In 2017, the electro-industrial band ohGr began recording its fifth
full-length album, TrickS, while at the same time launching a campaign
on the direct-to-fan music platform PledgeMusic. The service seemed like a good
way for the independent act founded by singer Nivek Ogre -- a member of the
band Skinny Puppy
and a cult icon -- to cover recording costs, promote the project with
behind-the-scenes updates and host online sales for pre-orders and specialty
items. But the largest factor in ohGr's decision to go with PledgeMusic, says
producer Mark Walk, was that it would provide "a safe place for
supporters’ funds to be held while the project was being produced." Now,
eight months after ohGr's campaign ended, the band is still owed nearly
$100,000 and struggling to access money it needs to manufacture merchandise
fans have already purchased. All hope for a lucrative album cycle has gone out
the window.
How ohGr's PledgeMusic campaign went from looking like a
success story to a total mess is a fitting allegory for the crowdfunding
startup that launched a decade ago and claims more than $100 million
distributed to artists across 50,000 projects. Thanks to the following ohGr had
amassed, the effort kicked off with a promising start: The project raised more
than $20,000 in just the first few days, giving a strong sense that this could
work -- not only to pay for TrickS, but also as a sustainable music
business model where a band could reach its audience directly, symbiotically
serving its top fans. But slowly, warning signs began popping up. Once the
album was completed in spring 2018 and digital files were delivered to
PledgeMusic, the company became unresponsive about payments. This included money
to the band for operating costs, but also specifically to manufacturers for the
CDs, vinyl, lyric books, T-shirts and other products fans had pre-ordered to
make the campaign a financial success.
These delays pushed ohGr to release the album digitally on
July 18 without any physical product and resulted in ohGr touring in support of
the new album -- without the actual album to sell. While it has also
compromised other plans for the release, Walk says the band is intent on
prioritizing its fans on PledgeMusic to reward their early support. When Walk threatened to go to the press with
his PledgeMusic experience, he says a company employee told him, "Do you
really think anyone would care?"
ohGr is far from the only band that has experienced problems
with late payments from PledgeMusic, if they receive the funds at all. Last
October, after reports the startup was having trouble paying some of its top
artists on time, some major change-ups were announced: Former CEO Dominic
Pandiscia departed, while co-founder Malcolm Dunbar's role was
elevated to global president and chief operating officer, while his fellow
co-founder Jayce Varden returned to the company. (Now sources tell Billboard
Varden resigned on Tuesday.) A new financial team was also implemented under
the leadership of Richard Vinchesi, a partner at Sword, Rowe &
Company, one of PledgeMusic's larger investors. Per a press release at the time, these moves
promised "a more rigorous infrastructure to underpin the company's growth
initiatives," as well as a commitment to improve its "financial
resources and processes." PledgeMusic also struck a deal with leading
music financing company Lyric Financial, it announced, "to help expand its
working capital and improve payable processing."
But based on accounts from several artists and managers who
are still struggling to receive payments from their PledgeMusic fundraising
campaigns, those measures have not been enough to right the ship, leaving many
feeling plundered and unsure what recourse to take. A few interviewed for this
story said they were considering legal action, while most simply pledged never
to work with the company again -- telling their friends and fans to do the
same. “We accept responsibility for the
fact that we have been late on payments over the past year,” the company said
in a statement to Billboard on Thursday (Jan. 24), noting it expects
payments to be brought current within the next 90 days. “PledgeMusic is working
tirelessly on this issue, and we are asking our community for their continued
support and patience.”
According an anonymous former employee who wished to remain
anonymous, the root of these problems is improper money management where
PledgeMusic failed to hold artists' campaign funds separately and securely and
instead invested it back into the company. If true, this would directly
conflict with PledgeMusic's terms and conditions, which state "monies collected by
PledgeMusic for a Campaign will be held on account for the Artist." The
idiom "robbing Peter to pay Paul" came up in many conversations
describing PledgeMusic's actions and as the company's growth slowed the
situation worsened. Over the last year, according to the former employee, in
effort to reduce overhead, PledgeMusic also laid off about a third of its U.S.
staff and moved out of its New York offices into a WeWork shared workspace.
The stories from artists waiting for payment are plentiful,
with outstanding sums ranging from $50 to $100,000. After Fastball completed a
problem-free PledgeMusic campaign in 2017, the '90s pop-rockers returned to the
service last summer to host a pre-order for a 20th anniversary reissue of the
band's album All the Money Can Buy, featuring chart-topping hit
"The Way." The sales ended on Nov. 9, having raised $22,000 from 500
pledgers. To date, the only payment the band has received is $895.24 to cover
shipping costs on a guitar purchased by a fan in Australia. With a balance
topping $21,000 still in limbo, manager Peter Wark says his requests
have been consistently shuffled between different higher-ups at the company
like "a game of hot potato" without providing any clarity. "I was just getting really pissed off
because they weren't responding," he says. "I can deal with failure,
I can deal with excuses, but incompetence is just something that drives me
crazy. Just tell me what the fuck's up."
