My First Earthquake

Our freelance, indie, do-it-yourself culture has a few major drawbacks, among them a shortage of start-up capital. It is the Great Recession, after all. Banks are happy to take cheap capital from the Federal Reserve Bank, but they haven’t been excited about lending it out to customers. Musicians and writers used to be able to rely on record companies and publishers for advances, but those are smaller and harder for mere mortals to get than in times past. And, many bands have found to their chagrin that record companies offered the most expensive form of financing when all was said and done.

And yet, the books want to be written, the music wants to be played. And even if it wants to be free, there are costs involved. When the going gets tough, creative people get creative.

That leads me to the adventures of My First Earthquake,  a New Wave influenced pop band out of San Francisco. The quartet is raising money for its second full-length recording (and fourth recording overall) via Kickstarter.com, a site created for crowd sourcing the funding of all sorts of different projects, including art, fashion, and video games. People make their case for why they deserve money, and others agree to make donations. Any funds received are considered to be gifts, not investments; the site has some nice language about ownership, but really, if Kickstarter solicited investments, then it would have a whole level of securities regulation to deal with.

A few members of My First Earthquake have tech-industry day jobs, and they are in the techy heaven of San Francisco, so they received a beta invitation to participate on Kickstarter. Not only has it helped the band raise money, says Chad Thornton, the band’s co-founder and main songwriter, but it’s also helped them connect with listeners. ”It’s fun to have an inner circle of fans who are a little more dedicated.” He says that about half of the funders are existing fans and the other half are people who found the group through Kickstarter.

My First Earthquake’s  goal for Kickstarter was to raise $5000; Thornton says that the cost of a cheap but good recording is between $5000 and $10,000. The group has already lined up Anthony Molina of Mercury Rev to produce, but it needs to fly him to SF. Donors are offered a range of swag and perks including song downloads and t-shirts in exchange for their largesse. (Give $1000, and My First Earthquake will even write a song for you.) At press time, the band had received $7050 from 168 backers. ”I kind of wish we had set the goal a little higher,” Thornton says.

Are there fees? Of course there are fees. In addition to the costs of the merchandise, Kickstarter charges 5 percent of the revenue on a successful project, and the payment processor takes another 5 percent or so.

This is just one approach to an interesting problem. The traditional business structure of the music industry is going away, but the business aspect of it is not. If you are not raising money, it’s great fun to watch and see how other people do it. (If you are actually trying to raise money, well, it’s not so fun, is it?)

If you’d like to hear My First Earthquake, you can get  a free a download for their EP, Crush, on their web site. That is at least as much fun as reading about finance.

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About the Author

Ann Logue

Ann Logue is a freelance writer and consulting analyst who is fascinated by business and technology. She has a particular interest in regulatory issues and corporate governance. She is the author of "Emerging Markets for Dummies" (Wiley 2011), “Socially Responsible Investing for Dummies” (Wiley 2009), “Day Trading for Dummies” (Wiley 2007), and “Hedge Funds for Dummies” (Wiley 2006), and has written for Barron’s, Institutional Investor, and Newsweek Japan, among other publications. As an editor and ghostwriter, she worked on a book published by the International Monetary Fund and another by a Wall Street currency strategiest. She is a lecturer in finance at the University of Illinois at Chicago. Her current career follows 12 years of experience as an investment analyst. She holds a B.A. from Northwestern University, an M.B.A. from the University of Chicago, and the Chartered Financial Analyst designation. How's that for deathly dull?

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