Asking your fans for money can feel awkward. It’s like, “I can’t seem to make money on my own, so I’m asking you to give me some.” That’s how it feels anyway. Maybe that’s just me. Either way, in this article I want to talk about fan investments, which are different than fan donations.
*What I Mean by “Invest”
When I say “invest,” I don’t mean when a fan is invested in your success, as in they want to see you reach your goals. I mean invest as in, they’re putting their money where their heart is.
I’m talking about when a fan gives you their money and expects something in return. An ROI, if you will. And this ROI, what the fan gets as an investor, is more than just your awesome music – it’s either something exclusive just for investors or an actual return on their money.
So what does it look like when your fans invest in you and your music career?
Benefits of Fan Investments
There are two clear benefits I see with fan investments.
The first is that you get money upfront. Just like a startup who looks for investors, you can raise money to help you make your art.
Making pro-level music can be expensive, unless you do everything yourself, which you totally can do. But if you don’t yet know how to do certain things – like master, mix, or even produce – then you may have to outsource those skills. And that will cost money.
Even if you do everything yourself, you surely have things you could use some extra money on, like upgrading your equipment or getting a new plugin.
The second benefit of fan investments is that your success becomes your fans’ success. When people invest their money in you, they become emotionally invested. They 1) want to see you succeed because they love your music and 2) they want to get a return on the money they spent.
So they become more dedicated to your success. They’ll be more likely to share and stream your music, and they’ll be more likely to become fans for life.
Downsides of Fan Investments
Just like any investment, there are risks and downsides. Here are a couple issues you could run into with fan investments.
The ROI could flop. Let’s say you get a bunch of people to invest their hard-earned moola into your music. But then things don’t pan out the way you planned and your investors lose money. That would suck, and it could leave a bad taste in your fans’ mouths.
In all likelihood, fans won’t be too upset because they love your music and they want to support you, even if they just give you their money. They’re investing in you first and foremost, not necessarily to get rich. However, in this scenario, they did lose money and may not want to invest in the future.
Another possibility is that you don’t get enough investors to begin with. This doesn’t necessarily hurt the people who wanted to invest because you could just give them their money back when you realize you don’t have enough investors.
But it’s kind of embarrassing. It would be disappointing to run an investment campaign only for it to fail.
Ways Fans Can Invest In Your Music
Okay, so let’s say you’ve decided you want to try to get fans to invest in you and your music. Here are a few ways to do that…
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 EPs, albums, music videos, and concerts for years. And today, artists are still raising thousands of dollars for their projects.
When a fan backs your crowdfunding project, you promise to give them exclusive goodies in exchange. So they invest in you, you give them something in return and you get to complete your project.
Patronage is kind of like crowdfunding but fans support you on a regular basis. Every month, your patrons are charged whatever amount they pledged and you get to keep that money (usually after the patronage platform keeps their cut).
In exchange, you give patrons exclusive things, like early access to new music, discounts on merch and tickets, and behind-the-scenes stuff. You can give these special supporters whatever you want.
The biggest platform for patronage is Patreon, but other options include Bandzoogle (which takes 0% commission), Ko-Fi, and Buy Me a Coffee.
Sell your royalties
Some companies will buy or rent your royalties. This means you can get an upfront payout in exchange for diverting the royalties from a certain song to an investor(s). And the deal could be in perpetuity or for a set amount of time.
This allows you to get a lump sum of cash to fund your tour, your album, or a new run of merch. Granted, you will have to be getting plenty of royalties from your song already, so this may only be a good fit for mid- to upper-tier artists.
Royalty Exchange is the leader in this niche industry, so you can learn if this is a good fit for you by reading their FAQs.
Sell shares of your song
A new way for indie artists to make some upfront cash is to sell shares of their song. This doesn’t mean you’d be selling the rights to your songs. It means you’d be allowing fans to invest in your song the same way they would invest in a company.
So let’s say you sell 100 shares of your song for $10 a piece, earning you $1,000 upfront. Now, based on the streaming revenue that song generates, the fans earn money based on the share(s) they bought. Typically, this deal would have a set time frame for the fans to earn their investment back or make a profit.
So you make money upfront, your fans feel good about supporting your career, and they can make a profit as well.
Two companies blazing the trail in this niche area are Fringe and indify.
Allowing your fans to invest in you and your music career makes them feel part of your success, because they are. On top of that, they can make a profit, making it more likely they’ll invest in you again.