STEVE INSKEEP, HOST:
Now, music fans, in the end, pay for the music business. They buy the songs, the concert tickets, the t-shirts. The online fundraising site Kickstarter gives music fans a chance to pay for the business before the music is made. Over the summer, Amanda Palmer raised more than one million dollars for her latest album through Kickstarter. She was then criticized when she revealed that a lot of the money wasn't going to making music, but to paying for the Kickstarter campaign.
Crowd-funding efforts are time-consuming. Big donations don't mean big payoffs, and that is the subject of today's Business Bottom Line. Frannie Kelley spoke with two bands raising money to find out how much it's cost them to ask you for help.
(SOUNDBITE OF MUSIC)
FRANNIE KELLEY, BYLINE: This is the video the band A House for Lions made to advertise a crowd-funding campaign for its new album.
(SOUNDBITE OF VIDEO)
UNIDENTIFIED MAN #1: How much money do you think it costs to make a record?
UNIDENTIFIED CHILD #1: Nine cents.
UNIDENTIFIED MAN #1: It's so much more money than that.
UNIDENTIFIED MAN #2: A lot more. It really is.
KELLEY: The musicians are asking little kids - or, as they call them, potential investors - for money.
(SOUNDBITE OF VIDEO)
UNIDENTIFIED MAN #2: How much do you think we could put you down for?
UNIDENTIFIED CHILD #1: Ten, 10, 10.
UNIDENTIFIED CHILD #2: Well, I have a lot of coins inside my wallet.
UNIDENTIFIED MAN #2: Really?
UNIDENTIFIED MAN #1: Really?
KELLEY: A House for Lions' video is funnier than most.
MIKE NISSEN: It's a pitch video, really.
KELLEY: Mike Nissen plays guitar in the Los Angeles-based band.
NISSEN: Every crowd-funding project nowadays has some sort of intro video where you kind of make your case or, like, present your product.
KELLEY: A House for Lions is presenting its campaign on its own site using Ignition Deck, which is different from Kickstarter. It's a software plug-in that charges a one-time fee, but the band has to run everything. The band didn't, however, have to pay what is usually one of the campaign's bigger costs - that video - because they have friends at a production company, says their manager, Allie Shaw.
ALLIE SHAW: I actually researched what that same video would have cost, had they charged somebody for that. And it would have cost probably between three and four thousand dollars to make that video.
KELLEY: The band saved money in other ways. Mike Nissen is a graphic designer when he's not onstage. So he came up with the band's T-shirts, posters, album covers and website. Normally he gets $40 an hour, which means after two weeks working on the campaign, he donated $3200 of work to his own band. And Allie Shaw is working for free.
SHAW: For me it's been a totally pro bono invested passionate project for me that's been going on for almost a year now I think. But they're gonna pay big when they're bigger.
KELLEY: The band couldn't get everything on the cheap. It paid to have the shirts and tote bags printed, and now the musicians have to pay to mail them out. If A House for Lions had to pay for its video and product design, the musicians would have come out in the red. With the $13,000 they've raised so far, they have just enough money to offset the cost of running their campaign plus pay for a producer, studio time, and an engineer to mix and master their album.
(SOUNDBITE OF SONG, "LAST GOODBYE")
A HOUSE FOR LIONS: (Singing) Late in the evening we walk down the street with our hands in our pockets. You say that you need me, that everything's changing and we'll never make up the wasted time. You say...
KELLEY: If the band been signed to a traditional deal with a record label, the musicians would be fronted the money to record the album, but they'd have to pay it back, and the label would take a piece of every income stream. In the crowd-funding model, the band sets all of the terms. If fans agree to them, then all the band has to do is fulfill its promises.
NISSEN: Aside from raising the money, it really is an exercise in engaging with your fans and having a conversation with them and getting them involved.
KELLEY: A House for Lions is a new band, playing mostly in L.A. The Mallett Brothers, on the other hand, have been playing throughout New England for three years. They hit New York City last month.
WILL MALLETT: Thank you, guys. We are the Mallett Brothers Band. We came all the way down from Maine today.
KELLEY: The Mallett Brothers are Luke and Will. They play with four other guys. In September, the band started a campaign with Pledgemusic that they've been running while on the road.
LUKE MALLETT: We're like a moving communications station right now in our van.
W. MALLETT: Yeah.
L. MALLETT: We generally all have our phones out at any given time.
NATE SOULE: I just ordered more copies of our last album while we were traveling down here.
W. MALLETT: While I was buying my Lunchable.
KELLEY: The band has already released two albums, which they paid for out of the money they make sweating onstage.
W. MALLETT: The crowd-funding thing is a lot like online busking.
KELLEY: You put out the hat and hope people walking by like what you're doing enough to drop some change. But Will Mallett says it's not quite so simple for some their fans.
W. MALLETT: Some of our older fans didn't understand this whole thing. You know, they're like, can I just give you guys a check? I don't want to go through some thing. And you know, we try to explain to them how it works.
KELLEY: But this whole thing is the meat of crowd-funding. Everything from the length of a campaign to the type of incentives bands offer in return for different amounts of donations are designed to pull the fans closer. Those incentives will cost the Mallett Brothers six to seven hundred dollars to make. They've already spent more than $3,000 to shoot videos and record the first singles from the album.
(SOUNDBITE OF SONG)
L. MALLETT: (Singing) Now I just want to keep on running. Yes, I just wanna drive real fast. Got a big ol' bag full of money so we don't run out of gas...
KELLEY: All told, the musicians are in for more than five grand just running the campaign, and another $11,000 to make good on the promises to deliver the album and rewards. That means they're a few thousand dollars in the hole. But with all the gigging they do, the Mallett Brothers have another income stream. And the funny thing is, Mallett Brothers fans seem more interested in the incentives that don't cost the band anything to make.
L. MALLETT: A signed drumstick.
W. MALLETT: A signed, used drumstick.
L. MALLETT: Cymbals.
W. MALLETT: Or like a handwritten lyric sheet, or like a signed setlist from a gig or something like that. It's all the stuff that we'd be throwing away, you know. That's what people are psyched about, right? Because it's more authentic.
KELLEY: Both the Mallett Brothers and A House for Lions say they would have made their albums even if their crowd-funding campaigns failed. But this way, when strangers take a chance on them, and the musicians come through, they've brought the fans into the van. Frannie Kelley, NPR News.