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Kickstarter: Countdown to scam city?
May 2, 2012 4:03 PM   Subscribe

Felix Salmon, the Reuters finance blogger, has raised a skeptical eyebrow at some of the latest success stories at Kickstarter (one, two). In a post yesterday pivoting off Kickstarter founder Yancey Strickler's appearance at the Wired con, he wonders: Is Kickstarter ripe for a big scam?

Here's the nut of his argument:
Kickstarter has grown and evolved in ways that the founders didn’t necessarily anticipate, and they don’t want to put themselves in a gatekeeper role telling people what they can or can’t do….Except, as Kickstarter grows, it becomes less and less tenable for Kickstarter to retain that attitude. Yes, there are dodgy projects which don’t get funded. Call those the true negatives. There are also great projects which do get funded — the true positives. Put them together, and you have a very successful ecosystem. The ecosystem can also live quite happily with the false negatives, great projects which for whatever reason don’t manage to reach their funding goals. That’s the beauty of Kickstarter’s no-harm-no-foul system: if you don’t meet your goal, then no one is out of pocket.
The problem is with the false positives — dodgy projects which do get funded. Statistically speaking, these things are certain to exist. Jason asked Strickler about some hypothetical crook who looked at the millions of dollars being raised by the likes of Pebble*, and hatched a scheme to simply defraud a lot of people out of their money, by putting up a glossy video for some sexy gadget, and then simply absconding with the money. How is Kickstarter addressing that risk? It seems, listening to Strickler, that the short answer is that it isn’t.
Kickstarter’s success stories have been mainstays of the main page of the blue for months [previously]. And even Salmon approvingly cites Amanda Palmer’s current project as an example of something the site does well. But the company has come under criticism as well.

*The Pebble project is affiliated with Netscape founder Marc Andreessen and has collected over $7 million for its goal, to produce a e-ink watch.
posted by Diablevert (47 comments total) 14 users marked this as a favorite

 
Most of the serious, multi-million dollar Kickstarter projects have come from either established names (e.g. Pebble, Double Fine) or projects using established IP (e.g. the new Shadowrun game). I don't know if Kickstarter is ripe for a serious fraud on that scale, since people don't seem quite ready to put down millions for a completely untested idea or creator.

That said, smaller scale fraud is still a concern, and I think Kickstarter should take some of its cut and form an insurance pool that would cover cases of blatant took-the-money-and-ran fraud. It's really in Kickstarter's own interest.
posted by jedicus at 4:19 PM on May 2, 2012 [4 favorites]


I've been involved in a kickstarter for a flashlight, which raised something like $250k. While it appears that the project is still going, it's now six months past the initial three-month estimate for delivery of the flashlights to backers. It's frustrating, and it makes me less likely to back a future kickstarter project even without being deliberate fraud.
posted by jepler at 4:28 PM on May 2, 2012 [1 favorite]


It really is a side-effect of the unexpected success of the "making and selling stuff" projects. If I fund a theater company to put on a show and stuff happens and it doesn't get put on ... well, that sucks, but it doesn't feel like fraud. If the same happens (unintentionally) for a "making and selling stuff" project, especially if I put a bit more in the basket, then I'm going to get a little more huffy.

That said, this falls into the "problems you'd like to have" camp. If your company is successful enough to have a serious (and as-yet only potential) fraud problem, you've done well. (You still have to fix the problem, tho.)
posted by feckless at 4:35 PM on May 2, 2012 [1 favorite]


It really is a side-effect of the unexpected success of the "making and selling stuff" projects. If I fund a theater company to put on a show and stuff happens and it doesn't get put on ... well, that sucks, but it doesn't feel like fraud.

