Amanda Palmer's Million-Dollar Music Project and Kickstarter's Accountability Problem

Back in June, when Amanda Palmer got $1.2 million via Kickstarter to support her new album and tour, the Dresden Dolls singer set a new record for music projects on the fundraising site. The average successful music Kickstarter asks for and receives about $5,000. Palmer asked for $100,000 and then got 12 times that. Naturally, she was thrilled, but now she's being asked to better explain what she's doing with all that money, and she's become a poster child for Kickstarter's accountability problems in the process.

Palmer finally put out her Kickstarter-funded album, Theatre Is Evil, last Tuesday. The release inspired news outlets to again take an interest in the 36-year-old's upcoming tour, and something leapt out at many: Palmer, who had only three months ago gotten more than a million dollars from her fans, was now asking musicians to come play on her tour for free:

we're looking for professional-ish horns and strings for EVERY CITY to hop up on stage with us for a couple of tunes.
we need a COUPLE of horns (trumpet! bari! sax! trombone! all need apply!!!) to join in the blasting with Ronald Reagan, our sax duo who'll be joining the Grand Theft Orchestra every night.
and we need enough strings to make up QUARTET (pre-made quartets WELCOME) to join us for a couple tunes….and to act at the string quartet for jherek bischoff's beautiful music (basically, you get to BE the opening ACT!).

the deal:
you'd need to show up for a quickie rehearsal (the parts are pretty simple) in the afternoon, then come back around for the show!
we will feed you beer, hug/high-five you up and down (pick your poison), give you merch, and thank you mightily for adding to the big noise we are planning to make.

The backlash against Palmer from professional musicians was immediate. Seattle musicians union Local 76-493 called her out multiple times on Twitter, and American Federation of Musicians President Raymond M. Hair Jr. told the New York Times, "If there's a need for the musician to be on the stage, then there ought to be compensation for it."

Indiscreet Chicago-based musician/producer Steve Albini was more direct in his criticism, initially calling Palmer an "idiot" in a message-board comment and then clarifying with an update saying that he doesn't really think she's an idiot, just wasteful:

It should be obvious also that having gotten over a million dollars from such an effort that it is just plain rude to ask for further indulgences from your audience, like playing in your backing band for free.

Fuck's sake a million dollars is a shitload of money. How can you possibly not have a bunch laying around after people just gave you a million dollars? I saw a breakdown about where the money went a while ago, and most everything in it was absurdly inefficient, including paying people to take care of spending the money itself, which seems like a crazy moebius strip of waste.

The breakdown to which Albini refers is a Kickstarter update from May in which Palmer attempted to offer a glimpse into how she planned on spending her money once she'd gotten it. To Palmer's average fans, who have come to know her as a person who whimsically auctions off things for money (t-shirts, wine bottles, dildos), it seemed like a nice gesture of transparency. But to many musicians in the know, Palmer's planned spending seemed extravagant—even impossible—especially in light of the fact that she was refusing to pay horn and strings players.

In a comment on Palmer's tumblr, Owen Pallett, a Canadian musician who formerly performed under the name "Final Fantasy," said:

I am having a hard time reconciling your assessment of your Kickstarter obligations with your current claims toward being unable to pay for yours and Jherek's string quartet.

For example: $100/unit for a 7" is 500% more than any 7" per-unit cost that I've ever heard of.

$300/unit for an art book is frankly preposterous. The most expensive art book store in Switzerland would maybe sell a couple books for that price, off the rack.

Even if these figures are genuine, I believe that I could help you source some less expensive (but still luxury) manufacturing options.

I am a working musician and but [sic] surely pull far smaller guarantees than you do. I work to make my business practice as efficient as humanly possible so as to ensure that everybody gets paid. I believe, in my heart, that you mean well here and you are not trying to rip anybody off. But it reads all wrong.

For the most part, Palmer's explanation of her finances was difficult to accurately fact-check—$250,000 for recording fees and personal "debts," $10,000 for assumed airfare, etc.—but for some of it one could make an educated guess, and Palmer's pricing seemed, as Pallett noted, preposterous.

