April 12, 2011 § Leave a comment
Many musicians today try to use crowdfunding to record music and reach their audiences. Majority of these efforts are done through specialized crowdfunding platforms. Yet, some musicians use really surprising and extraordinary ways to get their music out, get heard, perform and crowdfund. One such musician is Tobias Becker, also known to many as nnoiz Papp. He performs live concerts in and interactive computer game Second Life. His listeners, other game users, can drop by and look and listen to his avatar performing music. Users then have an option to contribute money to nnoiz Papp for his performances. To us it seems like a very original form of crowdfunding, the one that transcends technologies and conventional thinking and potentially opens up vast new opportunities for interaction between musicians and their fans.
We’ve asked Tobias about his (and his avatar’s) experiences in Second Life, as well as his views on crowdfunding.
Egor: Tobias, could you tell me a little bit about yourself and your performances on Second Life?
Tobias: I am very interested in the new technologies. A friend showed me Second Life three years ago. I didn’t like the graphics in Second Life and actually found them very awful. But when I when I saw the interactivity of the game, I became very interested. You see, avatars on the other side are real people too, so it is more than a computer game.
In the game, I wanted to do something completely different from the real life. I first started with Avatar Orchestra Metaverse [AOM]. AOM is a group of people who play music in Second Life together. They build their own instruments and play by clicking buttons. But it was hard to organize rehearsals and concerts because there were always ten or fifteen people involved and they were mostly in different time zones. Also, I am a musician, so I wanted to play real instruments. I wanted to play my oboe which was not possible to do with AOM. So I left AOM and went to play for myself.
I rented a little part of land, built a little oriental coffee-shop there and started to play groove-oriented oriental music. With contributions I get for my Second Life performances I try to pay for the game and my island’s rent. Eventually, after about one year and some concerts I realized that I had enough stuff to make a CD, which is now available on iTunes.
E: How does live performing in Second Life work?
T: There are two ways. One is: during my concerts I stream playbacks through iTunes and play instruments over the playbacks. The sound from the mixer streams like internet radio, then, in Second Life I have to mix this stream and enter the URL into the game, allowing everyone on my island to hear the music if they got the sound on. The other kind of playing is to program the objects in Second Life so when the avatar goes through these objects, the sounds are triggered. One time I tried a combination of the two: I had a playback and I walked through objects at the same time. This is very complicated! And you never know when the trigger is heard by the user because every user has to upload the sound as the sound is not on his computer. Using the combination you cannot play really exact stuff.
E: What do you think about musicians using crowdfunding to fund their “real-life” music?
T: I fear crowdfunding is only possible for musicians who are already famous, because when a group is famous you have many fans that will pay, but when you are not famous – nobody might pay you. That is why I am a little bit skeptical about crowdfunding… I am not sure that it will work for everybody! Making a CD is a lot of work and requires a lot of money, so I think in that sense, crowdfunding can be used only as a part of the music production.
E: Do you have any advice to give to artists who would like to use crowdfunding?
T: I think it is necessary to care about your fans! If the fans know you are busy and you are working on your music for them, then it will work for you. I have very nice fans in Second Life, when I see they are online, I play special kind of songs for them, and they know those songs are for them. I think it is necessary to have a good relationship with your fans! Your fans are interested in you to continue playing and making music. For example, the metal bands have often very strange fans that would buy everything that is from the band even though they can get all of it without paying. The fans pay because they like the band’s music and they want the band to make another CD. A band should build a relationship with their fans!
In sum, what nnoiz Papp is doing does not fall under any “traditional” crowdfunding approach. Rather, we see him as gradually building a bridge interlinking music, technology, funds and fans. Although technology still has a long way to go (remove lags, improve graphics, etc) to allow nnoiz Papp to perform the way he would find it best, still, the progress is being made in that area!
So there you go, dear musicians! Use technology in creative and original ways, build good ties with your fans, and hope that your originality, effort and energy pay off. Next time you are playing Second Life, do not forget to drop by and listen in to nnoiz Papp performing!
