Crowdfunding: A Case Study of a New Model of Financing Music Production

Galuszka, P., & Bystrov, V. (2014). Crowdfunding: A Case Study of a New Model of Financing Music Production. Journal of Internet Commerce, 13(3-4), 233–252. doi:10.1080/15332861.2014.961349

25 Pages Posted: 14 Nov 2014

See all articles by Patryk Galuszka

Patryk Galuszka

University of Lodz - Institute of Economics

Victor Bystrov

University of Lodz - Institute of Economics

Date Written: August 20, 2014

Abstract

This paper analyzes the application of crowdfunding to finance the production of music recordings. The analysis is based, albeit not only, on a case study of a crowdfunding platform located in Poland (MegaTotal). The case study illustrates how pooling contributions of crowdfunders and redistributing risk makes it possible to release records that would not be released by a traditional recording company. The analysis of quantitative data shows that one of the most important factors for success in the process of capital accumulation via crowdfunding is the involvement of a significant number of backers who make repeated contributions to a project. Additional factors that may help a project succeed are also discussed, such as engagement in communication with potential backers and offering bonuses to contributors. In this way, crowdfunding helps overcome one of the structural problems of the traditional recording industry.

Keywords: crowdfunding, crowd-funding, record label, music industry, mp3, social finance, independent artists

JEL Classification: M10, G10, G29, O39, Z10

Suggested Citation

Galuszka, Patryk and Bystrov, Victor, Crowdfunding: A Case Study of a New Model of Financing Music Production (August 20, 2014). Galuszka, P., & Bystrov, V. (2014). Crowdfunding: A Case Study of a New Model of Financing Music Production. Journal of Internet Commerce, 13(3-4), 233–252. doi:10.1080/15332861.2014.961349. Available at SSRN: https://ssrn.com/abstract=2523843

Patryk Galuszka (Contact Author)

University of Lodz - Institute of Economics ( email )

Narutowicza 65 str.
PL 90-131, Lodz
Poland

Victor Bystrov

University of Lodz - Institute of Economics ( email )

Narutowicza 65 str.
PL 90-131, Lodz
Poland

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