Besides the art books she plans on printing at $300 a copy, Palmer estimated that about 7,000 CDs and thank you cards would cost her $105,000 to manufacture and ship, while 1,500 vinyl records and cards would cost her $30,000. I called Standard Vinyl, an Ottawa-based record and CD brokering company, to gauge Palmer's prices. Co-owner Chris Saracino told me that even for top-of-the-line products, Palmer's estimates seemed "pretty high." "Just to give you a bit of an idea," Saracino said, "if you ordered 7,000 CDs from us, which would come in a normal jewel case and with a 32-page booklet of liner notes, you're looking at under $9,000."

To be fair, Palmer says her CDs come in a nondescript "hardbound case," which could connote some sort of artisan craft that's time-consuming and costly, and she's also got shipping costs. But even then the difference between $9,000 and $105,000 seems astronomical.

Kickstarter's accountability issues aren't new. Since the company's founding three years ago, tens of thousands of people have used the site to launch projects (Full disclosure: I recently used Kickstarter to fund a magazine with some of my friends, and we had a great experience), some of which have been sketchy duds that left donors out of money and out in the breeze. Palmer looks to be following through with her album, tour, and book plans, but, as others have noted, she seems to be going about it with the smoke-and-mirrors tactics of a grifter. In July, Wired detailed five Kickstarter projects that got so successful they became unmanageable, leaving thousands of people without the products for which they paid while the creators try to get their affairs in order with manufacturers, lawyers, even the IRS. And in one of the most notorious failures yet, Josh Dibb of the band Animal Collective collected more than $25,000 from Kickstarter donors in December 2009 to travel to Mali and work on an anti-slavery movement. Almost three years later, the hundreds of donors to Dibb's project have yet to receive any of the rewards they were promised. On August 21, Dan Rollman, a man who had supported the Malian endeavor, took to the project's comments section to complain. "We are now approaching three years since your project was funded. Three years!" Rollman wrote. "You relied on the belief of strangers, who gave you over $25,000 so you could have a fun adventure in Africa. It's truly disappointing."

According to Kickstarter's internal numbers, the site's most popular pledge amount is $25, and the average pledge is $70. Thus, if projects do intentionally or unintentionally swindle donors, it's unlikely anyone is losing their life savings. Nevertheless, Kickstarter has now raised a sum of nearly $300 million for U.S. projects. And with an increasing number of high-profile people using it, it's not uncommon for individual projects to make hundreds of thousands or even millions of dollars.

As it becomes a place where more and more money exchanges hands, it might make sense for Kickstarter to expect more and more accountability and transparency from its users. Some people are suggesting the site institute a maximum funding amount so projects don't end up underwater from success. Others say projects shouldn't be allowed to promise donors a product, which amounts to a sales transaction just like anything on Amazon. It might even be a good idea for people looking for donations on Kickstarter to sketch out the same kind of basic business plan they'd need to get a small-business loan from a regular bank. But according to a recent blog post from the Kickstarter founders, critics shouldn't expect too many changes to the company's model anytime soon.

"The pursuit of these projects with a guarantee doesn't work," they wrote. "A Kickstarter where every project is guaranteed would be the same safe bets and retreads we see everywhere else. The fact that Kickstarter allows creators to take risks and attempt to create something ambitious is a feature, not a bug."

As it stands, Kickstarter's Terms of Use requires project creators to either grant donors their proper rewards or refund their money. But because Kickstarter is technically only a platform to link backers and creators, the company says it can't give refunds, nor is it legally obligated to ensure creators follow through with other promises. The founders say they have been adding tools to help lessen the risk for both sides, including more staff to vet projects and additional guidelines requiring design and technology creators to have manufacturing plans and working prototypes. But such precautions are no guarantee. If you want a traditional online shopping experience, it's probably best to stick to places like Zappos or eBay.

"The traditional funding systems are risk-averse and profit-focused, and tons of great ideas never get a chance as a result," the Kickstarter founders wrote in the same blog post. "We thought Kickstarter could open the door to a much wider variety of ideas and allow everyone to decide what they wanted to see exist in the world."

In her original Kickstarter video, Palmer said that crowdsourcing money for records and tours is "the future of music." If that's true, people donating to their favorite artists might want to start demanding some guarantees, lest they get hustled like Dan Rollman and the rest of the the Josh Dibb devotees. Otherwise the future looks like bands screwing their own fans rather than labels screwing bands. That doesn't seem like progress.

[Image by Jim Cooke]