April 11, 2011 § Leave a comment
My last week ended with a roundtable discussion on crowdfunding with Dutch Economic Affairs, chaired by Prof. dr. Paul Louis Iske at ABN Amro’s Dialogues House. Among those present were: CrowdAboutNow, Geldvoorelkaar, Seeds, Share2Start, Sprowd, Symbid, WeKomenErWel, supervisors from the DNB (Dutch Central Bank) and AFM (Dutch equivalent of SEC). The topic of debate was whether crowdfunding can offer a feasible alternative to the financing needs of SME in Holland and beyond. Before tackling this issue everyone agreed on the definition I proposed for crowdfunding, which does not differ much from the one you can find on Wikipedia. We then went on to position different existing crowdfunding platforms on a matrix to see how they relate to each other. The matrix had two main domains: donating vs. investing and financial returns vs. emotional returns. This is what it looked like:
The list is in no way comprehensive, but it offers us a valuable insight: entrepreneurs and SMEs are now likely to find a platform to suit their financing needs and goals. The crowdfunding models offered currently extend from: acquiring funding by means of donation and intrinsic rewards for funders as one extreme (IndieGoGo), to a more conservative debt/equity financing and monetary rewards as incentives for funders as the other (GrowVC).
The platforms themselves are yet to decide on the most suitable business model. According to some estimates crowdfunding initiatives have so far raised about $80 million, I think the figure to be much larger, at around $280 million if you include KIVA’s $205 million in loans. Do not let the numbers deceit you! KIVA is a non-profit, while Kickstarter takes about 5% fee from all successfully backed initiatives, which even at the most conservative estimate has not yet been enough for them to turn up a profit. The size of the market is indeed large and growing, however crowdfunding platforms are yet to figure out how to create a sustainable business model around the new phenomenon.
Not everything in the crowdfunding industry is so segmented, however. One unifying trend is that across the globe we find constrictive financial and securities regulation significantly affecting the rules of crowdfunding. Here is an example. In Holland, under the article 3:5 of the Law of Financial Supervisions (WFT), firms or persons without a special license are not allowed to hold redeemable funds of another person. Even though the law was never intended to affect crowdfunding, it does so in a straightforward matter. Most of the platforms permit the entrepreneur / artist to receive the amount he has collected only after the target has been reached. Thus, as the backers submit their contributions during the period opened for funding, the money has to be kept on the platform’s accounts until the collection period expires. If the amount has not been collected, the money is refunded back to the backers. In the Netherlands it is impossible to go through that harmless procedure without breaking the law (unless you are a licensed financial intermediary).
To my best knowledge, profit-sharing crowdfunding models are forbidden by SEC regulation unless the entrepreneur /artist complies with expensive stock-market regulation. In France, only a very limited amount of investors can fund someone’s initiative without falling under the spot-light of securities regulators, a number of investors that is indeed too small for crowdfunding. In general though, we see that governmental regulation intended for stock-markets and corporations also directly influences the world of crowdfunding.
At this point our debate centered on what the government could do to help crowdfunding blossem and consequently boost the economy. Me and many others present at the discussion believe that WFT article 3:5 needs to changed, to allow CF platforms to hold refundable cash. We also think that a useful step-up would be for the government to create a form of certification for crowdfunding platforms telling visitors and backers that the platform is secure and is in accord with the law – Crowdfunding Compliance Stamp of Approval of sorts. But for the rest, the government should just let the industry become and blossom – I truly believe that the participants will sort things out themselves!
Not all is lost yet! Today’s roundtable was a major step for the government and other interested parties to get together and begin a debate on how to raise our promising child called Crowdfunding. Across the globe, in the USA, we hear news of SEC starting to tackle the problem of over-regulating crowdfunding as well. That leaves us with hope that crowdfunding is to take an important position as an alternative for funding of SMEs. That ship has yet a long way to sail, but in the least It appears to be setting the right course!