Music industry lobbyists have lambasted executives behind failed crowdfunding platform PledgeMusic for winding down the company on the quiet. The move to liquidate the company is the latest in a sorry saga of broken promises, unpaid debts and unanswered questions.
Background to the PledgeMusic debacle
The viability of PledgeMusic was called into question back in February when a string of artists revealed long delays in getting the company to pay them money they were owed.
As the true extent of the company’s financial issues became apparent, PledgeMusic stopped taking donations and promised to try and come up with a rescue deal.
As the weeks rolled on, the company announced that it intended to go into administration. Although not ideal, this move would have given musicians the chance to apply to become official creditors and try to recoup at least some of the funds owed to them.
How much does PledgeMusic owe?
Somewhere between 1 million and 3 million US dollars. These funds were donated (or if you prefer pledged) by fans to help their favourite artists pay for album recordings and cover other costs. It was never PledgeMusic’s money in the first place, and it’s unsure what the money has been spent on.
Many artists including Sarah Darling, L7 and Jesus Jones were left out of pocket, and with key projects in limbo.
Without warning, the PledgeMusic website was shut down last week. Then, much to the surprise of the music industry, it was revealed this week that plans to liquidate – effectively just the pull the plug on the whole thing altogether – PledgeMusic were well advanced.
A winding up order was granted in the Royal Courts on Wednesday.
Annoyed at the lack of transparency, lobbyists including UK Music turned up to the Royal Courts to express their anger at the move.
UK Music’s deputy CEO Tom Kiehl has also written to Business Minister Kelly Tolhurst seeking a full investigation into the matter.
He wrote: “The winding up of this company represents an entirely unsatisfactory development for the many music fans and creators who have invested so much into projects through this scheme.
“I ask you to again consider the merits of a ministerial referral to the Competition and Markets Authority to investigate what went wrong with this case.
“I would also like to ask you to consider taking up the case with the Financial Conduct Authority, which holds responsibility for regulating certain types of crowdfunding, to consider the activities of PledgeMusic and whether there have been any regulatory breaches.”
UK Music is also calling for measures to be put in place to ensure something like this can never happen again. Crowdfunding is a crucial funding avenue for independent artists and the public needs to be confident that when they pledge funds, the money reaches the desired recipient.
MAIN IMAGE: UK Music lobbyists at the Royal Courts.