Can you strike a financial chord with the masses?


John Lewis and Tesco do it; football clubs and music artists do it. But is funding the business through contributions from fans an option for less well-known or passion-evoking brands?

Last week John Lewis asked customers and staff to pledge money to help it raise £50m to expand its business. It wants people to deposit a minimum of £1,000 in its new corporate savings bond and in return, account holders will get 6.5% in annual returns over five years.

Tesco Bank did something similar last month. But aside from the retail giants, there is a gathering wave of smaller businesses that are now using the ’fan funded’ model to provide the capital to keep their companies going.

A strong name and a steady return on investment is what attracts people to open their wallets for the big brands, but for smaller firms, emotional connections can be the starting point. Football and music can engender this type of passion in people.

Without the security of a big brand, people need to be inspired either emotionally or with a high level of interest to part with their hard-earned savings, and sports clubs and musicians are well-placed to exploit this. But even if a brand does inspire either of these, can fan funding enable businesses to compete successfully?

In the wine market, Naked Wines has carved itself a niche where consumers can invest in producers direct and also have a say in which ones the business itself will support. The purpose is to bring wine producers to a market that would otherwise not have access to them.

According to marketing manager Francesca Krajewski, the business appeals to wine drinkers because it can provide independently produced bottles of wine at lower prices than retailers.

She claims the opportunity for Naked Wines exists because the supply chain has so many unnecessary costs that can be cut. “The UK’s average bottle of wine has about 50p of wine in it, and the rest is made up of agents’ fees and marketing fees. This prevents some of the world’s most talented winemakers from making a name for themselves in the UK,” she says.

Pledge Music offers fans music downloads, merchandise and experiences such as the chance to meet the artist in return for their investment

Consumers get a 33% discount as well as free samples, invitation to tasting events and the right to visit the vineyard if they pledge to spend £20 per month, but they do not get a share of profits or revenues. Yet Krajewski says this does not limit their engagement with the concept.

“The majority of the wines we fund are discovered and selected by our customers in the first place, so critically, we have their buy-in from the off. Plus, once we launch a wine on the site, we measure demand based on customer feedback, which gives us a clear steer on future investment,” she says. This creates a strong relationship between Naked Wines and its customers.

For a brand such as John Lewis, which has the clout and trust to offer a good return on investment, ’fan funding’ in the form of its savings bond is relatively easy to come by. But for brands cropping up today, often in troubled industries, securing financial support from the public could be much more challenging.

Public Enemy, who used the website Sellaband to fund their most recent album

The music industry has already had a measure of success with fan funding. New bands and established artists have run fundraising campaigns through website Pledge Music, for example. They include American band Fun Lovin’ Criminals, who are beginning a campaign having recorded their last album on their own label, Kilohertz; and London-based singer-songwriter Natty, already signed to Atlantic, funded an EP record. Hip-hop group Public Enemy funded their most recent album through rival site Sellaband.

The music industry uses several different models for fan funding, each using a different approach to getting fans to make a financial contribution. Pledge Music offers fans music downloads, merchandise and experiences such as the chance to meet the artist in return for their investment. The artist retains all rights to the recording and the website takes 15% commission on the amount raised.

According to Pledge Music managing director Malcolm Dunbar, the decimation of profits by music piracy has led to less investment in new artists by record labels. “They are just not signing as much as they used to, but there are still a lot of people listening to music and a lot of artists trying to make records,” he says.

Competitor website Slicethepie uses similar incentives, but also provides fans with the opportunity to write paid music reviews, and in some cases bands will offer a portion of their revenues on records sold. There are various levels to which fans can be involved in the process. Artists can also reward fans in unconventional ways, says Slicethepie communications manager Grace Hammond. “Some artists offer a royalty cut to their fans and others have baked cakes and personalised socks,” she explains.

Slicethepie and Pledge Music both offer access to analytics so artists can see data on visits to their promotion page and on donations.

For other brands, such as My Major Company (MMC), fans have a formal financial investment in each project, rewarded by a share of returns (see case study, below).

For a brand such as John Lewis, which has the clout and trust to offer a good return on investment, ’fan funding’ in the form of its savings bond is relatively easy to come by

“If there is some money to be made, it is only fair that the fans get a return from the money they have put in,” he says.

