Marketing madness or financial folly?: Implementing equity crowdfunding in the record industry

Purpose
The purpose of this paper is to explore the implementation of equity crowdfunding (ECF) within the record industry in terms of challenges and opportunities, in addition to the marketing and financial implications for independent music artists and major record labels.

Design/methodology/approach
This study adopted a qualitative methodology consisting of two-stage interview-based research methods. A total of 44 semi-structured in-depth interviews were conducted with the CEOs of ECF platforms in the record industry, other related record industry informants, independent artist managers and senior executives from major record labels.

Findings
The loyalty aspect of ECF may have significant marketing potential in terms of inconspicuously using the equity platform as a “prosumer” identification mechanism. As this early career stage of artists is delicate in terms of establishing trust and patronage from their fans, these early marketing and ECF ventures should be implemented directly from the artist without external third-party involvement.

Research limitations/implications
The implications of this paper’s findings and theoretical model are not limited to the two studied stakeholder groups of the record industry. The insights in relation to the obstinate lack of understanding and clarity (particularly for independent artists) which surround ECF are likely to influence short-term strategic approaches by other players throughout the wider music industry.

Practical implications
The insights regarding negative approaches towards ECF by the labels may influence future “coopetition strategies” for independent labels, as they seek to navigate the changing industry dynamics.

Originality/value
This paper is the first study to empirically explore the predominantly under-researched area of ECF implementation in the record industry in terms of marketing and financial consequences for artists and labels.