Back at Midem, I did a presentation talking about the importance of being more open, human and awesome is a key component to standing out against the (growing) competition these days. I used the example of Louis CK, but Amanda Palmer would be just as good. After all, her Kickstarter campaign is getting tons of attention for raising a ton of money, leading many to wonder how she did it.

But as the numbers keep going up, it’s also raised a second question: where is all of that money going? And so it should come as little surprise that Palmer has opened up and explained in fairly great detail where the money is going, and highlighting that even if the campaign ends up at a million dollars (a real possibility), a very large percentage of that money is actually going back into the “product” being offered. Here’s just a snippet, but you should read the whole thing:

7,000+ high-end CD-books & thank you cards cost about $15 a package to manufacture and ship. that’s $105,000.

1,500+ vinyls & cards, at about $20 to manufacture & ship…about $30,000

2,000+ art books (bearing in mind the shipping on those, every time they need to be shipped from the plant, to the distributor, to YOU, plus the signing, is killer) will cost us roughly $80,000.

PLUS we have to factor in about $15-20k to pay our design team to actually design all this stuff, and to make it super-duper amazing and worth your money. those of you who supported mine and Neil’s last Kickstarter know what i’m talking about here. this CD is gonna be a super-deluxxxxxe work of art.

the neil and kyle books are going to cost us a LOT of dough to create…let’s just throw out about $100/copy for about 100 copies…that’s 10k.

if we sell about 100 turntable packages: ordering the tables, paying the artists to paint them, shipping all that stuff around: ballpark another $15k.

arts & crafts/7-inch packages, if we sell about 300 of them, adds about another $30k (we’re planning on spending roughly $100 each on the packaging for those, including not only the vinyl but the fun arts-and-crafts activities. oh, and postage/shipping x5)

There’s a lot more, but it adds up. In the end, she basically notes that the purpose of Kickstarter alone isn’t to make a profit, but to invest in all of this awesomeness such that it can help sustain things going forward:

ONE…we are committed to doing amazing things for all of you who pledged. sure, it’s going to cost more to make things extra fancy (and for us to ship things for FREE all over the world), but making this stuff amazing IS THE POINT. if i skimped on making the packaging and actual products INCREDIBLE, i’d be an idiot.

and

TWO…a LOT of our income for the next year WON’T COME from this kickstarter. it’ll come gradually, over the following year: from the touring show, from the merchandise we sell on the road, from money we get in donations when i make the tracks available online, from the money i get from iTunes from the people who are sometimes lazy (like me), and so forth. it’ll be a slow burn, like it always is.

Some might think it’s incredible that she could “make” a million dollars, and not come out super wealthy out of that process, but as she noted: “that’s FINE with me. it’s almost even THE PLAN.” Why? Because it helps set up a variety of things for the future. This is important. As much as we’ve praised Kickstarter, which is completely awesome, it’s not a business model by itself. It can be a piece of a business model, but it’s an “event” and a limited time thing, rather than a sustainable ongoing revenue stream. Amanda is using Kickstarter wisely (obviously) not to just raise a ton of money and throw it all away (like a major label advance), but as a way to invest smartly in an awesome product while also setting up a way to keep earning money in the future.

And she’s doing all of this in a characteristically open and human way.

As we said, being open, human and awesome is a key way to succeed these days, and Amanda’s doing it better than just about anyone else out there.

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