(Hypebot) — PledgeMusic has fallen behind on payments to artists that have completed their crowdfunding and pre-release campaigns. The music crowdfunding and e-commerce site boasts that more than 3.4 million fans and 50,000 artists ranging from new to platinum-selling use the platform.
In multiple conversations with artists, managers, and music marketers, the story was much the same: months after completing their PledgeMusic campaigns, funds pledged by and collected from fans have not been released to the artists. Amounts due or paid months late range from low to mid five figures.
PledgeMusic’s failure to pay in a timely fashion severely hampered more than one artist’s ability to deliver goods promised to and paid for by their most loyal fans.
In an email, obtained by Hypebot, a senior PledgeMusic executive admitted, “Yes, PledgeMusic is going through payment delays,” and re-assigned the artist to a new account manager. Staff turnover is rumored to have increased in recent weeks, as pressure to deflect late payments has taken its toll.
PledgeMusic CEO Dominic Pandiscia says the late payments are just growing pains and being addressed. “PledgeMusic is committed to delivering great results for artists including managing through the challenges that sometimes come when a business grows too quickly,” Pandiscia told Hypebot.
The PledgeMusic board also issued this statement:
- “PledgeMusic has experienced 7-consecutive quarters of growth. We grew nearly 30% year-on-year 2016-2017. This unprecedented growth in campaigns outpaced our infrastructure which put pressure on our business.
- An externally imposed transfer of the company’s payment processing systems (which also affected many platforms in the crowdfunding space), complicated matters and caused us to have to divert resources to make the change and adjust how artists payments are processed.
- The growth combined with the payment processing changes caused some delay with artist payments. We’ve deployed resources in finance and tech and we are making good progress catching up.
- Even given the above, PledgeMusic pays people faster than the majority of other platforms and when that expectation is not met for whatever reason, it is understood that this causes concern across our customer base.
- ‘PledgeMusic remains committed to delivering value to our artist and fans. The Pledge platform is a unique market for fans to access incredible offers and experiences from their favorite artists, and we are committed on continuing to enhance our marketplace and setting the gold standard in the Industry.
- PledgeMusic growing pains are being addressed. The company enjoys the support.”
New York-based VC Magna Entertainment acquired a ‘major position’ in PledgeMusic in 2016, which followed a $3 million investment in 2014. PledgeMusic also owns artist services site Noisetrade and Set.fm.
I’ll admit to some skepticism that PledgeMusic’s late payments are just growing pains. An “externally imposed transfer of the company’s payment processing systems” would seem to result in payment delays of days or a week, but not months.
Is it possible that PledgeMusic did not follow the practice of most other crowdfunding and e-commerce services and hold fan funds in escrow or not charge their credit cards until the campaign was complete? Or did PledgeMusic use some fan funds for operating expenses, thus leading to the current cash crunch?
Either way, PledgeMusic risks a crisis of confidence unless it speeds up payments to artists.
Other media outlets have begun to report on the problems at PledgeMusic. That could lead to artists and labels pulling their campaigns off the platform or choosing to use Kickstarter and other services. Such an exodus could only exacerbate PledgeMusic’s problems.
We’d love to hear your recent PledgeMusic experiences (email bruce at skylineonline dot com ) and we will update the story as it develops.