Springtime for Hitler?
posted by ennui.bz at 4:40 PM on May 2, 2012 [8 favorites]


jedicus has a good point. Any huge project backed by an established name that doesn't deliver is more likely to be blamed on the established name, not Kickstarter. Smaller project problems seem likely to chip away at the Kickstarter brand, but probably incrementally.
posted by snofoam at 4:41 PM on May 2, 2012


It seems roughly as ripe for a big scam as say, every other way people invest money in stuff. It's actually probably more likely to have frauds outed because a popular project will have a whole load of internet-reasearch savvy eyeballs on it.
posted by lucidium at 4:41 PM on May 2, 2012 [1 favorite]


Even better, people who are research savvy.
posted by lucidium at 4:43 PM on May 2, 2012 [1 favorite]


I backed this Chico Mann project, which ended in '09. As of today, no rewards have been forthcoming.
posted by box at 4:51 PM on May 2, 2012 [2 favorites]


How are these false-positives any different than say, pets.com?
posted by Threeway Handshake at 4:56 PM on May 2, 2012 [2 favorites]


That Chico Mann thing is interesting. Over $6k from just 29 backers? And not a single comment saying "hey where's the deliverable?"
posted by jayder at 5:22 PM on May 2, 2012 [1 favorite]


If someone in the Press hasn't put up BLARING HEADLINES about actual occurrences of fraud on Kickstarter by now (even involving relatively small, under $10K amounts), they must not have found any they can run with, because I can think of several media entities, from the WSJ to Mashable, who want to see such stories because they'll fit their overall narrative. Or maybe they haven't thought to look yet. Thank you Felix Salmon, for tossing blood in the waters. (There's a pun in there somewhere)
posted by oneswellfoop at 5:22 PM on May 2, 2012


Kickstarter Game "Mythic: The Story of Gods and Men" Proves a Scam. The scam was uncovered when only $4700 of the $80,000 was pledged. If I understand right, that means no one lost any money.

It's important to note that no one invests in Kickstarter projects. You're not buying a share of future proceeds of the project and/or company. You're pre-purchasing a product that has not yet been made. Still plenty of room to get ripped off, but the details are different. My impression is that most failed Kickstarter projects fail because the creators have no idea how in over their heads they are.
posted by Nelson at 5:25 PM on May 2, 2012


The article mentions examples of Kickstarter projects that turn into attempts to start companies. I think this is really very unfair to people who fund the projects if those companies are successful. Essentially, every pledge is a little loan, which is paid back in product or service. If someone wants to do a frou-frou art piece or whatever that will never be profitable, then I don't see a problem with people sinking their five dollars into the project as a kind of altruistic act. But individuals who hope to create a for-profit entity from these loans? Sharks.

If I funded the boxer guy I'd never see any return on my contribution. If he makes a ton of money all I get is a pair of boxers that lose their value the moment I open the blister pack or whatever. If I were investing in the traditional sense he'd have to give me some kind of agreed-upon compounding return on my investment. But by changing the game midway through he gets to basically take donations to attempt to make a profit and that will ultimately cannibalize the entire site. I suppose Kickstarter is under no actual obligation to address this issue but ignoring it would probably be poor long-term planning.
posted by newg at 5:43 PM on May 2, 2012 [1 favorite]


Dude's probably never even heard of shit-starter, but then again I'm sure he's trying to be all professional so when some fraud eventually happens he looks like a sage.
posted by BYiro at 5:49 PM on May 2, 2012 [1 favorite]


I can see Kickstarter getting hurt by scammers or just by a high ratio of shitty ideas to good ideas. I think it's been blessed so far with lots of really neat, novel, inspiring ideas. Too many shitstarters, and the folks with good ideas won't want to be associated with the brand. In this way, it's a unique way of funding ventures. The risk of scam seems much more mundane and not unique to Kickstarter.
posted by 2N2222 at 6:01 PM on May 2, 2012


It is now.
posted by thsmchnekllsfascists at 6:08 PM on May 2, 2012 [1 favorite]


Actually, after looking a little more at the mefite links in this thread I really have to say that there are at least two different kinds of funding models going on with Kickstarter.

There's a contract model, in which there's a quantified product changing hands for money and then there's a patronage model, in which the contributor doesn't really care about the delivery time of final product, they just want to contribute to somebody's idea. The problem is that depending on which model you judge a Kickstarter with determines how "successful" a Kickstarter project is or is likely to be.

I contributed to R.U. Sirius's Mondo History project about a year ago and while he did post an update fairly recently, he's been keeping very quiet for a long time now. I really can't say I'm bothered too much by his slackfulness (and his suffering from CTS) because I know this is what he does for a living. So, patronage it is.

