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PledgeMusic Issues Statement on Late Payments to Artists

Facing intense criticism in the music community, the crowdfunding service has declared outstanding payments will be made within 90 days.

UPDATED: In June of last year, Variety spoke with multiple prominent artists who were owed thousands of dollars by the artist-to-fan marketplace PledgeMusic. The company’s CEO and another executive who chose to remain anonymous attributed many of the problems to an unexpected change in the company’s payment fulfillment system, restated their commitment to the company and its crowdfunding model, and insisted the company was “working through” the problems. In October that CEO, Dominic Pandiscia, stepped down, but the company reshuffled its senior management and pointed to new investors, and several of the artists Variety spoke with — particularly the “squeaky wheels” who spoke with the press or complained on social media — said they had received at least some of the money they were due (sources close to the situation tell Variety that PledgeMusic has a prioritized list of artists who will be paid first).

However, it appears the situation has grown worse over the past few months, as around 25 artists or their representatives responded to a post in the Lefsetz Letter, in which blogger Bob Lefsetz reported the service was behind in its payments to the band Fastball. While a few of the posts could be characterized as common complaints, more than half of them spoke first-hand of late or inadequate payments and a lack of response from company executives. Variety also spoke with several additional artists who had problems with the service in recent months.

The company issued a statement Thursday in response to those reports, saying, “It is our expectation that payments will be brought current within the next 90 days.” The statement reads in part:

PledgeMusic has always been committed to serving artist and fan communities. It was established by artists and was born of a need to change the way in which the traditional music industry operated. It was designed to help artists and their teams at every level, and we believe that PledgeMusic has become an essential part of the evolving landscape of the music industry.

“That said, we deeply regret that recently we have not lived up to the high standards to which PledgeMusic has always held itself. We acknowledge that many artists have and continue to experience payment delays. These delays to artists are unacceptable — not only to them, but to us.

“Mid 2017, new investors came into PledgeMusic with the goal of strengthening the company and improving the value proposition for artists and fans. After substantial investments in the business over the past 18 months, we believe we have made good progress to that end, but it hasn’t been enough. That said, the company has cut its operating expenses nearly in half over the past year. We’ve overhauled key parts of our financial and operating systems, while adding talent to our roster and making enhancements to the platform like our Vinyl Store, D2C artist store-fronting and our data analytics. While the company has made progress, we still haven’t reached our goals.

“PledgeMusic has been in discussions with several strategic players in the industry who have interest in the PledgeMusic platform. We are evaluating a number of transactions with those potential partners, and we plan to announce details of this in the next 60 days. It is our expectation that payments will be brought current within the next 90 days. We accept responsibility for the fact that we have been late on payments over the past year. PledgeMusic is working tirelessly on this issue, and we are asking our community for their continued support and patience.”

A source close to the situation spoke of overspending by and high salaries for previous management, says the company has moved into a WeWork space from its former expansive offices and cut staff in recent months; of the executives that Variety spoke with last year, just two remain: Global president/COO Malcolm Dunbar and North America president Scott Graves. Jayce Varden, who cofounded Pledge in 2009, told Variety his consultancy period with the company has ended.

One manager of acts who are not quoted in previous Variety reports or the Lefsetz letter, and who requested anonymity because their artists have begun legal proceedings against the company, said two artists they represent are owed amounts in the mid-five figures and have had to dip into their personal funds to cover expenses incurred that should have been reimbursed by Pledge months ago.

“It’s just been a series of excuses,” the manager said, “whether it’s the holidays or the person responsible left the company or the company has simply overspent” the money it has received from investors. (In October the company said it had obtained a commitment from Lyric Financial in an effort “improve its financial resources and process … and work with with PledgeMusic to help expand its working capital and improve payable processing.”)

The manager noted that their artists have worked successfully with Pledge on past projects and were even happy with recent dealings they have had with certain individuals at the company, but that the financial situation has become untenable.

Similarly, Charlie Faye, lead singer of Austin-Texas-based retro-soul girl group Charlie Faye & the Fayettes, had successful PledgeMusic campaigns in 2012 and 2015, but currently is owed $5,500 from the company. After she released her latest album in November and was due payment from Pledge, “they told me they were behind on payments, ‘Thanks for your patience,’” she recalls. “First they said I would be paid by Nov. 30. It didn’t arrive so I called them, then I was told Dec. 14 — that didn’t happen either. So I got on the phone with someone I knew at the company who was actually transparent about it. They told me, ‘Things are kinda messed up’ at the company, but to please be patient and it will come through. Well, I tried being patient and it didn’t get me very far, so yesterday I called my lawyer and today he sent them a letter.”
As nearly every artist working with Pledge will attest, the late payments have put her in, as she puts it, “a sticky situation. Even though I didn’t get the payout in November, I still had to order CDs, vinyl and hundreds of dollars in shipping to Pledgers because I couldn’t leave them hanging. So I put everything I could on a credit card and I’m wondering how long I will have to sit on that debt.”
The situation has become so untenable that one friend proposed an oddly meta solution. “Someone suggested putting up a Kickstarter to raise the money I’m owed by Pledge,” she laughs, “It’s kind of a funny idea, but who knows.”
She grows serious again, concluding, “I’ve kept my word to my Pledgers. I hope PledgeMusic will do the same for their artists.”

Benji Rogers, who cofounded with company with Varden and left in 2016, apologized to Pledge users Thursday in a post on Medium.

“To the Artists, their teams, managers, labels and fans, and to all who have been negatively affected by the issues at PledgeMusic, I am truly sorry,” he wrote. “When I conceived of Pledge, and when the co-founders and I started in on building the platform we thought of little else but of how it could help artists. We benchmarked the company’s success on how well our artists’ campaigns did.

“Even though I handed over day-to-day control of Pledge as its CEO for the second time in April of 2016 and left the board last February, the fact that this trust is now broken is unacceptable to me personally and I am truly sorry to all of you who have been affected by this. … As such I have been in touch with the current board and management team to offer my help both strategically and practically. If it is asked for, I will commit to doing all that I can to ensure that this wonderful engine that we created does not cause any further harm, and can grow into something even better for all who would use it. … I would like to acknowledge the incredible team, which includes one of my co-founders, who have been battling to get the right people paid under immensely difficult circumstances both professionally and personally.” It is not clear who the “right people” he references might be.

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