Crowdsourcing is the model by which a party can outsource activity to a larger unspecified group of people. Activity may range from processing, assessing through to, in the case of Kickstarter, financial funding ad benefits are gained from the size and variety of a crowd. As discussed in the interview from The Strand (2010), Kickstarter allows “micro financing” small projects in a non-traditional investment model where projects tend to be “driven more by creative expression than some sort of commercial interest”. A project’s success mutually benefits stakeholders and relationships tend to be relatively more involved between investors and organisers.
Kickstarter operates through a website that enables individuals or groups to list a creative project that requires financial funding. Projects need to have clear goals with something produced on completion and are only successful if funding goals are met or exceeded. Potential funders are encouraged to donate by the project’s goals and (strictly non-financial and non-equity) rewards such as crediting funders or receiving an item from the project’s limited initial production. Different tiers of donations are rewarded differently.
Kickstarter handles payments securely through third-party payment processing providers to ensure money if protected. Card details may be given but no money is withdrawn until the project has reached its funding goal. If a project doesn’t reach this funding requirement, it is unsuccessful and effectively closed. The creator can re-list another similar project if desired with, for example, different goals. No projects are deleted for reference and clarity.
Kickstarter does not protect funders if projects are not delivered and have no official involvement beyond introducing creators and funders and facilitating the transactions. However, all creators must abide to terms and conditions and therefore are legally bound to complete their outlined projects. Therefore litigation is a route available to funders if required.
‘Project Eternity’ by the creator Obsidian Entertainment listed on the 14 September 2012 and by the 16 October 2012, the initial funding goal of $1.1M was met. As of the 21st February 2012, the project has nearly raised $4M i.e. is overfunded. The project’s ambition is to develop a role-playing computer game.
Funding success can be attributed to a number of factors. Many computer game category projects are successful on the website, possibly due to the demographic of site users. The project listing is very detailed about the ambitions for the game and engages funders. Credibility of the team is strong where individuals are mentioned and past experience is highlighted.
The project has ‘stretch goals’, which (originally a community derived term) means the project has ambitions that go beyond the scope of the listing on Kickstarter. At the time of writing, the project is still trying to achieve a $4M goal and has outlined what is involved if this goal is reached.
The pledge-reward system was also very structured with over 20 donation tiers ranging from $5 to $10,000. Every tier has received backers and this broad appeal must have covered a range of budgets and reward desires from potential funders.
Crowdsourcing and in this case, a specific form, crowdfunding are increasingly utilised by individuals and non-for-profits organisations. There are strong implications for catalysing the genesis of creative projects and affects on more traditional established routes of investment and entrepreneurship. Scanning through the various Kickstarter projects suggests there is an underlying ethos to the community developing and many projects have noble ethical goals. Perhaps this appeal to funders may delay the adoption of this funding route by larger commercial organisations to fund new projects.
Kickstarter is an exciting and innovative site occupying a niche that empowers the project creators whilst offering engagement and rewards to funders in radical appealing way. Kickstarter draws on modern technological developments such as the social web, secure payment processing and web 2.0 technologies.
References
The Strand (19 July 2010) BBC World Service radio clip [Online], Available at http://www.bbc.co.uk/radio/player/p008lmss (from minutes 14:00 to 19:20) (Accessed 29 October 2012).
The Impact of Kickstarter, Creative Commons & Creators Project (21 Mar 2012) YouTube video, added by PBSoffbook [Online], Available at http://www.youtube.com/watch?v=024vLBBJf4I (from minutes 0:00 to 2:20) (Accessed 29 October 2012).
Project Eternity (16 Oct 2012) Kickstarter Project Listing, added by Obsidian Entertainment [Online], Available at http://www.kickstarter.com/projects/obsidian/project-eternity (Accessed 21 February 2012)