If I was hot to have him finish his book so I could read it I'd be greatly disappointed, but then again I know how he works, so I would have never contributed. A lot of this contractual fuzziness of Kickstarter comes from knowing who you're funding and tempering your expectations.

I think everyone but internet financial analysts know that "if it sounds too good to be true, it probably is."
posted by BYiro at 6:15 PM on May 2, 2012 [5 favorites]


I think the problem with Kickstarter is going to come from the big creatives swooping in and sucking up all the oxygen. I love Amanda Palmer and Neil Gaiman, but I can't believe they couldn't have accomplished a project without Kickstarter funds.

I keep seeing bigger and flashier projects from already established individuals, and I am of two minds on this. I love the idea of fans actually getting to engage with the artist directly. I like the idea of throwing a few bucks at something and getting something in return, but I half expect to see a U2 project soon. Like: Without your help Bono can't make another CD!

I've run one project and contributed to half a dozen. It's an interesting time for creatives.
posted by cjorgensen at 6:19 PM on May 2, 2012 [7 favorites]


I think Amanda Palmer is using Kickstarter as a way to promote her new record and tour directly to her fans, not as a way to raise money for a product. It's pretty smart and this is one of those things that KS is perfect for.

No middlemen, no unsold product, a direct transaction between her and her fans. She's just one of those people who has the clout to do this, and since she's got her product done and ready for duplication, there are no downsides.
posted by BYiro at 6:27 PM on May 2, 2012 [1 favorite]


On a similar note - venture capitalists have an abysmal failure rate. 1 in 10 companies supposedly succeed. Now of course, they probably say this to justify their often absurd terms (so that their successful bet will make up for all the duds). Meanwhile, a case could be made for blaming them on those picks.

With an artistic project, it's not like painting a house. Sometimes an artist is harder on themselves than their public would be and they don't want to release something because they feel like they may have failed (which they may have!).

I agree that Kickstarter is ripe for fraud.

I also feel like we absolutely have to have someone to fund these kind of projects. The other methods are just so byzantine and full of red tape.

There will be failure in anything worthwhile. It feels like some elements in our culture are so afraid of failure, that they could not possibly succeed because they want to run everything by spreadsheet and actuarial formulas.

Why the biz journals don't like Kickstarter? Their readership is threatened by Kickstarter. It is a way for people from the bottom to really get into the driver's seat of an endeavor. For all of businesses' obsession with "innovation". They pretty much hate it. Aforementioned actuarial formulas? They rely on the past projecting itself forward in a predictable way.

Insurance? Great idea. Problem? Here come those actuarial formulas!
posted by Dr. Peter Venkman at 6:42 PM on May 2, 2012 [4 favorites]


And of course Kickstarter isn't for investments anyway. Meanwhile, with the new rules for investment coming online, it's going to get interesting. Btw - accidently favorited myself on last post. Oops!
posted by Dr. Peter Venkman at 6:46 PM on May 2, 2012


A lot of this contractual fuzziness of Kickstarter comes from knowing who you're funding and tempering your expectations.

I thought Salmon had a good point about that specifically --- kickstarter started, and still says it aims to be, a site for artists and craftspeople doing creative projects. And I think --- as a couple people have mentioned here --- as long as that's what happening people still feel fine with it. But the "design" back door has allowed in a number of projects that are really meant to create a object which is industrially manufactured. And as so as you start into that people have a different relationship with what they think they're handing over money for. They're not donating. They're buying. In matthowie's own post about a project he felt went wrong, he felt like as a sponsor of that project he was owed good customer service. Once you get into that sort of industrial prototype zone, I think that's a pretty universal attitude.

If these big name projects become what people think of when they think of kick starter, then that has the potential to change what the site means. Perhaps that's just inevitable as it becomes more popular anyway, but I also think there's a feedback loop where if it gets known for big name projects, little projects all seem sketchier in comparison and are less likely to be donated too. That would make the site less useful for artists --- and it would only make the fraud idea more tempting
posted by Diablevert at 6:47 PM on May 2, 2012 [3 favorites]


Is Kickstarter the next beyond pre-ordering comics?
posted by Artw at 7:21 PM on May 2, 2012


I've been watching this for a while and I don't think the danger is so much fraud as the fact that there really is no resolution mechanism for either side when things don't go as planned. Long term that could really hurt Kickstarter. I've backed a variety of projects and some have delivered almost immediately, while the first one I backed is still lingering. In that case there was no specific outline of time, although I thought it was implied it would be well done by now.

