This is a sad tale, and I expect it is not so unusual. Music is not the primary source of revenue for a lot of the music business these days, and I expect that agents see opportunities like crowdsourcing and merchandising as a new chance to exploit their client and his fans. Agency implies a fiduciary responsibility to the client, but it is moot whether extracting capital from a crowd or by selling merch in order to provide income to an artist is in his interest when, as is apparently the case here, he is not able to produce new music at a sustainable pace. Simple honesty, on the other hand, would require that the agents would have taken the care to understand the needs and ability of their client rather than pressuring him to accept a deal that could not support him. Artists, and their fan base, may look like the golden goose to agents, but it is probably rarely in the artist's interest to gut him for short term gain. In effect this deal seems to have been predicated on the ability to extract money from the fans hope and nostalgia, rather than from the music. I disagree that there is any moral difference between taking an advance from a company or from a crowd subscription, although I sympathize more with the disappointment of the loyal fans than the officers and shareholders of a company who can typically structure their deals to cover the losing bets by extracting extraordinary benefits from the winners.
In retrospect the artist seems to have realized his mistake, and to have recognized the warning signs fairly early in the process. The high price of representation and the cut the crowdsourcing service charged would have eaten into any capital raised significantly, and there is testimony that the quality of the service was poor at any price. The question is why the artist acquiesced to what looks like a bad deal, and the answer seems likely to be that he was up against a cash flow problem. He does not say that he fronted any of his own money, but rather that not enough was realized from the capital raised from fans and merch sales after fees that he was able to continue to survive and render his music into a salable form. Selling his equipment was reportedly due to not having enough to survive on what was left after the money he intended to use to produce the music was either extracted through fees, or diverted to other investments. We are not told whether the funds not returned to him were profitably invested or not, but he did not authorize some investments, which depending on how his agreement was worded may be actionable.
Do we expect an artist, who apparently has little sophistication in business, to avoid this kind of disaster? Should agents who do not have music to sell, spend the artist's capital on other schemes while waiting for the sausage factory to deliver? Is it credible that an agent in the music business would not know that special equipment was needed for working with 2 in tape, or that an engineer/producer would not make extracting that music into a modern format a priority before selling his equipment? I expect none of this would have happened if the financial situation had not been dire to begin with. My sympathy is with the artist in this case. Had he been a superstar, with millions in the bank, rather than relatively unsuccessful, at least financially, I doubt he would have made the decisions he did. On the other hand, his experience of years in the music world should have given him a more insight into the business than he seems to have acquired.