by the MicroCapital Team - Trends/Challenges -

NEWS WIRE: United States: Retail Microfinance Loans Being Made to Musicians Via Calabash Music’s “Tune Your World” Initiative

Source: New America Foundation.

Original article available here.

WASHINGTON, April 25 – You know a concept has hit the big time when it gets applied to the global music industry.

Now, microfinance – the technique that has been reducing poverty amongst women from Bangladesh to Bolivia – is available to struggling musicians around the world.

Through the power of social networking and a recent surge in the popularity of peer-to-peer lending, Calabash Music, a popular music download site internationally and the world’s first “fair trade music” site, has launched a new initiative “Tune Your World” in which fans can “microfinance” the start up costs and recording activities of their favorite new and emerging artists’ around the world.

Here’s how it works:

“You can microfinance an artist on our Tune Your World social network, download a copy of their latest recording and help the world’s working musicians make great strides towards economic independence: 1) pick an artist and make a minimum USD 25 sponsorship via PayPal; 2) Calabash transfers funds to musician when artist’s goal is reached, and; 3) receive news and download advance copies of artist’s recording.”

From what I can gather, Calabash operates on a people-to-people model similar to the uber-successful Kiva.org. Musicians obtain funding for their recordings from fans, who contribute a minimum amount toward a larger funding goal. Similar to the Kiva model, these “social investors” are able to feel a personal connection with the borrower (the musician) and can get progress updates from them. And, just as Kiva-givers enjoy knowing that their money is directly impacting the life of a poor micro-entrepreneur in the developing world, Tune Your World-givers know that their small dollar lending is directly providing individuals with an opportunity for success in the most competitive and entrepreneurial sector of all: art.

I agree with Kiva founder and other commentators at IdeaBlob that this idea is cool. Small dollar peer-to-peer lending and making microfinance investments are certainly “in” these days. Peer-to-peer lending sites like Kiva and Prosper are hugely popular. You can even now invest, literally, in microfinance via eBay’s MicroPlace. And you know something is cutting-edge if Richard Branson is doing it too (see Virgin Money USA). And among industries in which emerging entrants lack opportunity and face adversity and marginalization of success, music (and art) is certainly toward the top of the list. So if a good system (microfinance) can equal more good music, then I applaud it.

At the same time, I am still cautiously optimistic. I have to question the sustainability of the model. I didn’t see anything on the website explaining the repayment policy for the artist. And even my extremely limited understanding of the global music industry tells me that it’s competitive enough that a substantial chunk (if not a majority) of musicians will not make it a hugely successful recording artists. Needless to say, I wouldn’t be surprised if Tune Your World didn’t see the 97% repayment rates touted by Kiva.

Regardless of its challenges, I’m encouraged to see that Generation X (or is it W now?) is increasingly catching on to (and innovating in) strategies akin to social investment. Providing opportunities for financial success of the under-served, marginalized, and excluded is core to the work of us in the asset-building field. It through this kind of thinking, and these kinds of approaches, that we will make progress toward equity within our societies. And while not the central goal of Calabash Music – making social investment even more “hip” is still a sweet contribution.

Similar Posts: