Controversy is swirling about PledgeMusic, the crowdfunding site targeted specifically at fundraising for musical projects. Multiple reports have surfaced that the company is not paying out funds raised by artists, and PledgeMusic just confirmed that the allegations are substantially true.
PledgeMusic works like most crowdfunding platforms: musicians set a financial goal, offer some incentives and the platform gives them the money after taking a 15% cut off the top. Multiple artists that I know (Gavin Hardkiss and Colette among them) have used it to fund album projects, and the company claims to have been the conduit for artists raising more than $100 million since the platform was created.
Notable allegations of PledgeMusic stiffing artists surfaced over the summer, but after a post in industry pundit Bob Lefsetz’s newsletter the number of artists airing complaints multiplied exponentially. The band Fastball cleared the air by claiming PledgeMusic was avoiding them, liked a dodgy debtor.
“And do you mean to tell me you don’t have $20,000?”
“I got a call from their manager Ron Stone today,” Lefsetz wrote. “The band was due their 20k on 1/1, Pledge said to wait a while, they’d dribble it out over time. And then when Ron pushed for the money, Pledge went silent, it’s been three weeks now without a return phone call. So obviously they don’t have the money…
“It’s not Pledge’s money, other than the small percentage the service takes as a fee. They hold the money as a fiduciary. But obviously they’ve spent it. But Fastball is a small player in their ecosystem, what about the big acts? And do you mean to tell me you don’t have $20,000?”
In the wake of more than 25 responses to Lefsetz’s post, Tyketto vocalist Danny Vaughn made a video in which he said a crowdfunding project that ended in late October 2018 still hadn’t been paid out.
According to PledgeMusic’s guidelines, artists will receive 60% of their money within two weeks of reaching their crowdfunding goal. Three months later, Vaughn has received less than $7,000 of the $30,000 he’s due – less than 25% – and this came only after badgering the company to pay him. He says that PledgeMusic has been having issues with payments since at least 2017.
Watch Vaughn’s video here:
In other words, PledgeMusic appears to be broke and teetering on the edge. They must be using incoming money that artists raised to fund the company’s operations or to pay out older projects, similar to the last gasp of a typical Ponzi scheme.
And like a Ponzi scheme, avoiding PledgeMusic at this point is probably a wise thing to do – yet may precipitate its collapse.
PledgeMusic Admits They’re At Least 90 Days Behind
Shockingly, PledgeMusic just released a statement which substantially confirms the reports that they’re short of cash and using funds due to artists to fund their operations.
“We deeply regret that recently we have not lived up to the high standards to which PledgeMusic has always held itself,” the statement reads. “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.
“We accept responsibility for the fact that we have been late on payments over the past year.”
PledgeMusic claims it’s made all kinds of investments, has cut its operating expenses nearly by half (how is this an encouraging statement?), says it is looking for investors to bail it out and hopes to have more to say about that “in the next 60 days.”
“It is our expectation,” the statement reads, “that payments will be brought current within the next 90 days.”
This is an astonishing admission, and one that probably opens the company up to legal armageddon now.
Moreover, I don’t know anyone that would start a new project on the platform knowing that the company is at least 90 days behind in payments and burned through other artists’ money. It’s not like Danny Vaughn’s money exists somewhere in the ether and they just can’t find it. They dipped into his kitty and spent it, and now are trying to get bailed out to replace it. Even if PledgeMusic manages to find a guardian angel that makes everything right, current management should be walking the plank and depending on what happened to all the money, possibly the perp walk.
This is all bad, bad stuff. There are a few alternatives to PledgeMusic out there, and there’s really no good reason why a company that does this (basically allowing musicians to pre-sell albums before they’re made and then – this is the key part – giving them the money) shouldn’t be both solvent and even profitable.
For now, Vaughn’s fans have headed to GoFundMe to attempt to make him whole.