficult to access. Kickstarter does not broaden access to capital for women musicians when compared with the FACTOR funding process; instead, unlike in other areas such as technology (Mollick & Nanda, 2015), it appears to replicate the gender disparities that are visible in the music industry generally. As other studies have found (Rhue & Clarke, 2018; Younkin & Kuppuswamy, 2017), it does not broaden capital for visible minorities; the Canadian music category on Kickstarter appears to be disproportionately populated by White men. While Kickstarter may improve access to capital for those living outside large urban areas (Kim & Hann, 2013), it also, similarly to FACTOR, tends to somewhat centralize economic capital and financial resources in the most populous provinces. 

The economic power of Kickstarter compared with that of granting programs in Canada is tiny. FACTOR contributes almost ten times the amount of money that Kickstarter campaigns generate to Canadian musicians. That said, Kickstarter grants seem to fill a hole for medium-sized projects between $2,000 and $10,000. As well, Kickstarter users can use the money they raise for nonprofit projects, which is not a possibility with some grants, including FACTOR grants. 

Social capital is important in the process of generating economic capital. This study found that Kickstarter is seen as helping to create a stronger bond with fans and supporters. Kickstarter may provide access to economic capital and financial resources for those who do not have the necessary social capital to be successful in competing for traditional grants. However, Kickstarter is not as strong as it is sometimes portrayed in expanding musicians’ networks of supporters; other social media and networking resources, including Facebook advertising, appear to be more useful in this regard. Rather than expanding networks, Kickstarter offers an easy and useful template and system for updating backers, including regular prompts to do so. It may facilitate the mining of users’ existing social capital more than it facilitates their access to additional social capital—to, for example, the social capital and networks of the music industry. While acting as only a modest source of economic and social capital for its users, the owners of Kickstarter collect significant profits, appropriate the social capital brought to the site by its users, and capitalize on the success, prestige, and cultural capital of their users. 

Kickstarter’s successes in broadening its users’ access to economic and social capital as well as financial resources are modest. The “publicization” of the private—or the infusion of public interest values into market forces (Braithwaite, 2008)—has not overcome the inequalities of musical production. The networked governance of cultural funding privatizes the public function of cultural funding, facilitating the appropriation of economic and social capital by Kickstarter and its owners, and deepening, rather than ameliorating, the inequalities of cultural production. 

Acknowledgements

The author thanks Michèle Martin, professor emerita at Carleton University, and research assistants Todd Harris, Ian Steinberg, Charnjot Shokar, Brittany Green, and Sheena Jary. The author is grateful to the Canada Research Chairs program and McMaster University for their support of this research

Notes 

  1. For example, Sweden’s CrowdCulture, the U.K.’s Crowd Funder, and Australia’s Match Lab all combine crowdfunding with government funding. 
  2. The Gender API tool was used to estimate, based on probability, the gender associated with the names of grant recipients and campaigners.
  3. No data is available from FACTOR (Gordon, 2017). 
  4. These numbers include FACTOR grants that go to individual musicians and bands under the Artist Development, Comprehensive Artist, and Juried Sound Recording programs. They do not include grants that are given to music labels as a more indirect support of individual artists under the Comprehensive Company program or other programs.
  5. Music labels also sometimes support nonprofit and charity projects (Dyck, 2017).

Interviews 

Anonymous. (2017a, October 2). Interview of a representative of a music industry organization by Todd Harris, research assistant to Sara Bannerman.

Anonymous. (2017b, October 5). Interview of a representative of a government organization by Todd Harris, research assistant to Sara Bannerman.

Anonymous. (2017c, October 10). Interview of a representative of a funding organization by Todd Harris, research assistant to Sara Bannerman. 

Anonymous. (2017d, October 11). Interview of a representative of a funding organization by Todd Harris, research assistant to Sara Bannerman.

Anonymous. (2017e, October 13). Interview of a Kickstarter user by Ian Steinberg, research assistant to Sara Bannerman.

Dyck, Ryan. (2017, November 5). Interview of Ryan Dyck, label manager, Mint Records, by Ian Steinberg, research assistant to Sara Bannerman.

MacDougall, Kevin. (2017, October 5). Interview of Kevin MacDougall, manager, music policy, Canadian Heritage, by Todd Harris, research assistant to Sara Bannerman.

Perrin, Sean. (2017, October 16). Interview of Kickstarter user Sean Perrin by Ian Steinberg, research assistant to Sara Bannerman.

Roberts, Kristian. (2017, October 3). Interview of Kristian Roberts, partner, Nordicity, by Todd Harris, research assistant to Sara Bannerman.

Simon, Ben. (2017, October 5). Interview of Kickstarter user Ben Simon by Ian Steinberg, research assistant to Sara Bannerman.

Tait, Dan. (2017, October 11). Interview of Kickstarter user Dan Tait by Ian Steinberg, research assistant to Sara Bannerman.

Websites 

ArtistShare, https://www.artistshare.com/

CrowdCulture, https://www.crowdculture.se/

Crowd Funder, http://www.crowdfunder.co.uk/funds

Drip, http://www.d.rip.com

Match Lab, https://www.creativepartnershipsaustralia.org.au

Slicethepie, https://www.slicethepie.com/

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