Fan Funded Labels

This article, written by Damien Chaney, was published in International Journal of Arts Management the 2 of December 2010. It is untitled “What Future for Fan-Funded Labels in the Music Recording Industry? The case of MyMajorComapny and ArtistShare”. It deals with the apparition of Fan-Funded Labels. With two examples, the writer explain us how these companies are working and why they have grown up.

First of all, since the arrival of the Internet, the cultural world of music has been changed due to dematerialization of media such as MP3 music. Indeed, sales of CDs were the center of the music recording industry in the past. Nowadays, people don’t have to buy CDs to listen to music. They can buy music directly via the Internet, or listen to music
Through this revolution, artists and labels face a real crisis because of illegal downloading.
The history of these labels began to rapidly changing rule of the consumer in the society. Indeed, the role has grown in importance over the years to be more active in the process of consumption.
These companies take a website form allowing users to select and to fund artists to see their environmental record albums. The consumer becomes a kind of producer of the artist, by involving directly in the musical project. It’s like a cultural and artistic sponsorship. In return, users don’t expect a return on investment only financially but also in terms of communication, with some recognition on the fact of participating in the success of the artist.
It also permits to create a strong relationship between the consumer and the artist. Functionment of MyMajorCompany is that there are selections of artists by art directors. Thus the artist has his own web page on laquel it will display pieces or other information. The consumer becomes a sponsor by leveraging the amount of their choice.
When the artist has collected 70,000 euros, it allows him to record an album in the studio, while providing coverage. In return, the consumer harvest 30% of physical sales.
This site differs from others with saving in security gains of the consumers. It is also the most expensive because it requires that the artist harvest 70,000 euros against 36,000 euros on average for its competitors.
However ArtistShare site differentiates itself by providing numerous benefits to consumers that are normally reserved for producers such as video, music on iPod presets, or VIP concerts.

It is however a paradox because these sites were created when the sales of the record industry falling while these sites contribute to electronic music.
A few years back concerts allowed to promote albums. Today they are the main source of income for artists, and it is hard that promote albums.
This article demonstrates that consumers are increasingly forced to pay for music, either on the download platform like iTunes, or listen to the streaming platforms. It is also difficult to make the consumer pay for promoting artist.
To conclude, this system creates a resistance to big labels, despite its small size. It remains difficult to become a world-famous artist through these websites because to be successful, artists must convince a large number of users.