What is really a challenge is what happens if someone posted a Kickstarter, collected $100,000, spent it as best they could, had bad luck, and were left with a whole lot of not working or unfinished products, no money left and nothing to give the backers. Right now the solution to this situation is for each backer to take it up in small claims court I guess, or perhaps try a class action. But, there likely isn't anything to go after anywhere.

An even bigger challenge is how do you know when you actually won't get your deliverable? Does missing a deadline mean you have cause for action? Waiting six months, a year, two? What if you send a letter demanding the product or a refund and get a response that they are still working out kinks?

I think the timing of delivery issue will be the first to have a broad resonance in the supporter community. Almost everyone who has supported more than five projects is probably currently sitting with at least one that is well behind schedule. If that starts to be a reputation for what happens it may need an organizational response.
posted by meinvt at 7:54 PM on May 2, 2012 [3 favorites]


I just wanted to point out a comment about the boxer shorts on the second link, because it is awesome:
So doesn’t it come with thermoelectric and vibrational energy harvesting fibers to recharge my cell phone battery? Electroluminescent threads in the waistband to let me download a different customized glow-in-the-dark animated embroidered message for my sweetheart each night? A pleasingly tingly but silent IPv6-fluent tweet alert for the tweeters I’m following? High tech stain-sloughing odor-digesting coatings on the long-life washable genetically modified ultra-high-count threads? Isn’t the crotch imbued with revolutionary time-release pheromonic babe attractant nanomolecules, or the elastic made of flubber, or the lift and separate contour sculpting refined by laborious focus group testing to dramatically enhance my lower front/rear/profiles?
posted by migurski at 8:00 PM on May 2, 2012 [2 favorites]


Didn't Kickstarter already have a fairly big scam? Zioneyez raised $300,000 and delivered approximately jack.
posted by Holy Zarquon's Singing Fish at 8:17 PM on May 2, 2012


I can see Kickstarter getting hurt by scammers or just by a high ratio of shitty ideas to good ideas.

Maybe I'm an idiot, but I can't seem to get to a page that lists all projects or even all projects in a specific category. All I can seem to find are curated lists, staff picks, popular projects, etc. How can you even tell what the ratio of shitty ideas to good ones is?
posted by ODiV at 8:19 PM on May 2, 2012 [1 favorite]


1. Design underwear
2. ???
3. Profit!
posted by problemspace at 8:31 PM on May 2, 2012


How are these false-positives any different than say, pets.com?
When you are an investor that receives actual shares or debt, you are first in line to get paid when the company is liquidated. So you might get a fraction of an Aeron chair. You can also take legal action if laws or contracts were broken.
On a similar note - venture capitalists have an abysmal failure rate. 1 in 10 companies supposedly succeed.
Less than 1 in 10 startups break even. VC is really hard. But one Instagram can make up for a lot of failures.

Interestingly, kickstarter scams are an argument for JOBS-act style crowdfinancing. Scams are still possible, but so are legal consequences for the scammers.
posted by b1tr0t at 8:50 PM on May 2, 2012


ODIV, it isn't you. Kickstarter makes it annoyingly difficult to just browse projects and virtually impossible to systematically review them. I have no idea why.
posted by meinvt at 9:15 PM on May 2, 2012 [1 favorite]


meinvt ODIV, it isn't you. Kickstarter makes it annoyingly difficult to just browse projects
Perhaps because people are intended to enter Kickstarter directly at the project page, from external promotion.

and virtually impossible to systematically review them. I have no idea why.
That'd be the nature of the relationship - they want us to be customers, not investors. As a customer, you buy or not and caveat emptor to you. As an investor, you're expected to thoroughly review a project in the expectation of a return.

