Crowdfunding Music and the Democratization of Economic and Social Capital: new article

My article "Crowdfunding Music and the Democratization of Economic and Social Capital" has now been published in the Canadian Journal of Communication. Here is a summary:

Crowdfunding (soliciting funding for a project through an open call, often via an online platform) is promoted as a tool for mobilizing grassroots, small-scale funding for people who might not otherwise have access to the start-up capital to carry out their projects and ventures (Bannerman, 2013). Crowdfunding’s proponents in the tech sector claim that crowdfunding is “democratizing” in that it shifts capital allocation from “the province of a relatively small and entrenched minority” to something available to and guided by “the collective wisdom of our now 7 billion people” (Lawton & Marom, 2013, p. 1). In other words, proponents claim that crowdfunding “democratizes” capital by making it available to anyone who launches a crowdfunding campaign, while also facilitating broad investments in and contributions to start-up projects. At the same time, crowdfunding can contribute to the casualization of labour, reducing resources and supports available to creators (Agrawal, Catalini, & Goldfarb, 2014). This article asks whether crowdfunding “democratizes” capital for musicians in Canada: Does crowdfunding make capital available to a broader range of Canadian musicians, compared to traditional arts granting programs?

In part one, the article discusses inequality in the distribution of economic, cultural, and social capital. Utilizing the concept of “networked governance,” it discusses the ways in which private companies such as Kickstarter, under regulatory capitalism, take on formerly public roles to become sites of networked individualism. In part two, the article discusses the ways in which crowdfunding distributes economic and social capital and financial resources. Drawing on a content analysis of Canadian Kickstarter profiles in the music category and a survey of Kickstarter users, it compares the demographic distribution of crowdfunding funds with the demographic distribution of a traditional funding agency: The Foundation Assisting Canadian Talent on Recordings (FACTOR). Then, drawing on interviews conducted with Kickstarter users who conducted crowdfunding campaigns in the music category, Canadian policymakers, and music industry representatives, this article examines the economic capital, financial resources, and social capital made available through the use of Kickstarter, drawing comparisons with the economic capital and financial resources made available by FACTOR.

The article concludes that Kickstarter’s successes in democratizing economic and social capital for users are modest.

Kickstarter did not improve access to capital for women, when compared with the FACTOR funding process; Kickstarter's gender ratio was actually worse than the Billboard top-40 and FACTOR's grant recipients:

Kickstarter, similar to FACTOR, tends somewhat to centralize the financial resources it provides in the most populous provinces:

Many (57%) of Canadian Kickstarter music campaigners are debut musicians. Kickstarter may broaden access to economic capital and financial resources for debut musicians.

 
FACTOR funding is a far more significant contributor to Canadian music funding than is Kickstarter; during the period we examined, FACTOR contributed almost $6 million dollars while Canadian Kickstarter musicians raised just over $7 million:

Many Kickstarter campaigners intended or hoped that their project would be profitable:

However, most of the musicians I interviewed (too small a sample to be representative), did not make a profit, or made only a small profit.  Some saved a little to put toward future projects:

Kickstarter fills in some funding gaps that FACTOR may not fill; while FACTOR grants for musicians are either small ($2000), medium ($10 000) or large ($40 000), Kickstarter fills a gap; numerous projects raise amounts in the $2001-$9999 range.

Some of the benefits musicians get from Kickstarter are social; some musicians interviewed (too small a sample to be representative) felt that Kickstarter helped them gain new supporters and fans.  Fewer felt their campaign opened doors, lent credibility to their project, or helped convince people to work with them.

The article concludes that, overall, the governance of cultural funding by digital platforms, in the case of Kickstarter, facilitates the appropriation of economic and social capital by Kickstarter’s owners, who take a profit and benefit from the social connections of artists on the platform, while deepening, rather than ameliorating, the inequalities of cultural production.  

The full article will become available on an Open Access licence in 12 months.  Back issues of the CJC are accessible with a 12 month delay as Open Access with a CC-BY-NC-ND license. Access to the most recent year's issues, including the current issue, requires a subscription.

The author thanks Michèle Martin, professor emerita at Carleton University, and research assistants Todd Harris, Ian Steinberg, Charnjot Shokar, Brittany Green, and others. The author is grateful to the Canada Research Chairs program and McMaster University for their support of this research

For more information about this research, contact Sara Bannerman at banners (at) mcmaster.ca.