At a time when many traditional musical revenue steams are failing, crowdfunding has provided a way for artists to raise funds for various projects.

Successful companies utilizing it are Kickstarter and Rockethub, whose co-founder Brian Meece moderated a panel at South by Southwest on Wednesday. Artists post a page suggesting a project they need funding to complete, and if fans donate for a project that gets fully funded, those fans are rewarded with CDs, merch or concert tickets depending on the amount contributed. Essentially, fans invest in musicians' projects.

Panelists Kate Dawson (performer), Kevin Breuner (marketing manager at CD Baby), Tom Puukko (founding partner at Hyper), Billy Zero (founding partner at Chemistry Management) discussed how to use crowdfunding successfully, which Dawson and Breuner have first-hand experience with. They discussed the do's and don'ts when it comes to asking fans for donations, as well as case studies to show how successful it can be.

Meece said they expected $1, $5 or $10 donations, but found that the average fan contribution is $40 -- it generally takes about 50-100 people to fully fund a project. His tips for full funding are: 1) a really good project that interests fans and makes them likely to invest, 2) a community/network/fanbase, 3) rewards element where the return is appealing to fans, whether it's a CD or concert ticket. He advised artists to remember that to fans, they are interesting as people aside from their music, a fact they often forget. Therefore, artists should use their personality to engage fans so they contribute.

Victoria Vox, an artist managed by Zero, earns more than $100,000 annually through crowdfunding and tours the world extensively as a result. Zero says this was made possible by leveraging her 10,000 Twitter, mailing list and website fans. He added that his artists didn't know their fans by name until they remembered their donators or the fans that were rewarded with shared experiences

To Puukko, a founding partner of Hyper, a digital creative and communications company in the United Kingdom, crowdfunding is less about the money and more about engaging fans -- and involving them in artists' work. If artists come up with creative ways to solicit fan investment, they can grow their fanbase in the process and connect with existing ones by interacting more with them. He summarized crowdfunding as "a capitalist solution to a socialist movement."