As a promoter of products and services, you aren't responsible beyond the limits of ordinary common sense and warranty law for any hidden issues with those products and services. As a promoter of investments, you are expected to have thoroughly and completely reviewed those investments and may be jointly liable with the provider for problems arising from hidden issues. Which would Kickstarter rather be?
posted by aeschenkarnos at 10:08 PM on May 2, 2012 [1 favorite]


Anymore, if something's not 100% totally amazingly bullet proof people complain and whinge that someone, somewhere, could exploit it. I say: so what? There's been frauds and crooks since the beginning of time, and any system that involves an exchange of money will, by it's very nature, lure some of them in.

I think kickstarter does more good then bad, and that's all that matters - that it continue doing more good then bad. If it's not perfect, then that's fine because no human endeavor ever is, and the constant obsession with perfection retards progress and slows down innovation.
posted by dethb0y at 12:48 AM on May 3, 2012 [1 favorite]


At some point, Kickstarter will be named "pre-tail" as that's really it's place. It's interesting that the founder doesn't want it to be seen as a commercial store, when that's exactly the role it's fulfilling.

As far as the scams go, I don't think the scams are Kickstarter's responsibility, for it's just a platform at the moment. That does not mean Kickstarter bears no impact from scams, rather, that the best the platform can do is build in mechanisms for reporting scams and frauds.

It's similar to a farmer's market. A proprietor at a farmer's market can easily sell you something poorly processed that could make you quite ill. And I'm sure that has happened. However, at most farmer's markets I attend, it does not. Primarily because those kind of individual vendors are bad for the community, thus the community of sellers will reject scammers.

Same thing with Kickstarter. Each scammer reduces the value of the community at large, thus the best the platform can do is implement tools for identifying and managing the impacts of scammers.

The idea of Kickstarter providing an insurance policy for donors is a very bad one, for in that case, Kickstarter is moving from a platform provider to a service provider. That's not to say that insurance cannot be offered as part of contributions, however that would be the funders purchasing insurance for that specific project and basically funding project-by-project insurance policies, not a platform-wide insurance policy.

At the root of this issue is very much what a brand is. McDonalds is huge globally because 1) it's low-cost, and 2) it's safe. Anyone who's ever gotten a case of digestive "issues" from a street food vendor (kebab, hot dog, etc.) may be quite averse to low-cost food. McDonalds brand is a promise that the food will be inexpensive and safe. Tesco's brand promise is similar, good quality food at a very reasonable price. Waitrose's offer is great quality food with price as a secondary characteristic. Further, these brands offer liability. If McDonalds DOES make you ill, there's someone to go after.

The rise of Kickstarter and AirBNB and those ilk are interesting because the platforms are certainly enabling a new kind of commerce, and providing channels to market, however, they are just distribution platforms, essentially, and offer no promise of quality or control. The best control that can be exercised is feedback from the community.

The chap with the lock picks on Kickstarter who is 2 years late and used the money to go on vacation, fix his car, and buy a TV probably will not be funded again. Thus, in some sense, these are the problems inherent in creating a community. As many Kickstarter projects are biting off more than they can chew, so is Kickstarter, in a way. And either your mouth gets bigger to accommodate or it doesn't.

One can see that there will eventually be the rise of a 'reputation index' for these platforms. Right now, it's called Facebook and that's part of what makes AirBNB work quite well. You can see how you're connected to someone -- if you're connected at all -- and make decisions based on that. With Kickstarter, people will develop track-records. It's not unimaginable that Kickstarter can become a platform that funds some people's entire careers.

In fact, it has been quite deflating to learn that the guys running Kickstarter do not seem to have a bigger vision of serving businesses, rather than just individual artists and small teams. That's not a chide at all, as I am sure they are doing their absolute best and they have done very well thus far. But, Kickstarter is just a starting point in offering a new type of commerce, and it will take time to evolve.

For example, with AirBNB, people are buying houses to list on AirBNB, turning them into part-time hoteliers. That is very powerful and represents the real opportunity of these platforms. It's bigger than renting your flat out for a night or funding a single project. These platforms can create entire new careers that were not possible before.

And the formula is relatively simple. Take a market gap (unfunded projects, empty flats), build a common framework to address that gap (project categories, property indexes), add a payment platform, and let the community do it's work.

Maybe the problem is OUR level of expectation as consumers. If our expectation of Kickstarter projects is the same as Amazon, then we are in error. If our level of vigilance on AirBNB is the same as Hilton, then we are also in error. That feels approximately right. Kickstarter may be ripe for scams, but then again, scams existed before Kickstarter.

