As demand for Kpop concerts in North America saw a significant increase after 2012, industry insiders and fans alike looked for innovative ways to satisfy the growing appetite. Financing being the overriding component to a successful concert, many turned to reward-based crowdfunding, a means of raising funds from the general public, enabled by new technology and legislation.
With the success of crowdfunding platforms like Kickstarter, Indiegogo, and GoFundMe, as well as legislation signed into law in 2012 making it easier to raise money through crowdsourcing, many kpop companies have embraced this business model with varying degrees of success. However, the model is not without severe pitfalls.
Examples of Kpop companies that have adopted crowdfunding as a business model are Krowdpop, Makestar and MyMusicTaste. Unlike the first two, Makestar is a crowdfunding platform directed at Kpop idol groups and their agencies to enable them raise money for individual projects like new albums, with Laboum as a good example. However, our focus is crowdfunding in concert promotion and production.
With the growth of the internet and social media, crowdfunding was introduced to concert production as early as 1997, when fans of the British rock band Marillion, successfully raised $60,000 using a fan-based internet campaign. With the money raised, the band was able to arrange a 21 date tour of the United States.
After that campaign, the band then turned around and used crowdfunding to release their next album, in 2001.
Kpop concerts, especially in America, are expensive and are capital intensive affairs. Artist fees range from $30,000 and up for a single appearance, not including round trip airfare from Korea, hotels, venue fees, and other ancillary fees like visa filings and stage setup. The budget for a single concert can be anywhere in the range of $50,000 to $150,000.
Well-financed K-pop agencies with impeccable reputations like SM Entertainment are able to lean on traditional forms of investments and pre-concert ticket sales to fund their concerts, such as the 2011 SMTown Live in New York City. Held at the Madison Square Garden on October 23, 2011 with over 15,000 fans in attendance, the concert, included the entire K-pop agency’s active roster, BoA, Girls Generation, Super Junior, TVXQ, Kangta, Shinee, Trax, and F(x). The total cost of the event could have run into several hundred thousand dollars. The reported revenues for the exact same concert held in Los Angeles the year before was over $1 million. This model is not accessible to upstart Kpop agencies and start-up concert promoters like Kpop United.
Kpop United, founded in 2011 by Richard Choo, from the outset was not a traditional K-pop entity. In a genre and sub-culture that places an inordinate amount of emphasis on the exterior, Kpop United sought instead to augment the interior, by bringing a little sunshine into the lives of Kpop fans who had debilitating illnesses like cancer, or were physically and/or economically challenged. As described by the founder to GOOD.MO.MUSIC, during an exclusive interview in 2014,
Kpop United “was a way of giving back to the Kpop fan community.”
Kpop United served a vital role, reminding K-pop industry insiders that sometimes making memories is just as important as making money.
It was in the same vein, with the welfare of the fans in mind that Richard Choo conceived of the idea to make Kpop idols more accessible to fans through crowdfunding. An off-shoot of Kpop United, Richard called his new company, Krowdpop.
This was the first time K-pop and crowdfunding had been combined, and it immediately created a ground swell of excitement among K-pop fans. With a well executed strategy, involving the right technology, Krowdpop successfully launched its first Kpop concerts in March of 2014, with a 4 city North America tour of boy group Teen Top. The successful “krowdpopped” cities were New York, Los Angeles, San Jose and Toronto, raising up to $150,000.
With the genie out the bottle, others, big and small, immediately lunged for the same business model, with varying results, some disastrous.
To date, MyMusicTaste, founded in 2013, has had the most success with a more sustainable business model combining both crowdfunding and venture capital. In January of 2016, they raised $10 million in series A funding. With the tagline “stop wishing and start making,” the company is made up of tech entrepreneurs and has successfully completed 80 events (according to their website), including the recently concluded Shinee In Jarkata concert held in November of 2016 and an Exo 5-cities North American tour in February of 2016.
On the other side of the spectrum was TGM Events, an upstart concert promotion company founded by a former Krowdpop executive. Launched with the same crowdfunding model, they then combined it with direct ticketing and some innovative concepts like selling t-shirts in place of tickets. All with eventual disastrous results. But, no need to rehash that episode, there are myriad documentation of what transpired online. Ultimately, that company left fans out of their money, and Kpop idols with canceled shows.
From this and other similar examples, the industry and fans alike lost confidence in crowdfunding as a business model, especially with regards to startup K-pop concert companies. However, the industry has continued to support and provide backing to MyMusicTaste, and to a lesser extent Krowdpop.
The situation at present, appears to have put the squeeze on Krowdpop. On the one hand with competition from MyMusicTaste who have a ten million dollar arsenal, and on the other hand the bad experiences created by TGM Events.
As the case may be, Krowdpop is at present in the middle of a controversy in Vietnam, for a planned Exid concert. It appears it’s previous association with the founder of TGM Events, along with some poor planning and logistics has the company in the cross hairs of upset Vietnamese fans, who think they are being scammed. The unfortunate situation is detailed here.
Be that it may, Richard Choo, as far as I’m aware, in his previous K-pop activities has always followed through and delivered on his obligations to Kpop fans and idols, alike. After the Teen Top High Kick tour in 2014, Richard successfully put on another tour, Unite The Mic, that brought New Jersey native, Ailee to North America for the first time in concert.
It’s not clear what the present circumstances are with Krowdpop and the Vietnam concert (as the story is still developing as at publication). However, it is clear that crowdfunding cannot alone be the funding resource or the encompassing component of a kpop concert promoter’s business model.
Does it play a role? Possibly. However, with Kpop agencies less willing to lend their name to such avenues of funding, and already edgy fans being scammed out of their money, without an impeccable track record as well as a spotless reputation, success is elusive and the model is fraught with pitfalls and disaster.
The saddest part about the current situation with Krowdpop, is the detriment to Kpop United. A victim of circumstance, you could call it. As the case may be, if the requiem for Kpop United has been sung, then it will be sorely missed.
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