Kickstarter is celebrating their fifth birthday. They have an impressive string of successes, but they probably don’t want you to know about their “failed” projects. Not only projects that were very late, or very disappointing, but those that didn’t deliver at all, or, worst of all, those that appear to have been outright scams. The list is growing, and a marketplace where first-time sellers are the norm offers anonymity and protection. Kickstarter’s Pontius Pilate attitude surely helps the scammers.
This came to a head in Washington, with the backers of the AWOL Asylum project managing to get their Attorney General to file a suit against the creator:
What does this mean for the future of crowdfunding? Will backers of undelivered projects receive their restitution? Will crowdfunding companies be held accountable for future projects that fail to deliver? Can they even survive, if they are made to repay a portion of the money lost? Is there a viable crowdfunding system of monitoring projects’ progress and releasing funds accordingly? Has anybody lost money on crowdfunding here? Personally, I’ve only funded one project with an expected reward so far, which is more than one year late. The creator offered a refund, but the backers weren’t in a hurry and asked for it when it was done.
Replace “crowdfunding” with “venture capital” and you will have the same: an impressive string of successes, but the majority are failures. Like venture capital crowdfunding will continue as long as it has an impressive string of successes.
I see crowdfunding as a lottery where you have fairly high chances of winning something, not some sort of guaranteed pre-order. When I look at video game Kickstarters, it seems that the vast majority is on the right track. Some of those will end up being bad games but that’s what you get when you buy something a year or two before it’s done.
I’ve participated in eight video game Kickstarters and one comic book print drive on Indiegogo. Got the (amazingly gorgeous) book and access to some beta/alpha versions of the games I’ve backed so far with all of the projects still in active development. As long as you keep your expectations in check, don’t pledge more than you can afford to lose and realize that the project is most likely going to be late and slightly different than what they pitched, it works.
For video games 2014 is really the year where we are seeing some big names launch or in case of the massive behemoth of Star Citizen with its 42M+ funding, at least enter playable beta. So far it’s looking good.
Crowdfunding isn’t a pre-order system. It isn’t even an investment. At best, it’s a donation. People fail to realize that over and over again. All there is is a “good faith” agreement that Project Creators should try to complete what they say they will.
Only donate to project creators that have a history of getting something done if you expect something in return for your donation.
I’m not sure how much of a bubble there is, or if/why crowdfunding would ever fail since it’s companion venture capital has been going on for decades. They’re starting on legislation for people to essentially be able to do venture capital on a much smaller scale. Everything points towards the law being OK with people willing to give their money away to other people, and people being willing to give their money to other people.
Crowdfunding is here to stay; the success of individual projects will be inversely proportional to the cost.
In publishing, it has shown itself a viable model: I’ve already sold to a couple of anthologies that were crowdfunded. Essentially, if you can come up with a book that people would pay $10 for, then you can get them to pay the $10 in advance as crowdfunding.
I think people are mischaracterizing what a “bubble” is.
A bubble is when people are investing more and more money into assets that have no underlying fundamental support. basically the only think propping up the unnaturally high price of the asset is a vicious (virtuous?) cycle (circle?) where a lot of people think it’s worth something so they buy it, other people see the price rising and jump on board, the price and hype keeps rising in spite of all common sense to the contrary, yet no one wants to sell because they don’t want to miss out. Eventually some trigger event prompts a massive sell-off and the value of the asset disappears overnight before most investors can get out of the market.
Crowdfunding isn’t a bubble since it’s donations, not people investing. That is to say, there is no return on your Kickstarter donation, other than the company might finish it’s project or whatever donor perks were offered.
Maybe a more accurate question is if it’s a viable business model? Or will it mostly just produce a bunch of “alpha” and "beta’ software that never gets completed. I suppose my answer is “depends” on the project. But I wouldn’t expect a massive “collapse” of Kickstarter projects like you would see with CDOs, real estate, dot-com software companies or tulips for the simple reason that people can’t pull out all their funding.
I’m a little :dubious: on crowdfunded video games. There seems to be a race to the bottom in terms of quality. Sure you’ll get some amazing games this way, and there will be smug backers who were on the ground floor. But for every golden apple there will be bushels of lemons. And as people get burned, it will turn off more backers. There’s a few more problems:
-There’s no guarantee of rewards promised, and these folks love offering pie in the sky rewards.