Thus perhaps the best answer is to re-calibrate our communal bliss and remember that on the other end of the platforms are other people. Some have good intentions, some have bad intentions. The platforms are thus far overwhelmingly positive, so we can say They Are A Good Thing, now we just need to learn how to use them correctly.
posted by nickrussell at 12:58 AM on May 3, 2012 [4 favorites]


It's called "due diligence".

As a VC investor, both you, and the company you are investing in, are expected to do due diligence. They have to do it to prove to you they're worth your $$$. You have to do it to make sure you aren't just a trout biting on a well-baited hook.

My guarantee is: there will be fraud in Kickstart, and some of it will succeed (they'll get away with the $).

My bet is: Fraud will follow a curve (that's already begun), ramping up quickly to abuse Kickstart's weaknesses, and slowly the million-eyed beast that is the Internet will collectively begin to learn how to perform due diligence. Not as individual VCs (or "Angels"), but as a whole - an Angel Group.

In short, over time the percentage of Kickstart fraud attempts/losses will look like a noisy version of this curve, and the long-term value at which it settles out to (assuming Kickstart survives that long) will be similar to the amount of VC fraud that's in the "normal" market.
posted by IAmBroom at 7:41 AM on May 3, 2012


Didn't Kickstarter already have a fairly big scam? Zioneyez raised $300,000 and delivered approximately jack.

Yeah, that's what I was going to say. I mean there's still some possibility they'll deliver something at some point in the future, but the shipping deadline was specified as winter 2011. The most recent update says it's going to be another 8-12 weeks until the design is finished. The design, not the product. It was completely misrepresented, and after the phenomenally successful fundraiser, all we've gotten is periodic, bullshit updates like "Your concerns regarding a shipping date have not fallen on deaf ears. As mentioned in the previous update, the engineering process has taken longer than we originally anticipated and as a result we've had to postpone our target shipping date of Zeyez to you. We have been hesitant to offer a new tentative shipping date without being certain that we can fulfill by that date. Rest assured that we will be sending a shipment update featuring a precise list of production timeframes from the Zeyez engineering team soon.

Read through their updates to get an idea of how this has progressed; everyone has been left hanging and in the meantime, they've managed to receive an award nomination and multiple features on tech websites like Engadget, where the product seems to actually exist.
posted by nTeleKy at 7:47 AM on May 3, 2012 [1 favorite]


I'm not so sure due diligence applies well in crowdfunding. Who is going to do the legwork, the research? In a typical VC investment case there's just a few companies each putting up a lot of money. They have the incentive and resources to do the research. But with something like Kickstarter where each individual only puts up $10 or so, how much work and research are they going to do? It's just not worth it to the individual with so little at risk. But thank to the multiplication of crowdfunding, the scammer's take is big enough to be worthwhile.

IAmBroom talked about an "Angel Group" that would do the due diligence, some collective action. But who's going to form that group? In the Mythic Game case I linked the fraud was uncovered by game forum nerds; that's good crowdsourcing. But then it was a clumsy fraud in a market with lots of nerds discussing it in detail; I'm not so sure that will apply to projects in most domains.

Kickstarter is just the beginning. The crowdfunding investments that are about to be enabled by the JOBS Act are going to be a whole 'nother ball of wax. I fear there will be a lot of scammy startups separating individual investors from their $10,000 investments. It's a big experiment.
posted by Nelson at 8:34 AM on May 3, 2012


Regarding Amanda Palmer: She's just one of those people who has the clout to do this, and since she's got her product done and ready for duplication, there are no downsides.

That was one of my points. She has clout already. This isn't a platform she needs. Kickstarter isn't a distribution model she depends on. She waves her hand and women everywhere are posting pictures of their bellies on the internet. She also has a highly influential husband. Not everyone is as lucky.

