Lovely Andy Jenkinson forwarded me this email from Amanda Palmer: he’s contributed to this massive example of Crowd Sourcing. Really interesting, transparent read.
Project Update #5: all you ever wanted to know about all this kickstarter money & where it’s going.
Posted by Amanda Palmer
my dear comrades,
GREETINGS FROM my desk in boston, where it’s raining and the birds are going crazy and i’m tied to my computer crank crank cranking on the artwork and the tour prep.
lots more to come. we’ve almost hit 17k backers and i’m oozing with joy.
so you know: i’m cross-posting this backer update to my blog as well. i think it’s important shit. i’m going to be reading the comments in both places, but the majority of discussion will probably be going backy-forthy over on the blog site, if you want to join the conversation over there. HERE is the link. the text is exactly the same.
this is a long update, but i have something important i’d love for you to read first.
save it for later if you have to, but READ IT. (a lot of you, especially the music-biz types, probably already have.)
it’s a now-famous piece of writing from the early 90’s by producer steve albini, entitled “The Problem With Music.”
in it, he basically explains why a famous touring band on a label is still fundamentally FUCKED once you do the math.
click HERE to read it.
everything he says is true. i lived this reality on roadrunner records.
if you compare his numbers to my numbers (below), the similarities are striking, but that shouldn’t be surprising.
it COSTS REAL MONEY to manufacture and distribute a record, to have a staff and a publicist, to promote an artist and tour a band.
that will never truly change.
but now, because we can reach out fans directly without the machine, artists are empowered to call the shots and keep whatever’s leftover…not the labels.
lots of people have been asking LOTS OF QUESTIONS. why we set the goal where we did, and who the fuck do i think i am doing this anyway, blah blah blah.
and i’m working on answering A LOT of big life-altering questions for my next blog, including why my kickstarter is actually NOT a front for the church of scientology.
this question from @MaleahArvieux on twitter merits its own big-ass answer, and it’s one of things i’ve been asked CONSTANTLY.
“so, are you loaded?”
well, you tell me. depends on your definition of “loaded.”
let’s say this kickstarter hits a million dollars in pledges by may 31st.
TRULY? first i’ll run naked through the streets, yelling hallelujah.
because this WORKED.
but financially, realistically?
first i’ll pay off the lovely debt – stacks of bills and loans and the like – associated with readying all of the stuff that had to happen BEFORE i brought this project to kickstarter.
for the past 8 months or so, i wasn’t touring – and therefore wasn’t making much income – but every step of the way, there were expenses. so, during that time, i borrowed from various friends and family who i’d built up trust with over the years.
i had to pay my staff and crew to get this album ready as well as keep the ship afloat and headed in the right direction. i also needed to come up with the cost of the recording itself (which was pretty whopping), and any other expenses the band racked up in the meanwhile.
to put a number on all of that behind-the-scenes stuff which just got us to DAY ONE of kickstarter: $250,000.
terrifying? damn straight.
but to do this the way i knew it needed to be done, that was just a bet i had to take against myself.
i’m a truly lucky person to have been able to float myself without having to simultaneously tour and break my back.
i’ve also worked my ass off for years to build the kind of trust that built me that line of credit with people.
let’s subtract that from the $1,000,000 we theoretically make on kickstarter.
that takes us down to about $750k.
here’s some very back-of-the-napkin costs to manufacture the goods, with a rough estimate of about what we’d have sold if we got to a million.
7,000+ high-end CD-books & thank you cards cost about $15 a package to manufacture and ship. that’s $105,000.
1,500+ vinyls & cards, at about $20 to manufacture & ship…about $30,000
2,000+ art books (bearing in mind the shipping on those, every time they need to be shipped from the plant, to the distributor, to YOU, plus the signing, is killer) will cost us roughly $80,000.
PLUS we have to factor in about $15-20k to pay our design team to actually design all this stuff, and to make it super-duper amazing and worth your money. those of you who supported mine and Neil’s last Kickstarter know what i’m talking about here. this CD is gonna be a super-deluxxxxxe work of art.
the neil and kyle books are going to cost us a LOT of dough to create…let’s just throw out about $100/copy for about 100 copies…that’s 10k.
if we sell about 100 turntable packages: ordering the tables, paying the artists to paint them, shipping all that stuff around: ballpark another $15k.
arts & crafts/7-inch packages, if we sell about 300 of them, adds about another $30k (we’re planning on spending roughly $100 each on the packaging for those, including not only the vinyl but the fun arts-and-crafts activities. oh, and postage/shipping x5)
to take the band on TOUR to six cities and install the art shows is probably going to break even, but if they don’t sell out (looks like some won’t) we might eat it a little bit on that art tour. let’s say we wind up not selling out berlin and LA. we still have to pay to fly the band, gear, art (carefully!!!) and crew to each city. that difference might sink us about $10k.
i’ll be able to wrap some of the house parties into a regular tour, but a lot of them i’m going to need to fly to or otherwise get to. 35 parties. let’s assume i crash on couches and with friends and don’t even stay in hotels…and let’s assume the flights are cheap and i only have to fly to 20 of the 35, with average airfare from place to place being $500. that’s $10k.
now we’re down to $440,000.
