Crowdsourcing has become one of the fundamental concepts on which modern Internet culture is built. Crowdsourcing is the general idea of using the Internet to bring together the collective efforts of a large number of people to accomplish a goal. Often, but not always, this goal is prohibitively difficult or time-consuming for an individual to do alone, but with the help of the collective efforts of people around the world, both physical and/or mental, it can be done. A prototypical example of this is Wikipedia.
Wikipedia has become the go-to quick reference for almost any fact imaginable, from the career of an obscure poet in the 1800s to the line of succession of the French monarchy. The astounding depth and surprisingly high level of accuracy (studies show it matches Encyclopaedia Britannica for accuracy) is all thanks to its crowdsourcing approach to the aggregation of knowledge. It is such a popular and successful way to use crowdsourcing to create massive, accurate databases of information that it popularized a subgenre of crowdsourcing sites called wikis (or wikias), where people submit their collected knowledge on the wiki’s specific niche, such as a popular video game like World of Warcraft, and over time this builds a complete, easy to access and search, compendium of all of the knowledge on that subject. But wikis aren’t the only subgenre of crowdsourcing. There are also forms of crowdsourcing that ask for something from its participants other than their labors.
Crowdfunding is a branch of crowdsourcing that focuses on soliciting money in the same way that traditional crowdsourcing solicits work. By reaching out to the web and pulling collectively from all around the country, or even the world, many small donations can make big things happen that wouldn’t have been possible otherwise. At first it may seem that this is a commercialization or perversion of the crowdsourcing ideals, especially to someone who looks at open-source, free crowdsourcing sites like Wikipedia as the paragon of what crowdsourcing should be. However, taking a look at what crowdfunding has been able to achieve gives a much more positive impression of the future of crowdfunding as a part of the Internet culture.
There are many sites that have popped up over the last few years, such as IndieGoGo and RocketHub, but by far the most famous, and one of the oldest, is Kickstarter. Kickstarter came into existence to support artistic and creative endeavors by giving creative people an outlet to ask for funds to support their projects. Anyone with a solid idea could set up a page with Kickstarter and try to raise the money needed to get their project off the ground. Not unlike a PBS funding drive, they offer rewards for levels of funding commitment, always tied in some way to the final project or the people creating it. For example, if a filmmaker wanted to raise money for a movie, they might offer a mention in the credits for $1 contributed, a signed copy of the movie’s marquee/poster by cast and crew for $10 contributed, a personalized DVD for $20 contributed, and a character named after the contributor for $100 contributed. I won’t go into the complex specifics of how Kickstarter handles the funds, clears projects for funding, or any of that, but suffice it to say it is an excellent tool for aggregating funds that protects both the contributor and the recipient, while providing a way for creators and the people who believe in their creations to find each other through the Internet, in a mutually beneficial way. In the beginning, this usually meant raising several thousand dollars to independently fund theater, games, and the like. But recently that changed.
Crowdfunding has been getting a lot more attention lately, thanks to a handful of extremely successful campaigns. For example, auteur game designer Tim Schafer raised over $3 million for his production company Double Fine to make a new adventure game, a genre that he pioneered in the 1990s. Wasteland 2 raised almost $3 million to develop the follow-on to their groundbreaking post-apocalyptic action RPG, Wasteland, which was originally published in 1988. The Order of the Stick raised over $1 million just to reprint the book versions of the popular webcomic. These are just a few examples of the large sums of money that are capable of being raised through a service like Kickstarter.
This instantly raises the question in my mind: what if crowdfunding expanded past just independent creators? Currently, Kickstarter is used to fund very low-budget independent films and web-shows. That said, while Tim Schafer’s Double Fine Productions certainly isn’t Electronic Arts, it isn’t exactly an indie studio either. Yet it was perfectly able to raise millions of dollars to fund the production of a for-profit title. What would happen if a world-renowned film director like Christopher Nolan wanted to break from the studio system to make a movie of personal importance? How much could he raise? Kickstarter isn’t to the level yet where it can back a big budget Hollywood feature (which commonly exceed $100 million), but for a smaller feature, could a known name get the $10 million he or she needs? What if Steven Spielberg hadn’t had to fight for 10 years to make Munich, but could have asked the Internet for the money instead? TV networks could take advantage of this too, using Kickstarter to let fans raise funds to save their favorite shows. Everyone knows that fans of cult shows like Star Trek, Firefly, Chuck, and Community will come out in force to support what they love. What if that could be channeled directly into the financing of the show? If a network can tell from the Nielson ratings that for a show to be competitive financially it needs to make at least $3 million more per season, they could simply ask the fans to put up the money to make it happen. Hell, Firefly fans got a multi-million dollar feature film out of their passion. Why couldn’t a show in a similar situation today get a crowdfunded season or two? But the revolutionary potential of crowdfunding isn’t limited to the entertainment industry; this fundraising trend could mean a change in how capital is raised for all kinds of businesses.
Imagine a world where an entrepreneur could get the money they need to start pursuing their dreams, without the burdens of pitching venture capitalists or bankers for an initial investment or loan. Kickstarter is the first step in this direction. While Kickstarter is designed mostly for artistic pursuits, with the tenuous exception of the Design category, crowdfunding, either through an existing network or through a company’s own site, could be used to raise money for business purposes as well. Taking this idea to the next level presents all kinds of new possibilities for companies both old and new. What if a company raised funds to make a new product of some kind, and the reward for contributing enough money was simply a copy of the product itself? All of a sudden you are funding the initial product run off of what amounts to pre-orders. To give an example, let’s say a high-end gaming equipment company like SteelSeries wants to reach the serious fighting game player market by adding a fight-stick to their product line. Rather than risk the production cost on a product that might fail, they can launch a crowdfunding campaign to raise the funds for an initial product run. The awesome thing about this is that, win or lose, the company can take something valuable away from the experience. If they raise the funds, they can safely produce their fight-stick knowing that, thanks to crowdfunding, they will make a profit. If they fail, they know that there isn’t enough interest in the product to be worth developing further.