Like I said, I am of two minds about this. I love the way fans can engage with an artist and directly have a role in support and creation. I just think the intent behind Kickstarter wasn't to fund millionaires in the creation of projects. I would rather see the money go to those lacking the resources to get these things created on their own. What's next? A watercolor book by Warren Buffett?
posted by cjorgensen at 10:45 AM on May 3, 2012


I've been thinking of Amanda Palmer and other already-established names using kickstarter as loss leaders, sort of. Most of those big projects are also backing other, smaller, projects. Some percentage of people who come to kickstarter for Amanda Palmer are going to end up also funding, say, Jherek Bischoff, because she's backed one of his projects. Amanda might not need the kickstarter funding, but Jherek does. And if her having an unnecessary project up helps get funding for him, that's cool with me. If Warren Buffett's watercolor book project leads to people hearing about and funding some documentary about a muralist that wouldn't otherwise have seen the light of day, that counts as a win in my book.

As for the scam potential, eh. I don't tend to fund things at more than around $30-$40 unless I'm pretty damn sure that they'll deliver or it's something that I really want to see happen and don't care much about whether I get anything out of it except the existence of a thing in the world which wouldn't otherwise have existed. So, sure, someone might be able to scam the community out of a lot of money, but they won't be getting much from _me_.

The only project I've backed so far where I expect I probably won't get the promised reward is a student project to create a midi pipe organ out of PVC. I would have given them that money even without the promise of a reward, just to see them try to make it. If they succeeded, great, and if not, they would have learned something in the process anyway.

I've backed another project that looks to be stalled out with some unhappy backers, but I only backed it at the $8 level, which didn't come with any physical rewards. It was a project I wanted to see happen, but not something that looked like they had really thought out how they were going to deliver rewards (their "how are we going to use this money" didn't say anything about paying for the rewards they were offering), so I limited my risk there and thought of my pledge as a contribution to a tip jar.

But two possible duds out of 24 projects seems like a pretty good return to me. Especially since I've been thinking of kickstarter more as a micro-patronage model than a pre-order site. The projects which are obviously using kickstarter for pre-orders kind of break that model, which is a shame, because despite those projects getting all the attention, I think micro-patronage is much more interesting.
posted by hades at 11:52 AM on May 3, 2012 [1 favorite]


It's an interesting time for creatives.

Please stop using that adjective as a noun. It hurts me.
posted by Mars Saxman at 11:59 AM on May 3, 2012 [1 favorite]


A good friend did a very in depth analysis of crowdfunding patterns for Role Playing Games. He surveyed a one year period on multiple platforms, which turned out to be primarily Kickstarter and extracted an enormous amount of data on about 150 projects. The bottom line is that while most projects that get successful funding have some sort of existing industry link, there is a sizable portion of projects from novices getting funded. So, it still isn't just an insiders game. Memail me if you want a link.

Also, you have individuals like Rich Burlew who had a successful commercial enterprise getting huge funding levels, but I don't think it is likely he could have gotten anywhere near that level in any other way. So even for "big players" in some of our small ponds Kickstarter is opening up new markets.
posted by meinvt at 3:47 PM on May 3, 2012 [1 favorite]


I'm not so sure due diligence applies well in crowdfunding. Who is going to do the legwork, the research?

All you really have to work with is the track record of the fundee's existing projects. I do most of my kickstarting in rpgs (tabletop) or music. In both cases, I only fund if I know the band and/or people involved, at least by reputation. And I'm careful about reputation without existing product because I got burned on that once--but the kickstarter didn't fund so it wasn't a financially painful lesson.

My husband and I funded an iPad game before we had iPads, but one of the gimmes was the soundtrack by a local band we like. I hear the game is still a work in progress (one of the developers works with my husband) but we already have the soundtrack. I feel like I got my money's worth even if the game never materializes.
posted by immlass at 8:34 PM on May 3, 2012 [1 favorite]


Not sure if anyone saw this, but Amanda Palmer recently e-mailed music industry blogger Bob Lefsetz about Kickstarter.

