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UK Music again asks government to investigate Pledge collapse as its UK company is wound up
By Chris Cooke | Published on Thursday 1 August 2019
UK Music has again called on the government to investigate the collapse of PledgeMusic. The cross-sector trade group wants to know if there were any regulatory breaches at the crowdfunding and pre-order platform, and whether there are any lessons that can be learned to prevent similar companies collapsing in this way in the future.
The trade body spoke as the High Court in London granted a winding-up order for the PledgeMusic.com Limited company. After the Pledge website basically went offline last week, it emerged that the firm’s board had submitted a petition to wind up the UK-based Pledge entity back in June, with that petition due in court yesterday.
The collapse of Pledge has left a significant number of artists out of pocket. The firm admitted to having financial problems last year, after artists using the platform to run pre-order or crowd-funding campaigns had started to publicly complain about late-payments. But it insisted that a bunch of internal changes would get things back on track.
However, late payments continued and, earlier this year, it became clear the company was now on the brink. Artist payments stopped altogether and live campaigns were frozen while Pledge’s owners tried to find a buyer for the business. Co-founder Benji Rogers, who was no longer with the company but still widely associated with it, returned on a voluntary advisory basis, but no buyer could be found.
Some of the artists out of pocket as a result of Pledge’s collapse have criticised the company for its failure to communicate the financial problems early on, and for saying very little since things started to properly fall apart earlier this year. There has also been much speculation as to what caused the financial problems in the first place, and whether bad decisions by management or interference by investors were to blame.
UK Music first called on the government to investigate what, exactly, went wrong back in May. Following yesterday’s court hearing granting the winding up order, UK Music’s co-CEO Tom Kiehl sent a new letter to recently appointed Business Minister Kelly Tolhurst.
His letter reads: “Many musicians across the UK relied on crowdfunding website PledgeMusic to deliver payments from patrons, to pay for album recordings and other costs. The winding up of this company represents an entirely unsatisfactory development for the many music fans and creators who have invested so much into projects through this scheme”.
“I ask you to again consider the merits of a ministerial referral to the Competition And Markets Authority to investigate what went wrong with this case”, he goes on. “I would also like to ask you to consider taking up the case with the Financial Conduct Authority, which holds responsibility for regulating certain types of crowdfunding, to consider the activities of PledgeMusic and whether there have been any regulatory breaches.
And as for lessons learned, he concluded: “Furthermore, I would like to ask for a meeting with you to consider further possible government interventions to ensure the issues which have arisen from PledgeMusic can never happen again”.