i have to pay the VISUAL artists who joined this amazing art party. i commissioned them all to paint their art, they own it. i’m only BORROWING the art for the art gallery tour — and using the “likeness” (the digital copy) for the album/book/etc. packaging – and then returning the art to the artist to keep. still, i paid them all. add another $20-25k there. i feel very good about giving them all that money.
which puts us at $415,000.
this is a good time to talk about commissions (get ready to be bored):
me and my management team are doing this all 100% by ourselves (globally). because this IS the way it should be – putting control back into the artist’s hands – there’s a shit-ton of work involved. this is not a bad thing, i am not complaining, but it means a pretty big staff (including my lawyer) needs to be in place to DO THIS.
they’ll take about 15% of everything.
my business manager, who gets everyone paid and acts as the accountant for all my cashflow, also takes a 5% cut of everything i earn (which is very fair. hi patrick!!!).
for you business majors, since you’ll ask: some of this commission is after expense, i.e. on the net. some isn’t. good questions. let’s continue.
so do the % math: on a million dollars, give or take, that means that about $150,000 of the kickstarter money will go to the commission pile.
down to $265,000.
we had budgeted about $80k for four to five music videos, which are fun and we all love (and which also provide work for more of amazing artists). i might up that to $100k now that i know we can afford it.
that’d take us to $165k.
there’s expenses i’m not even TALKING about here…the cost of our new website designers, my full-time staff (i have two: superkate and sean), the tour equipment, band costumes, gear cases, stage backdrops, and gazillion other incidentals. the mind boggles. you should see my email inbox, as we try to sort all this stuff…it’s hilarious.
and wait, fuck….i forgot. kickstarter also takes 5%. and so does Amazon (who handle the credit card processing fees, turning pledges into actual moneys). so we have to lop off $75-100k for them.
(are you starting to get the idea here…?)
are we at under $100k yes? why, yes! how the fuck did THAT happen?
not by accident.
all business choices. all art choices.
none of this is surprising to ME.
i can tell you two things for sure:
ONE…we are committed to doing amazing things for all of you who pledged. sure, it’s going to cost more to make things extra fancy (and for us to ship things for FREE all over the world), but making this stuff amazing IS THE POINT. if i skimped on making the packaging and actual products INCREDIBLE, i’d be an idiot.
TWO…a LOT of our income for the next year WON’T COME from this kickstarter. it’ll come gradually, over the following year: from the touring show, from the merchandise we sell on the road, from money we get in donations when i make the tracks available online, from the money i get from iTunes from the people who are sometimes lazy (like me), and so forth. it’ll be a slow burn, like it always is.
if we keep our expenses down, and keep the tour pretty practical and the video budget way down, i could probably put $100k of this in the bank personally. which would be great.
but i might just be close to zero as i head off on tour this fall.
and you know what?
that’s FINE with me. it’s almost even THE PLAN.
if i break even on this project, i still see this as a massive win. do you see why?
first of all, this kickstarter and its success is going to open the door for a lot of other artists, especially major-label refugees like me.
i’ve never denied the value of getting a boost from the old label system. but that was then, this is now.
and we’re being shown PROOF POSITIVE that it’s just not necessary anymore. paying now for value later is what historically would’ve been a label’s primary purpose. now YOU are able to bankroll and finance and KEEP CONTROL WITH THE ARTISTS. showing that this WORKS…that’s simply great art-karma, and awesome for everybody, including me. and all my art-making friends.
and almost DEFINITELY: all the buzz around this kickstarter will mean the record itself will get more attention when it comes out for real, commercially.
and the record itself is AWESOME. it is. it is awesome. which means i have a feeling it’s going to do really well aside from this pre-order.
and that’ll make me real money when i hit the road in september.
don’t forget: i’m CHOOSING to spend all this money making the packages fancy as shit….and i’m CHOOSING to tour this way. EXPENSIVELY.
i could send you all cheap-ass jewel case CDs, fire my staff, make a cheap book on xerox paper, and tour just with a solo piano…with no crew, no band….and RAKE IN THE DOUGH.
i mean: i could potentially do that and walk with close to half a million dollars. but the products would suck and the tour would be a solo piano tour. and nobody would ever trust me again.
i’ve been running my life this way for years, bouncing up and down financially and just making sure i always had enough money to do WHAT I WANTED, and do it RIGHT.
it may be what makes me different, fundamentally, from a lot of pop artists. i’m almost never looking at the monetary bottom line, i’m always looking at the creative bottom line. the happiness index of my life and creative self, not the amount of dough i’ll have in the bank at the end of a project. (it can drive a manager crazy.)
to answer the question:
loaded with awesomeness.
in no fucking case scenario do i get a check for $1,000,000 and laugh my way to the bank, then book a private jet to ibiza where a limo filled with hookers and blow will be waiting to escort me to a slamming nightclub called “la uno percento” where i then spend my time contemplating my handsome nose job in the darkened mirrored bathrooms (probably weeping).
and you know what else? if i wind up truly loaded someday, it means i’ll probably buy an abandoned church somewhere and turn it into a free 24-hour circus brunch bar for everybody. cross your fucking fingers. we’ll all win.
this is just the beginning.