From: Amanda Palmer
Subject: Re: Kickstarter

hey bob

don't know if you've noticed, but yesterday i launched the 30-day kickstarter for my new album, "amanda palmer & the grand theft orchestra".

at the moment i'm writing this, we've reached over $250,000 after only one day of being live. go look:

http://www.kickstarter.com/projects/amandapalmer/amanda-palmer-the-new-record-art-book-and-tour

that's about $50k MORE than the scheduled recording budget i wouldn't have been given if i'd stayed on roadrunner...AND WE'RE ONLY ON THE FIRST DAY.
i hope we reach $600k or more by the time we're done. or a million. who knows? sky's the limit.

since getting released, i've been waiting to put out - on my own terms - a big, legit solo album.
for THREE YEARS i've waited....three years of tweaking and agonizing over the perfect online self-release system, the perfect management team.

when i fought to get off roadrunner (my old band the dresden dolls signed in 2004; i tore off and went solo in 2009), my main problem is that they had NO IDEA how to work WITH ME.

they didn't understand why i didn't want to spend money and energy on stupid shit, wasting time where our audience and potential audience WASNT...opening for vapid bands, putting our songs on lame film soundtracks to sub-par horror movies. our audience was too smart for that shit.

they didn't understand why i wanted to spend marketing budgets on what they considered "unnecessary" things....like hiring an internet marketing team, building giant web systems to showcase my fans' art and homemade videos....like spending money and time on the online fan forums.

and i was always told them: "REALLY? you don't get this? you don't get why it's not only important, but why it's going to MAKE US MONEY? ok FUCK IT, we'll pay for it ourselves."

so we did. i was happy to spend the money out of our pockets: this shit OBVIOUSLY had to be done. and we were starting to make money on the road by then.

i remember one freezing chaotic day in minneapolis, on tour with the dolls in 2005....leaving soundcheck, picking up my cell and asking a frantic favor of a friend in new york (the only friend i had who was adult enough to have a checkbook at the ready, i didn't have one on the road).

my internet marketing guy had called me, freaking. when we'd signed, the label had agreed to cover his monthly fee. now he was expecting an over-due check from the label, had been waiting six weeks, and was about to be evicted from his fucking apartment if he couldn't get ahold of $1000. i begged my random friend to write out and mail a check it to my internet guy, promising i'd pay her back when i got to new york in a month...so he could pay his rent. i knew better than to call the label. they'd just lie and say they'd cut the check. i'd been through this 12 times already.

a few months later the label told me they wouldn't cover our internet marketing team AT ALL while we were "between records". they didn't think paying someone to run our myspace and fan forums was NECESSARY unless "we had a record actively being worked".

they didn't get it. at. all.

THEY SERIOUSLY DIDN'T THINK THE INTERNET WAS NECESSARY UNLESS YOU HAD A RECORD TO PUSH.
they didn't understand the value staying connected ALL THE TIME, every day, from the road, from the spaces between.

and this was 2005/2006. not the dark ages.

but still....LOST. they didn't understand why we'd want to put the majority of our resources into connecting with our fans online.

were they on the road with us 300 nights a year? were THEY emailing & chatting online and off with these people EVERY DAY? fuck no. but i was. i knew. our fans were all geeks and gays and punks and young weirdos. ALL ONLINE ALL THE TIME. i knew the connected we did throughout the year would result in the sales later.

now, after three years OFF THE LABEL, and after ALL these collected years of talking with fans after every show, twittering daily, staying connected, singing hard, touring constantly, and answering thousands of fan emails....the result?

$250k in a day.

BAM.

fuck em.

seriously: i can't imagine why i'd do this any other way.

love
amanda fucking palmer
www.amandapalmer.net
posted by SarahElizaP at 7:04 AM on May 4, 2012 [2 favorites]


If Kickstarter helps pull the rug out from under the recording mafia, then that's another thing they've got going for them.
posted by b1tr0t at 10:38 AM on May 4, 2012 [1 favorite]


Please stop using that adjective as a noun. It hurts me.

Prepare for a world of pain. This is a battle you've already lost: Creatives.

On the bright side, language evolves, so if you stick around long enough this may fall out of favor in another decade or two.
posted by cjorgensen at 6:29 AM on May 5, 2012


Waiting for neologisms to defavor themselves is about as good a time-usement as Godoting.
posted by aaronetc at 9:49 AM on May 5, 2012 [2 favorites]


Kickstarter talks to Engadget about product 'pre-orders,' won't force refunds when creators flake
posted by Artw at 3:26 PM on May 7, 2012


How long before the Kickstarter bubble bursts?
posted by Artw at 3:32 PM on May 7, 2012


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