PledgeMusic, Once a Crowdfunding Haven for Artists, Now Owes Them Thousands of Dollars

"I can deal with failure, I can deal with excuses, but incompetence is just something that drives me crazy," says Fastball manager Peter Wark. "Just tell me what the f---'s up."

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 a 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.

UPDATE, 7 p.m. EST: This story was updated to include a reference to PledgeMusic's terms and conditions.


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