In a ‘heartfelt’ letter, co-founder Benji Rogers admitted the embattled British crowdfunding platform stole….sorry, “used” artists’ money to pay off debts, a fact the company refused to disclose to fans and musicians.
He wrote (emphasis mine),
“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….
“The company will go into administration 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.”
Earlier this year, after speaking with Rogers and his team, the British Musicians Union urged indie artists to use a better, more stable platform.
Hinting at legal action down the line, the organization wrote,
“The MU has been aware for some time that musicians who have launched campaigns on the crowdfunding platform, PledgeMusic, are owed outstanding monies. We have today met with [the company], and they have assured us that the outstanding payments will be brought up to date within the next 90 days.”
“This is far from satisfactory, but at this time we believe that any legal action against Pledge may be counter-productive.”
While the 90-day excuse satisfied the MU, it now appears that the company never had plans to pay artists. Earlier this year, Rogers confirmed that PledgeMusic would no longer accept contributions to active and pre-sale campaigns.
The bankruptcy may now lead to significant legal trouble for Rogers and his team.
Following the news of the crowdfunding platform’s bankruptcy, UK Music’s Chief Executive, Michael Dugher, immediately stepped in. He called on Kelly Tolhurst to refer the company to the Competition and Markets Authority (CMA). Tolhurst serves as Minister for Small Business, Consumers, and Corporate Responsibility.
“Many musicians across the UK relied on crowdfunding website PledgeMusic to deliver payments from patrons, to pay for album recordings and costs.
“These artists were already enduring long delays in receiving payments. As a consequence, creators who used PledgeMusic’s services are likely to lose money, if it goes into administration without resolving its outstanding debts.”
Rogers and his team reportedly owe independent artists between $1 million and $3 million.
Dugher added crowdfunding platforms remain an essential medium to ensure emerging artists raise the capital needed to support their careers. This includes covering album recording costs, music video costs, and other expenditures.
“This is often a crucial step for them to progress through the music talent pipeline. Musicians should be able to trust crowdfunding platforms to fulfill their obligation of delivering money pledged by fans and supporters.
“I would, therefore, ask that you refer PledgeMusic to the CMA to ensure that this matter is properly investigated.”
Stating the MU remains “extremely concerned” about how the bankruptcy will affect musicians owed money, the organization wrote,
“The MU has been working with individual members who have had funds withheld on a case-to-case basis. Members who have been affected but have not yet been in touch are advised to get in contact with their Regional Office.”