-Less free Betas to play. People are throwing money at indie developers to beta test their games for them. I don’t want to waste $40.00 on an Alpha that might not even go into development. Give me a free demo to get me to invest in what you are trying to make. Someone had an ambitious global RTS game concept idea, but asking $90.00 to play the alpha (without even a guarantee you’d get a copy of the finished product)
-Slow development cycles and dead ends. 18 months ago I bought several kickstarter alpha versions of games.
Castle Story- ZERO new content
Kentucky Route Zero- They just released Act III.
Then you get the folks that just do it as a cash grab. Kickstarter and Indiegogo are bloated with these. There’s the mom who wanted to raise money for her daughter to go to “game developer camp” and make a game for backers. The game turned out to be made via RPG maker (the source of a lot of kickstarter JRPGs) and was never finished on time (still not sure if it got done) There’s that LGBT friendly game that had stolen art used for its concept art. Or how about the webcomic artist who promised a hard copy anthology of his webcomic then, overwhelmed with the costs and deadlines involved in making them and shipping them to backers (each I believe donated in the $300.00 donation tier for the anthology) not only failed to produce content he promised, make enough anthology books, and pocketed tens of thousands of dollars of backer donations, but he took the books he did have ready, and made a YouTube video of him setting them on fire! :eek:
Incubus, that sounds like a lot of cases of people getting exactly what they should expect. When your funding is going towards preliminary training for the game creator, of course you’re going to get something dashed together using simple tools. If that’s not what you’re looking for, why did you even fund that project?
The whole point was to create a game that backers could play. Mom got far more money donated than the camp cost. The 9 year old started to lose interest and the mom got defensive at people genuinely interested in the game.
And that’s the way the cookie crumbles on Kickstarter. Don’t give money to people who do not have a history of providing, if what you want is something back.
I will note that the guy who burned all the books - John Campbell - had a several-year internet history of his mental breakdown. His last serious comic was about the multi-day drug trip he took. He wrote a couple “joke-not-a-joke” essays about how he lied for attention and money, except woops he wasn’t lying, and he’s horribly depressed, and let’s drag former friends with me through the mud. Then there were the multiple manifestos about how capitalism destroys the human in all of us. Stories about him living in filthy shacks in an attempt to shrug off materialism which may or may not be true. It all culminated in his book burning, his demented fist shake at capitalism.
Several people thought the money they paid for the book was worth the “show” he put on of going “insane”. Honestly I was intrigued the whole way through the mess as I’ve been following him for years.
Either way, with a bit of research a person could quickly find that the fellow was not all in one place and likely could not deliver.
Is there that much of a difference? How many Kickstarter projects don’t promise the “donators” something (that is, something that the non-donators don’t get, so don’t include “they get the opportunity to buy the game at retail price like everybody else” even the people who put money into the Veronica Mars movie got a digital download of the film) if the project gets completed?
Oh sure, almost all Kickstarters promise the donators something, but the key point of a Kickstarter is there is no legally binding agreement (yet, anyway) that you will get it or are entitled to anything in return.
There is a difference in that investors would have some sort of legal agreement as to what they would be entitled to if the company they invested in turned a profit.
In the end people will still treat Kickstarter like a store when it isn’t one.
The Veronica Mars movie is an interesting campaign. For $10+ fans got various perks (e.g., watching the video online at release). Set all sorts of Kickstarter records.
It illustrates a key aspect of the market for a product. You can split the buyers into 3 groups:
People who are willing to pay more than average for the product. (E.g., spend $20+ to see the film.)
People who are willing to pay a regular amoung.
People who want it for more or less free. (Downloading it from who knows where or just waiting for it to come on TV.)
All too often, you can’t rely on the 2nd group alone. But the first two groups together sometimes mean real profits. How to get some people to pay more than “retail price” for something without increasing the size of the 3rd group? Crowdfund!
The awareness of this marketing scheme is increasing, so it is more, not less, likely to happen in the future.
But you have to ask for modest amounts so if things go belly up, horrible things don’t happen.
In any market, there are bad people. Buyer beware will always be a maxim.
Looks like a lot of people backed games projects. Maybe games are less prone to scams? At least you can deliver a really crappy game, but if the perk is a physical object, you gotta have something. I don’t know - I only hang out in Design and Technology categories.
Yes, venture capitalism is still around, but I think the key difference is VC is an investment. All a project requires is to turn a profit. Crowdfunding, on the other hand, is specifically not for investing, and besides the integrity of the backer, people have to want the perk.
The title was interesting, but half the article seemed to be advertising for a company.
