Famous and Breaking the Bank

Many aspiring artists have goals both professionally and personally that when met are often overshadowed with financial illiteracy. Fame and fortune have many costs but for the sake of this blog entry, let’s focus on the financial aspect. Too often we hear of musicians filing for bankruptcy due to various reasons. And in some cases musicians declare bankruptcy more than once. The most notable repeat offender, Toni Braxton, recently filed for bankruptcy a second time.

When Stanley Burrell, also known as MC Hammer, was signed to signed to Capitol Records in 1987 I am sure he was not thinking of the financial woes he would meet just years later. It was reported that Burrell spent an estimated $12 to $20 million on a custom-build mansion alone. Forbes estimated Burrell’s net worth at $33 million in 1991 but only 5 years later was claimed a debt of approximately $13 million. A lavish lifestyle with homes, furnishings, cars and an entourage without the proper financial aptitude is to blame for Burrell’s bankruptcy.

A record deal does not secure an artists’ wealth by no means. In fact, the artist only receives monies after the record label recoups the costs spent toward producing and marketing the recorded music. Whether it is a bad contract signed or the upkeep of celebrity image, poor financial management is to blame.

The Grammy Award winning Toni Braxton is known for a string of hits in the 90’s, her show in Las Vegas, Dancing With the Stars, and her financial failures. A repeat offender, Braxton declared bankruptcy first in 1998 and often the public rumored a bad recording contract was at fault. Later in 2010, Braxton filed for Chapter 7 bankruptcy protection. According to court documents, Braxton had debt ranging from $10 to $50 million while only holding $10 million of assets. Resilient, Toni Braxton continues to entertain. Braxton is currently working along side her family in Braxton Family Values airing on WE tv.

Big dreams and a record deal should not be synonymous with fame and fortune. Financial mismanagement will certainly have an artist dreaming of another chance at making it “big” someday.

Fan-Funding Made Easy

One of the most common hurdles faced by the do-it-yourself artists when beginning new projects is funding. Major record labels bring to the table major marketing and production budgets that are not accessible by independent artists. Many independent musicians lack the financial resources needed to properly promote, manufacture and create recorded music.

There are a variety of ways that indie artists circumvent inadequate funding. Technology today allows artists to reach fans effectively and more cost-efficiently than ever before. Social media, home studios and digital music retailers are becoming more prevalent in the music industry, which also equates to lower costs for the DIY artists. Sites like Kickstarter.com, Artistshare.com and Indiegogo.com provide a platform for fan-funded projects to develop.

Through Artistshare.com, Yeahwon Shin, a South Korean vocalist and arranger, is releasing her U.S. debut album with the help of her fans. Her project’s page on the site shows video footage of Shin throughout the recording process. Click on the month and watch the progress she makes on the record. There are various messages from the Shin on the page to view as well. However, access to some of the messages requires donations.

Fans donations are broken down by purchase prices. The donations provided by Shin’s fans vary as does the benefits received. Prices for purchase range from $12.95 for the ‘Yeahwon Download Participant’ to the $12,500.00 ‘ArtistShare Executive Producer Participant.’ By purchasing the album, fans may receive a credit listing on the physical CD, a chance to participate on a track, an invitation to a recording session, VIP access to Shin’s performances for an entire year, an opportunity to name the album and more depending on the price paid.

Kickstarter.com is another popular site for indie artists to use as a platform for raising funds. Panacea, a hip-hop group from Washington D.C., used Kickstarter.com to fund a limited vinyl pressing of their album ’12 Step Program.’ The band gave fan-packages in exchange for donations. One premium donation of $1,000.00, which sold within 24 hours, gave a fan the chance to be included on the record. By the end of the first day of the project’s posting on kickstarter.com, nearly one-third of the goal had been met. The group raised the needed funds in less than 5 days.