Tag Archives: LAUNCH

Why Isn’t the Music Business Fully Crowdfunded?

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Last week, I posted an article detailing VC Fred Wilson’s thoughts on investing, in which I drew on a few things he’d stated during his interview with Jason Calacanis at LAUNCH. This time around I want to explore another statement Wilson made during his time on stage which I thought received way too little attention at the time. In fact, I’m quite shocked that more people haven’t really latched onto this sooner.

At one point during the conversation, Wilson mused, “I don’t understand why the music business isn’t fully on Kickstarter,” to which there was some murmuring (I heard sitting in the audience), but no real discussion thereafter of that particular comment. While I was just as interested in the next point that Wilson discussed with Calacanis (the subject of my previous post), I couldn’t (still can’t) get my arms around how something so stark to many people seems to fly under the radar. But before I get too incoherent, let me back up and explain my exasperation.

The wonderful thing about Kickstarter (or any of the other crowdfunding platforms) is the freedom that they give to artists. In the case of the music industry, the freedom I’m referring to is the ability to not have to sign to a major record label in order to have money to finance an album, tour, video, etc. Instead, artists can go directly to their own fanbases and raise the required capital from them, thereby side-stepping the very real consequence of having to sign away some amount of creative control (ever hear of master tapes?) to the major label. As a result of this, artists consequently side-step the dynamic of accruing a similar sort of debt with the label itself. (I will explain the deeper economics at play here in a later post).

The dynamic of crowdfunding has changed the entire paradigm of the music industry. Wilson’s comments struck me so much because of how true they really are. He doesn’t need to be a guitarist in a band to understand that the freedom that services like Kickstarter give content-producing artists is invaluable (clearly the reason he invested in Kickstarter in the first place). His own “I don’t understand why” comment exhibits his understanding of the services that used to be out of reach of artists, which are now readily available thanks to crowdfunding dynamics.

Of course, crowdfunding alone can’t and won’t control an entire vertical like, say, the music industry. It’s one part of a larger mechanism. But it’s nonetheless a shift in the paradigm of music production, distribution and consumption that was previously unavailable. Where crowdfunding really comes into play is when it totally disrupts the age-old adage “live won’t save music” (but that’s an argument for a later post).

Here’s the real point: Fred Wilson is an investor, not a guitarist or aspiring singer. Yet he sees the value of crowdfunding so much (investment interest aside) that he doesn’t understand why any artist would forgo the opportunities presented by these new services. And I’m inclined to agree with him (and I’ve been in the music industry now for years). So here’s the real question: if he gets it, and I get it, don’t you think that all the new artists out there get it too?

It just might be a very short time until the music business is fully (or mostly) crowdfunded.

Fred Wilson Believes in Things That Everyone Else Thinks Are Wrong (But Are Actually Right)

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A couple of weeks ago I attended the LAUNCH Festival in San Francisco, where I saw a number of amazing speakers over a three-day period. Needless to say the cross-country trip from Atlanta was worth it. However, despite the fact that there were numerous speakers whose points have stuck in my head since then (particular favorites of mine were Yancey Strickler (Kickstarter), Jeff Weiner (LinkedIn), Chris Sacca (VC) and Tony Hawk (yes I’m a huge fan of skating and the Brown Brigade)), the speaker whose comments were most easily accessible to me was Fred Wilson (Union Square Ventures).

Since the wrap-up of the festival, Jason Calacanis has published a couple of posts and tweets noting the fact that his fireside chat with Wilson was one of the most popular interviews of the whole event. This I readily believe, as I sat with rapt attention as Wilson discussed a number of topics. Actually, Wilson made so many good points during his chat that I need to dissect it through a number of posts rather than in just one.

Of particular interest to me though was one thing that Wilson said. It clearly demonstrated to me his line of thinking when it came to identifying new companies that he liked to become (or was likely to become) involved in: “Believe in something that everyone thinks is wrong (but actually turns out to be right).”

That terse statement, which Wilson actually attributes as something Bill Gurley once wrote, underscored his thinking when it comes to herd-mentality and how he identifies opportunities. While I’m sure there are certainly other factors at play, the qualifier word “wrong” is an interesting choice for his (Gurley’s) adage; it implies quite clearly that he identifies opportunities not only in areas or with companies that might be viewed as rare or unconventional, but ones which may be entirely against the grain of “logical” thinking at the time. This by extension highlights the fact that one can expect Wilson’s current and future investments to be in areas or companies wherein others might not dare even entertain the notion of involvement. He benefits from the fear factor that clears the road in front of him to make it an open highway while others see the words “do not enter.” [1]

Though I’ve followed Wilson’s blog for some time now, since LAUNCH I’ve been reading his posts with this new thought in mind. With each new post I read, there’s now that nagging question in the back of my mind: “what’s the thing in this post that Wilson has identified that others think is flat-out wrong (but is actually right)?” There isn’t always a phrase with a blinking sign screaming “it’s me!” but the point remains that with each subsequent post comes a learning opportunity to go back and reexamine a possibility that I might have dismissed earlier as a “do not enter” sign.

I’m interested to see Wilson’s posts over the next month or so. I’m curious to see what piques his interest enough to blog about it that others may have already dismissed or avoided. I suspect that Wilson’s thought process might very well be as alternative as his Egon Schiele-esque Twitter profile pic (by the way Fred, kudos on that; art-history nerds like me rejoice in the fact that so many within the tech industry use so much modern art imagery). I believe that’s precisely how he’s able to identify opportunities that others miss, or dismiss altogether.

 

Thanks to Dad for reading drafts of this.

 

Notes


[1] Wilson also stated that he had been on the board of a non-profit called DonorsChoose for a few years, which, as he put it, “does exactly, exactly what Kickstarter does” for teachers and public schools. As a result of his involvement with this previous venture, which was raising between $30-40M at the time, Wilson notes that he had a bit of an inside look at the very sort of mechanism upon which Kickstarter was building.