Thursday, January 17, 2013

Music Business/Law Tips - "Kickstarter Basics"

Kickstarter is a platform where Creators run campaigns to fund creative Projects by offering rewards to raise money from Backers. By creating a fundraising Campaign on Kickstarter, the Project Creator is offering the public the opportunity to enter into a contract with the Creator. Kickstarter is not a party to the agreement between the Backer and Creator (all dealings are solely between the parties). A Project is defined as something that has a clear goal, like making an album, a book, or a work of art. A Project will eventually be completed, and something will be produced by it. A Project is not open-ended. Starting a business, for example, does not qualify as a project. It is the Project Creator's responsibility to complete the Project. Normally, the motivation for a Backer to invest is that they are rallying around their friend’s Project, supporting someone they have long admired (i.e., a fan), or are inspired by a Project's rewards: e.g., a copy of what's being made, a limited edition, or a custom experience related to the project (i.e., a date). Kickstarter's Terms of Use require Creators to fulfill all rewards of their Project or refund any backer whose reward they do not or cannot fulfill – Creators have a legal obligation to do so. Also, a Creator shall not, and shall not permit any third party using its account to, take any action that it knows is false, misleading, or inaccurate, or is deceptive or fraudulent. Essentially, a Creator has to make a good faith effort to complete the Project and fulfill. If problems come up, a Creator is expected to post a project update (which is emailed to all Backers) explaining the situation. Sharing the story, speed bumps and all, is crucial. Most Backers support Projects because they want to see something happen (i.e., completion of an album) and they would like to be a part of it. Creators who are honest and transparent will usually find Backers to be understanding when plans change. Sometimes the execution of the project proves more difficult than the creator had anticipated. If a creator is making a good faith effort to complete their project and is transparent about it, backers should do their best to be patient and understanding while demanding continued accountability from the Creator. If the problems are severe enough that the Creator cannot fulfill their Project, Creators need to find a resolution. Steps could include offering refunds, or other actions to satisfy Backers. A Project Creator is not required to grant a Backer’s request for a refund unless the Project Creator is unable or unwilling to fulfill the reward. Ben McLane Esq

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