A brief survey of the social and technological evolution of patronage in the arts

Part One: History of Patronage

Part Three: Future of Patronage

At CROWDX, our goal is to give creatives access to sustainable funding for their endeavors while strengthening their ongoing connection to their supporters through a distributed patronage system. We believe that innovation in artistic patronage has stagnated given the current capabilities of technology and that in order to evolve further we must interrogate the fundamental notions that have accumulated around the pursuit of art over the years. The history of artistic patronage goes back hundreds of years and tracing that history yields insight into how creative commerce has transformed with the evolution of society and technology.

The previous entry in this series traced significant technological and social currents that shaped patronage in the arts. From the Golden Age of Rome, the Renaissance, the music industry in the twentieth century, and finally to the Internet’s digitization of the industry at the turn of the century, we traced the patterns between artists and the forces that help them manifest their work into the world. Before the last decade, a common pattern had persisted for centuries: artists relied solely on wealthy and powerful entities to secure different parts of the creative supply chain, such as funding, IP management, and distribution. In this chapter, we’ll explore a new paradigm that has become a go-to method for artists to secure capital for their endeavors.

The Wisdom of the Crowd

In 1997, the British rock band, Marillion, found themselves adrift with no record label. Since tours were largely bankrolled by labels, they were unable to produce the estimated $60,000 cost of the tour. The inability to perform shows could have resulted in a death spiral given the band’s dwindling resources. When they went on their mailing list to update fans on their predicament, many fans offered to help fund the $60,000. After setting up an escrow account managed by a third-party, the band successfully funded their next tour with the aid of their fans. After the tour, Marillion fired their manager and funded the recording of their next album with pre-orders. Marillion’s story is often cited as the first instance of crowdfunding in the creative arts before the existence of crowdfunding platforms (and even e-commerce).

The first documented crowdfunding platform was ArtistShare (2001), a venture that provides “fan-funding” to artistic endeavors while also operating as a record label. Their business model is designed to maintain a connection between artists and their fans so that the fans could witness the creative process throughout the project’s development while earning rewards for their contributions. ArtistShare set a foundation for future enterprises to explore the possibilities of capital formation by the crowd.

In the past decade, the ability of the Internet to facilitate capital formation for projects, products, and other creative endeavors has been realized to great effect by various platforms. Let’s briefly look at three which have been particularly popular in the creative industries: Indiegogo (2007), Kickstarter (2009), and Patreon (2013).

Each of these platforms provides a variety of services, but there are notable differences between them. Indiegogo, for example, is the only one which provides equity crowdfunding (and recently ICO fundraising). Kickstarter focuses exclusively on project-based funding whereas Indiegogo has launched entire startups and business ventures. Patreon’s model is focused on providing subscription-based funding for individual creators rather than project/product-based campaigns.

Equity crowdfunding (or investor crowdfunding): when actual shares of a project’s future earnings are sold to accredited investors. Since investors expect to profit in this arrangement, this is a tightly regulated model across many jurisdictions. See also: Bowie Bonds.

(or investor crowdfunding): when actual shares of a project’s future earnings are sold to accredited investors. Since investors expect to profit in this arrangement, this is a tightly regulated model across many jurisdictions. See also: Bowie Bonds. Project-based crowdfunding : when artists or entrepreneurs fund specific projects in a one-off funding event, rewarding contributions at certain tiers with exclusive content and experiences.

: when artists or entrepreneurs fund specific projects in a one-off funding event, rewarding contributions at certain tiers with exclusive content and experiences. Subscription-based crowdfunding: artists reward monthly subscribers with exclusive access to content and other experiences

The popular perk-based model of crowdfunding has already been through the gauntlet of regulatory uncertainty to become a sound way to raise capital for creative endeavours. The sheer volume of funds raised is testament to the power of pooling capital from a large number of supporters rather than a select few.

Crowdfunding, in its various forms, has become the ideal mode of patronage in the age of the Internet, creating new opportunities for artists and their fans that were impossible before the maturation of the web, yet the enterprises behind these platforms have become so set in their lucrative business models that innovation has slowed considerably in the following areas:

Payments Infrastructure : Bringing credit card payments onto the Internet lead to the e-commerce revolution and with it a 3–5 percent baseline fee of all transactions, but combined with platform fees, the total fees of successful funding campaigns can be as high as 10 percent.

: Bringing credit card payments onto the Internet lead to the e-commerce revolution and with it a 3–5 percent baseline fee of all transactions, but combined with platform fees, the total fees of successful funding campaigns can be as high as 10 percent. Market Design : Crowdfunding platforms are naturally multi-sided, facilitating two-sided markets, yet their design is basically a high-latency shopping catalog or monthly subscription package. There is significant room for innovation in areas of curation and patronage.

: Crowdfunding platforms are naturally multi-sided, facilitating two-sided markets, yet their design is basically a high-latency shopping catalog or monthly subscription package. There is significant room for innovation in areas of curation and patronage. Community Engagement: Incumbent platforms do not use the vast potential of the community to generate value for both sides of the market. While the community is the core driver of a successful crowdfunding endeavor, their role is fairly passive beyond consumption.

As society and technology continue to evolve, what new vistas of opportunity will open up to artists in the future? What new tools will we have to build for these new techno-social structures? Fortunately, the future grows in the soil of the present, so we can anticipate some of the flora and fauna that we’re likely to encounter as we head into the unknown.

Part Three: Patronage in the Future