PledgeMusic Crowdfunding Platform is Facing Bankruptcy
PledgeMusic, the crowdfunding and music fulfillment platform, has been under fire since last year for the company’s inability to pay bands money collected on their behalf. Now Variety is reporting that PledgeMusic will soon go into administration, the U.K. equivalent of bankruptcy.
PledgeMusic’s financial issues first came to our attention this past February when the company was unable to pay Queensryche $70,000 fans had spent on the platform for the band’s new album. Despite a clause in PledgeMusic’s terms and conditions that specifies money collected on artists’ behalf is to be held separately and shall not to be used for any purpose other than that artist’s affairs, the company had been using that money to fund its daily operations and found itself in dire straits.
Variety sources estimate that PledgeMusic owes artists between $1 and $3 million. Once the company goes into administration and its assets are sold to the highest bidders, it seems incredibly unlikely that the company will come anywhere close to paying off that balance, leaving artists without the money collecting on their behalf and fans with nothing at all.
PledgeMusic founder Benji Rogers left the company in 2016 but returned earlier this year to attempt to help right the ship. He was ultimately unsuccessful, and a planned sale of the company fell through. In a message Rogers sent to artists on the platform, he said:
“I am truly sorry.
“I promised to let you know as soon as I had news either way and I received final confirmation of this just now at the board meeting. The company will go into administration [the British equivalent of bankruptcy; Pledge is a U.K.-based company] at some point this week or early next which means that any funds received for the assets of Pledge will be distributed to all of the creditors involved. This will include all of the artists who are owed money.
“This was the last thing I wanted, and I am holding out hope of a decent recovery for all of you.”
Rogers posted a separate statement to Medium that reads:
“I went back into PledgeMusic just over three months ago as a volunteer to try and help the board and team turn around and sell the company, but I am sad to report that this effort has not met with success,” he wrote in part. “I cannot begin to appreciate how all of you affected artists are feeling about this and I am deeply sorry for what you have been through. I ask all of the fans to please understand the awful and near impossible situation that this has put the artists that you love and supported in, and as such I ask you to bear with them as they do their best to make any obligations to you right. I am also sorry for all of the labels, fulfillment companies and other vendors affected.
“I was CEO of PledgeMusic twice, and even though I left for the last time in 2017, I still always felt connected to the company and to the mission. I wanted to be a part of the efforts to get things back on track but it is obvious now that too much damage had already been done.
“I have seen recent media articles criticizing the business model of crowdfunding and I feel that these are unfair. A failure in execution does not mean that the model is fundamentally flawed. I still believe that there is a great future for fan-funded projects in this industry and I hope that someone builds a new version of, or resurrects what we started. I would gladly help in this effort.
“Once again, I am truly sorry that it has come to this.”
It’s one thing to say “sorry,” but man… what a shitty situation. How was the company allowed to operate in such a fashion that artist funds were used to pay operating expenses for such a long period of time? Who allowed that to go on? Can criminal charges be filed? A class action suit, perhaps?
I’d imagine any artists who were defrauded on the platform and fans that spent their money on it can relate to this old classic: