Crowdfunding

     A Guide to What Works and How

Back the Person or the Product?

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I have been giving a lot of thought, partly because of conversations with reporters I know this week, about the difference between two major categories of crowdfunded project.

On the one hand, you have campaigns that are designed to allow a creative person or group of any discipline (music, film, design, maker, what have you) to create what I have started calling another thing like the thing you made. That is, an audience likes the previous creative effort, and wants that individual or organization to now do something else that is like that only new.

In that sort of case, the motive force behind a project has amassed an email list, readership to a blog, a Web site on which to post things on the home page, Google juice for getting referrers to said Web site and blog, and social-media connections via Twitter, Facebook, and beyond.

That person or group says, “I am doing this thing like the thing you like that I have done before. Please become part of the effort to allow me/us to do this new thing, and you will be able to get this new thing, along with the option to have enhanced versions of this new thing, and possibly the chance to meet and have real interaction with me/us.”

That’s a patronage situation. The rewards may start at a level in which a donor pledges an amount equal to or less than the retail price of obtaining the resulting work, but also engages in two kinds of risk. First, they risk that the project won’t fund, and they have committed themselves to wanting it to fund. Second, that the project won’t be fulfilled, and they will encounter sadness (and an unreciprocated financial transaction) due to not having the thing that they wanted to call into existence.

The other hand comprises fundraising for products that don’t require any direct previous knowledge of the maker. These have typically been hardware and video games created by people with a track record, but for whom a typical donor may never have heard of before or only know by project, not personality.

In those cases, the campaign organizer is saying, “We have made this sort of thing before, and we want to make something that is different and better that we can do when freed of the constrictions of investors. By backing the project, you will get one of these things, and we promise to make it.”

That is more akin to pre-ordering a product and expecting that it will eventually ship within a predicted timeframe. The whipped cream on top is when a creator offers customized or exclusive versions of a product that increase the object’s rarity and thus value in the eyes of a donor. In some cases, the highest levels of pledges related entirely to distributors who will fund the item in order to sell the resulting product at a profit.

There is overlap, of course, and lots of exceptions and quirks.

For instance, if someone is creating essentially a work of art, such as an album, movie, or other thing that is fixed into a replayable medium (digital or otherwise), that is also a pre-order. Some percentage of people who back such creative projects view it just like ordering an album on Amazon before it’s out. (But these people also must be fans, or discovered that they like the creative effort by visiting the Kickstarter page and related links, otherwise why pre-order the item?)

The relationship between patron and pre-order also blurs at the moment a project receives its minimum funding, at which point all subsequent donors have a higher degree of expectation that the project will come into being, and thus they are making a firm commitment for something that will happen, vagaries of fate aside.

You can also easily see the viral spread of certain projects that may meet none of the above criteria. The Glif in 2010 or the Ouya this week are both examples. The Glif creators had no previous products on the market, but they made a compelling case and had prototypes to show of something that was so useful and obvious (once you saw it) that people went berserk. The two designers made people want something that doesn’t exist, and major sites provided the amplification to spread the memetic virus into the brains of people who put their money down for a Glif.

Likewise, the Ouya game controller, which is an open gaming system for developers (as opposed to closed systems that require the assent of Sony, Microsoft, or Nintendo to release valid games), is an idea for which the time has arrived, and people were waiting for such a viable system to be created. If Ouya could only have appealed to people who knew the designer’s earlier work, there would be no millions of dollars raised so far.

We’ll continue to see the tension between these two categories, because a project can slip between one or the other, or occupy both states at once. You already see comments on pre-order-style projects in which people go slightly insane that their money was collected but an item hasn’t shipped. (In some cases justified, because a project organizer has gone missing or just said they aren’t going to make the thing in question.)

This is also evident in mainstream coverage of crowdfunding as it’s expanded. Trying to put everything into one column or another isn’t going to work, because there’s a continuum, and each donor may have a different position on the motivation behind their pledge.

Author: glennfleishman

I'm a writer and editor.

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