While it can be fun to brainstorm all of the new and interesting avenues opened by crowdfunding, it is also important to remember that Kickstarter campaigns don’t automatically get backers and many campaigns fail due to lack of funds. This is actually an area I have some experience with, as I helped develop materials used in a Kickstarter campaign for a theatrical production. The first weakness of Kickstarter, and the related crowdfunding sites, is that there isn’t much space to sell the public on your idea or project. There is space for a video, but videos longer than five minutes are generally too long to hold a backer’s attention, and there is some space to provide a written pitch, but again a long written section is likely to be either skimmed or largely ignored by most backers. This makes every campaign page amount to an elevator pitch. If you are not familiar, an elevator pitch is a term from the entertainment business that refers to an aspiring filmmaker trying to sell a senior executive on his great idea for a movie or TV show during the short time in which they are sharing an elevator ride: “It’s The Good, The Bad, and the Ugly meets Shawshank Redemption…” In general, all though this is an efficient presentation, it fails to present the nuances and finer details that might actually make a discerning person take interest in the film or product.
A second weakness is that Kickstarter and its brethren don’t do a good job of promoting the projects on the site. Instead, they leave the promotion up to the campaign’s creators. This means that unknowns struggle to get recognition, while those with established brands find it much easier to reach their goals. Wasteland 2 cashed in on an established brand and franchise, famous for inspiring the absurdly successful Fallout series. The Order of the Stick made use of its established fan network. Other examples of success, such as Amanda Palmer (over $1 million earned) or Five Iron Frenzy (over $200,000 earned) raising funds for new albums, or Penny-Arcade using viewer contributions to remove ads from their site (as I write this, over $350,000 earned and climbing), further enforce the idea that recognizable names and brands can see success by using their existing social clout to draw attention to their campaigns. On the other hand, Amanda Palmer is mostly noteworthy for collaborating with Ben Folds, and Five Iron Frenzy is an obscure band in a dying genre, Ska, and neither had made a record in the last four years. So what is the magic ingredient that brings in the money?
As with so many things, the answer is exposure. This can be done in a number of ways, such as harnessing social networking, particularly the viral spread of information through Twitter’s retweet system, to get the word out about a campaign, and generating interest through popular news sources, be it an established news outlet or a niche blog. It is easy to see this when you look at some of these more successful campaigns. Five Iron Frenzy was able to draw attention to their new album by reaching out to their fan networks, through the band’s personal Twitter, the band’s Facebook fan page, and the band’s official website. Since Facebook and Twitter are push based, unlike the band’s RSS-free site, fans that were subscribed to the band through one or more of those networks were instantly alerted to the presence of the Kickstarter campaign. From there, retweets, reblogs, and Facebook shares and likes sent the word out from the hardcore fans to fair-weather fans, and so on until everyone who would really want to have a new album knew about the campaign.
Now let’s look at the powerful effect of reaching a news outlet. Double Fine’s adventure game campaign had Tim Schafer’s name recognition, which helped them raise an impressive 3 times the desired funds in less than 24 hours, already making it a $1 million plus campaign. Then casual gaming news source Kotaku, amongst others, picked up on the story and published a front-page article about Double Fine’s Kickstarter. With this increased exposure, they raised an additional $2 million. Another example of this is Anita Sarkeesian’s Tropes vs. Women in Video Games Kickstarter. Sarkeesian already had a mildly successful Youtube channel, Feminist Frequency, which aimed to be a feminist critique of entertainment and pop culture. To raise money for a new channel/show that was specific to video gaming, she started a Kickstarter with the aim of raising several thousand dollars to cover research and production costs. Already a controversial figure amongst some for her show’s tone and tactics (some accuse her of misrepresenting feminism, failing to understand shows’ underlying messages, and manufacturing outrage and/or drama), she was targeted by the meaner elements of the Internet when they caught wind of her campaign. These attacks, and the general controversy surrounding the campaign, ended up on The Huffington Post, causing her fundraising to explode, finishing at almost $160,000, or more than five times her original budget. In both these cases it’s easy to see the powerful effect of exposure, both mainstream and in niche or fan networks. Since the goal is large volumes of small contributions, if you assume only 15% of people will give, the more people who know of the campaign the more givers are reached, by simple math.
Generating exposure has long been the purview of public relations, regardless of whether it’s a consulting agency or an internal department. Since getting needed attention to a crowdfunding campaign is key to its success, and since doing so involves harnessing social media and landing media mentions, this is perfectly in-line with the work that PR is already doing. Because of this, it potentially opens a whole new revenue stream for PR agencies. As more companies discover the power that crowdfunding represents, the PR firms that have positioned themselves to consult on using sites like Kickstarter or RocketHub will have a leg up. This could be helping a start-up generate its seed fund off of contributions instead of venture capital money, or it could be helping an existing company test the waters, safely, for a new product. While Kickstarter and its kin have long been the domain of the independents, many of whom can’t afford a PR firm, as more money is flushed through crowdfunding campaigns, more and more astute people will realize that paying a small upfront fee for a greater chance at getting to those $1 million plus funding levels is worth the cost. PR firms can and should add consulting on crowdfunding to their wheelhouse, as this trend will do nothing but grow for the foreseeable future.