While fan funding for musicians is one way to reach an audience when they find traditional funding routes blocked, this type of business model has often been an indicator of a company in poor financial health. For example, some football clubs have been saved from winding up by fans stepping in.

Others, such as AFC Wimbledon, have been started from scratch. In this case, it was because of Wimbledon FC’s relocation and renaming as Milton Keynes Dons. Unhappy about the decision, fans took action and started up their own team.

The club’s chief executive Erik Samuelson says the model works because fans get closely involved with running the business. “The virtue of a fan-owned club is that it is properly controlled and acts in a responsible way, because the fans insist that it be managed so they do not lose ownership,” he says.

The drawback of this is that it limits the level of investment that can be made in a team. According to Samuelson, it is hard to compete with clubs prepared to go into debt to buy and pay players, or those funded by profits from their owners’ other business interests.


It is therefore difficult for a club such as AFC Wimbledon to earn promotion to the Football League, where prize money and TV exposure are higher than in the Blue Square Premier League, where the team currently plays. As a result, there is scant opportunity to build a squad, develop a stadium or grow the fan base. “At the lower levels, fan-owned clubs are fine, and work. At the higher levels, they cannot work while this ’financial doping’ continues,” says Samuelson.

While other industries lack the capacity of football clubs or musicians to generate passionate support from the public, it has not prevented some from trying similar funding models. Online encyclopedia Wikipedia and the unrelated whistleblowers’ website WikiLeaks are two well-known examples.

Both solicit donations to cover their running costs and attract support, partly because their offerings are novel, ambitious and unlikely to be replicated. Fan funding works well where a brand has a specific role and therefore appeals to smaller businesses whose audience is very engaged.

While fan-owned football clubs will probably always struggle to compete (unless, like FC Barcelona, they have additional revenue streams), the passion they engender means fans will always be willing to give. And in the music industry, the chance of discovering a major artist in return for helping with the cost of marketing is a lure for a large number of fan investors.

But as Naked Wines has shown, existing businesses could have something to fear from fan-funded brands. Being complacent and expecting consumers to accept the status quo is a dangerous stance when fan-funded brands can offer consumers greater product variety and value for money.

Industries where these types of opportunities might arise are many and varied. As MMC’s Albertini puts it: “I do not see why you would not be able to fund any business like that.”

Case study: My Major Company


Founded in France in 2008, music website My Major Company has already succeeded in launching artists across the channel. In the UK, the first band to reach its £100,000 funding target was Ivyrise, whose first single has since received airtime on BBC Radio 1. Other bands, such as The Draytones (main picture) are currently 17% funded.

Of all the fan funding sites in the music industry, MMC’s business model is the one that most closely resembles that of a traditional record label, with fans who invest having a financial stake in the record an artist makes. One share of the 10,000 available costs £10, and entitles fans to a portion of the net revenues earned by the recording for three years.

This can be as much as 40% on net revenues of less than £250,000, falling to 10% when they rise above £750,000. Artists take 20% of their net revenues, and MMC takes the remainder to cover overheads.

Helping the unsigned: artists such as Adam Parker can access music industry and marketing expertise as well as funding from their fan base

Often fans will help market an artist themselves, through social media and even calling radio stations to complain if their act is not played. MMC’s chief executive Paul-René Albertini says: “When you have a few hundred or a few thousand people investing and buying shares in a recording contract, by nature they become agents for the artist. They become field promotion.”

The site also runs a significant marketing operation of its own on behalf of the artists. MMC is not short of music industry expertise. Indeed, Albertini is a previous chief executive of Warner Music International. The purpose of the site is “not only to raise money from the fans but deliver the professional support that is required from the recording point of view, and also from the marketing point of view”, he says.

He claims that the model will be an enduring one, because it solves the problem for artists of major labels being unwilling to take a risk on new music, for which there remains a strong demand from listeners.

“It is a system whereby you can still expose 10 artists, because the risk is not yours alone, it is a collective risk. Also, it validates projects when there is already ownership of an audience. For these two reasons, I believe what we have put in place will be somewhere in the ecosystem of the overall music industry.”

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here