Many artists hire outside companies to run their fan clubs, but one club designed to bring fans closer to their idols ended up dividing them.
Last June, 13-year-old Sophia Lief was all set to go to her first concert to see her absolute favorite: Christina Aguilera.
Sophia’s mother, Janet Crane, wanted to be assured of getting good tickets. So she joined Aguilera’s official fan club, paying the $35 membership fee that offered access to seats in the first 20 rows. She bought three tickets, totaling another $375.
In late April, however, Aguilera canceled her entire 28-city tour due to “strained vocal cords.” Naturally, Sophia’s mother looked for a refund — except there was none, for her or hundreds of other Aguilera fans.
Aguilera had hired a company called FansRule to run her Web site and fan club. But as it was taking money for Aguilera tickets, FansRule was being run by a court-appointed bankruptcy trustee after filing for Chapter 11 in November 2003.
FansRule still owes about $320,000 to Aguilera fans, trustee Joe Baldiga says.
“The inability to refund payments made for tickets,” Baldiga said on Aguilera’s web site, “is in no way the fault of Christina Aguilera.”
Sophia (whose father is a sports writer for The Associated Press) doesn’t agree. “Her fans aren’t going to follow her through the years if she treats us like this and doesn’t even make up the (canceled) concerts,” she said.
Said Crane: “I don’t really know how the music business works, but she is responsible if she hired (FansRule). We paid money on good faith.” She recently obtained reimbursement from her credit card company, six months after the fact.
All due to Grateful Dead?FansRule also ran clubs for Aerosmith. After the band postponed three concerts in June, many ticketbuyers went without refunds. One fan, Ginny Roberson, posted a Web page telling FansRule to kiss a certain part of her body.
“I will continue to be a fan, but I am extremely disappointed and disillusioned at the way (Aerosmith) have sold us out for a quick buck,” she wrote. “I never would have believed it possible for them to become like this!”
It has become regular practice for music acts to outsource their fan clubs to companies that run their Web sites, sell high-priced VIP concert tickets and offer an assortment of perks for paying members. But how did the fans of international stars like Aguilera and Aerosmith end up left out in the cold — and for a summer tour, no less?
Like many things, the answer begins with none other than the Grateful Dead.
Decades ago, the Dead pioneered the idea of a club offering direct ticketing to their biggest fans. Back then, as much as 50 percent of tickets were made available directly to Deadheads. Now Ticketmaster caps seats available to fan clubs at closer to 10 percent.
The business dramatically changed, though, in the ’90s with the Dave Matthews Band. Manager Coran Capshaw saw a connection with fan clubs and the then-emerging Internet, which offered new ways for bands to connect with their fans beyond the traditional newsletter.
“Fan clubs had been a neglected or stepchild of the business,” says Capshaw, now the CEO of Musictoday, one of the largest fan service businesses.
For example, one of Musictoday’s acts, The Rolling Stones, offer two types of memberships. For $65, a fan gets a one-year membership, full access to the member-only online fan club, e-mail updates and a Stones DVD. However, $100 also buys a commemorative poster and special access to tour tickets.
Dream or nightmare?The amenities for members can be a fan’s dream. Turnstyle, a smaller company whose clients include Kid Rock and Pamela Anderson, offers raffles where fans can win a birthday phone call from their favorite artist.
FansRule was pushing to bring fans even closer to their idols. Founder and former CEO Neil Donahue, a venture capitalist and music producer, says his company was “pioneering in fan experiences.” It specialized in getting fans front row and backstage as part of a “velvet rope experience.”
Brian Sikorski, CEO of Ticketrends.com, said FansRule was an innovator in the highest growth area of the music business. Mike Lundgren, former chief operating officer of FansRule, says the company only went bankrupt because of “external financial reasons” — which remain murky.
Sikorski talks of mismanaged funds. Baldiga says an individual may have taken money from the company — a possibility Sikorsky considers likely, noting the questionable name of another company founded by Donahue: In the Pocket Productions.
“They give fan services a bad name,” says Sikorsky.
Baldiga, while running the company under bankruptcy law guidelines, used all incoming money to pay FansRule’s bills. He says the company was going “gangbusters” until the Aguilera tour cancellation.
After the non-tour, a proposition for over $1 million in financing was turned down in bankruptcy court and Baldiga closed down FansRule for good. Hundreds of fans remain unpaid and their chances for reimbursement from FansRule look bleak. Ultimate resolution of FansRule’s liquidation could run two to three years, says Jon Aquino, another bankruptcy trustee.
Aguilera has hired attorney Larry Green to help retrieve as much money as possible for her fans. He hopes the matter can be settled within a year.
Green says Aguilera “never saw a dime” of the tour ticket money, and is actually owed money in “mid five figures.” But he says he is seeking reimbursement for the fans, not Aguilera.
Whether these experiences will lose fans for Aguilera or Aerosmith remains to be seen. But it’s clear that outsourced fan clubs will thrive regardless. Record labels are beginning to sniff around, sensing a new revenue stream.
“This business is just going to grow and grow,” says Baldiga, even as he presides over the liquidation of FansRule. “It’s the way of the future.”