(Inspired by the Social Capital Index located here on xigi.net, two analysts are posting their take on the enterprises listed in Deals in Play. Deals in Play is a new feature of the Social Capital Index that lists social ventures actively seeking capital. Following is Andrea McGrath’s analysis of one of these enterprises.)
CALABASH:
Tune Your World
By Andrea McGrath
Think KIVA for the global music community! Calabash is creating an online microfinance/social networking platform to help independent recording artists worldwide (approx 30,000) attract funding for their recordings directly from fans. It also helps increase their ability to engage with their natural fan bases! Different from Kiva, however, these are not loans but 'donations' of support - coupled with 'high touch' donor services and benefits such as receiving news from he musicians and downloading advance copies. Fans can also download free tunes and purchase downloads from artists for .75 - .99 cents (iTunes is generally .99). Musicians receive approximately 50% of net revenues (revenues - fees) and retain ownership of the copyrights and all other rights in any content and material submitted.
The appeals are numerous for fans and musicians - social networking for music fans, support for small, independent artists, and a platform for global musicians similar to fair trade markets for indigenous products. The social networking site includes spotlights on current projects/artists to fund. Calabash has launched its own "One True Fan" fundraising campaign - looking to find 1,000 "true fans" to donate $100 each to help pay for its development costs to launch their musician micro-funding platform for artists globally. The team is currently working with 2500 artists with goals to reach 10,000 artists - and 100,000 fans - this year (2008). Helping it reach these goals, Calabash is expanding its media company partnerships - including Link TV, Afropop Worldwide Global Rhythm, Brazilmax and Mondomix - and an exclusive music service provider contract with National Geographic.
I love this idea!! The social networking possibilities seem ripe and the team is actively looking to natural partners such as MySpace (fan-artist connection) and iTunes (for distribution). While Calabash uses similar language to microfinance - and actually use Kiva as a comparable - the funds raised are donations to the artists rather than loans. That said - they seem to be doing a great job in terms of creating/marketing a true 'exchange' of value (rather than a donor-recipient mentality) - in that fans who donate get a variety if value-adds from both the artist and Calabash - as well as the opportunity to direct their funds in a meaningful, specific way (growing popularity of this "citizen philanthropy" is being developed well with Kiva and DonorsChoose)
Dialogue Questions
Questions about the markets: independent artist music industry, music download business, etc..
Competition: iTunes and other sites for free music
Revenue model: Calabash current funding appears to come from fees from music sales, some advertising (Google ads on certain pages) and from media partnerships? Curious to see
Social Impact
Could increased marketing and exposure for smaller, global musicians actually produce an 'exit' for previously unfunded artists to more institutional funding from the industry?
Could Calabash have a 'systemic' impact on how people access music, how music is supported, how global audiences can have dramatically improved access to global music (and societal benefits from that)?