Instrumental world music band Incendio finished a
PledgeMusic campaign in September meeting 115 percent of their goal, totaling
about $6,200. Of that, the band claims a first installment of $3,300 is now
more than four months late, but requests for payment have been ignored. That
money would be used to fulfill orders made on Pledge -- a requirement to
release the remaining funds.
Folk rock duo HuDost, who first spoke with HypeBot last September about payment issues with the
website, were able to obtain an initial payout from PledgeMusic -- but they are
stilled owed about $8,000. Recently, the band wrote PledgeMusic to inform the
company they would soon release a digital version of their new album to
pledgers, which should unlock a second installment of funds, and asked when
that new money would be issued. Their client manager replied saying the company
is doing its "best to ensure payments are released as they are requested,"
but that with "the current backlog" of requests they could not
"guarantee that payments will be released on time." The band is now
planning to release its album early in order to "get in queue," as
member Jemal Wade put it, to receive their earned payment.
Canadian rapper illvibe earned $500 on a
campaign with all funds going to the nonprofit Charity: Water, but payment took
more than five months and he is still waiting on $50 that was missing from the
total. Singer-songwriter Mike Evin says he's owed $2,900 on remaining
funds for a project that closed a month ago. Joanna Wallfisch has been
owed $3,000 since October, with another $2,000 due when she finishes fulfilling
her orders with her own money. Amanda Duncan is owed more than $3,000
for an album released on New Year's Day and hasn't been able to get a reply
from PledgeMusic. And then of course there are the thousands of fans waiting on
their orders, also now demanding action from PledgeMusic.
The PledgeMusic community is looking for answers, while
questions persist beyond when they will get paid or when their products will
arrive. Namely, why has the company continued to take on more clients, when it
seems unable to pay those it already has?
"Yeah I want to get paid and I want to raise a stink about what
happened to me, but I also want to raise awareness so people are not sending
money to [PledgeMusic] and contributing to new projects that artist are
starting with them," says Even. "They should not be taking on new
business."
For some of PledgeMusic's artists who have spoken with reps
from the company, some relief has been promised soon -- but at this point,
after months of getting the runaround, it's unclear what to believe and some
are preparing for the worst. As of Tuesday, ohGr had been promised 25 percent
of its funds for operating capitol and to manufacture books on Friday. The band
tells Billboard it was promised more money to come when the company
receives an influx of capital in six weeks. It's not waiting around, though,
and has decided to move all sales to BandCamp.
Meanwhile, though Fastball has fulfilled all fan orders, the
band did so at its own cost and now owes its record label on the reissue,
Omnivore Records, about $9,000 for the album costs. While the label has been
understanding to the situation, says Wark, he's concerned the money may never
come. "I'm genuinely worried -- I
don't know if we will get paid," he adds. "[PledgeMusic] may file
bankruptcy and then it's a big middle finger to us."
Read PledgeMusic's full statement here:
PledgeMusic has always been committed to serving artist
and fan communities. It was established by artists and was born of a need to
change the way in which the traditional music industry operated. It was
designed to help artists and their teams at every level, and we believe that
PledgeMusic has become an essential part of the evolving landscape of the music
industry.
That said, we deeply regret that recently we have not
lived up to the high standards to which PledgeMusic has always held itself. We
acknowledge that many artists have and continue to experience payment delays.
These delays to artists are unacceptable--not only to them, but to us.
Since its beginning, PledgeMusic has successfully
serviced over 45K artists from emerging acts to some of the biggest names in
the industry. We've supported 60 Grammy-nominated artists and helped
springboard 100s of unsigned bands to successful careers. Our efforts have
assisted over 375 artists with chart position on the Billboard Top 200. Our
platform has provided close to $100m of revenue to its artist community.
Mid 2017, new investors came into PledgeMusic with the
goal of strengthening the company and improving the value proposition for
artists and fans. After substantial investments in the business over the past
18 months, we believe we have made good progress to that end, but it hasn’t
been enough. That said, the company has cut its operating expenses nearly in
half over the past year. We've overhauled key parts of our financial and operating
systems, while adding talent to our roster and making enhancements to the
platform like our Vinyl Store, D2C artist store-fronting and our data
analytics.
While the company has made progress, we still haven't
reached our goals. PledgeMusic has been in discussions with several strategic
players in the industry who have interest in the PledgeMusic platform. We are
evaluating a number of transactions with those potential partners, and we plan
to announce details of this in the next 60 days. It is our expectation that
payments will be brought current within the next 90 days.
We accept responsibility for the fact that we have been
late on payments over the past year. PledgeMusic is working tirelessly on this
issue, and we are asking our community for their continued support and
patience.
