Kickstarter Helped Raise Nearly $100 Million In 2011... But There Are No New Business Models?
from the just-saying... dept
For years, we've been hearing how the new business models we talk about aren't really "big enough" or that they're just "exceptions" to the rule. Yet, every year we see more and more success stories involving those kinds of business models. Kickstarter, for example, has been quite successful building a platform that empowers exactly the kinds of business models we've described for nearly a decade -- and it has found tremendous success doing so. It just posted some stats for 2011, showing that just under $100 million was pledged into projects this year (with approximately $84 million going into projects that were actually funded).Perhaps most interesting of all? The two areas of the entertainment industry where we repeatedly hear the loudest cries of "there are no new business models!" -- movies and music -- were the two largest areas on Kickstarter. An impressive $32,473,790.40 was pledged for films and video -- leading to 3,284 successful projects, involving 308,541 backers. For music, it was $19,801,685.21 pledged for 3,653 successful projects, involving 260,178 backers. The 2011 numbers roughly tripled the 2010 numbers, so this kind of thing is clearly growing quickly. And, remember, Kickstarter is just one company in this space, which has multiple other companies -- such as IndieGogo and PledgeMusic -- offering similar platforms.
And yet, we're told that there's no way to make money and that fans just want stuff for free? Perhaps it's time to rethink some of those assumptions...
But the really key thing here is exactly what we've said all along: new business models develop. They always do. And part of allowing those new business models to develop is letting new startups, services, platforms and tools develop to meet the needs of the market. Kickstarter clearly meets a need. Things like SOPA and PIPA make it more difficult to start such a company or build such a platform these days (which is why both Kickstarter and IndieGogo have come out strongly against these bills). Let these new services live, and watch new business models succeed (and with them, all sorts of artists and creators).
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Filed Under: crowdfunding, economics, independent artists, new business models, opportunity
Companies: indiegogo, kickstarter
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But, but, but, 200 million dollar movies! amirite?
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Anything outside the MAFIAA is just not enough money or "those filthy freetard pirates".
Logic and facts don't work with those ppl... Just sayin'.
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What I really like about this information, is the sheer amount of content thats being created through Kickstarter that would otherwise be:
- Underfunded.
- Self-funded at what could be a painful expense.
- Funded by middlemen who would likely insist on owning the content.
- Not created at all.
Never in human history has it been this easy to create content (art/knowledge/whatever) with a shot at getting the whole world to experience it. It's really, really cool.
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Old World Blues
Actually, I dig kickstarter, awesome idea carried to awesome execution. Moreso some of the stuff that's come out of it--like the "GameTel" (bluetooth android EZ gaming-pad attachment thing) and the PumpTire (self inflating bicycle tire). One of which is one production, the other is not..
But yeah, super awesome.
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1. You don't seem to recognize the difference between an investment and a pre-purchase or pay-for-support -- despite them being world's apart.
2. You don't seem to understand business models.
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Re classical VCs vs. the financing models noted in your article, in each instance funding is being secured in order to finance a project. Call it whatever you will, but I do not believe it can be denied that they each serve the same purpose...raise needed capital. Perhaps motivations are different in some cases, but that alone does not change the fundamental purpose of each approach.
I well understand the business model you describe in your article. My comment was simply to make a general observation that new means of financing relates to third party projects only in the sense money is now being raised from alternate sources.
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VCs get equity and kickstarter participants do not, correct? That seems like a pretty major difference right there.
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No, I just didn't realize you were using "soul" to mean equity.
Other than that, however, there is fundamentally no difference other than different "banks" are involved, each having its own terms and conditions.
So other than that really major difference, they're the same. OK. ;-)
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I know a bank that has a red sign, and one that has a blue sign. I guess that must be a major difference sufficient to conclude they are not substantially related in function.
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Well I guess we're done having any kind of serious conversation then.
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I doubt you would find it to be an irrelevant detail if you were considering giving up partial ownership of your business.
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Astractions
Simple. Don't know why anyone would spend years in school studying that one.
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It's not that motivations are different, it's that the entire structure is different. Look, there are all sorts of ways you can get money. For example: equity, debt, as payment.
Those are three very different things. VCs do equity (some do debt, but that's besides the point). But this is as payment. Totally different.
I well understand the business model you describe in your article. My comment was simply to make a general observation that new means of financing relates to third party projects only in the sense money is now being raised from alternate sources.
Okay, now you're just being stubborn and stupid at the same time.
Look, at the end of the day, ANY business model is about getting money. For you to say "that's not a new business model because it's about getting money" makes you look stupid. If you don't want to look stupid, perhaps don't say stupid things.
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Importantly, I am not at all leveling any criticism at the Kickstarter model. Quite the contrary. It enables the participation of a wider financial base than is otherwise the case with the classical VC model.
I admit that my comparison is a generalization associated will all investment schemes, but where we do differ is your generalization that legislation such as SOPA and PIPA (or whatever they eventually morph into) somehow makes it more difficult for a group like Kickstarter to get started, and as a consequence of which you note that it and another company do not support the pending bills.
As for startups far removed from what Kickstarter is all about, I remain of the opinion that legislation such as the pending bills would represent but a minor pertubation that would be directed at sites who predicate their business plan of plainly infringing activity. As for others, legislation such as the pending bills would simply not be applicable. To say otherwise is, in my view, an overstatement that many are using to create an unwarranted and unnecessary moral panic.
These are my observations and opinions. Please note I have not made any comments casting personal aspersions, and would greatly appreciate reciprocity.
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Why do you suppose they're against it?
As for others, legislation such as the pending bills would simply not be applicable.
Do you have some reason to think SOPA will not be abused as the DMCA has been?
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You note that the DMCA is abused. I note that on sites such as this it is regularly said that the abuse of the DMCA is quite substantial. I wish I had a copy of a study I read some time back by a law professor who had studied the DMCA and determined that the abuses complained of were very limited, and nowhere near the magnitude that many seem to believe is the case. I will keep looking, and post a link to his paper should I find it.
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That would be great. I'm sure the great majority of DMCA requests are legitimate, but that doesn't mean there isn't a problem. Some abuse of any law is inevitable, but if the law is written in such a way as to allow more abuse than necessary, then it's a problem. And SOPA is written very vaguely, allowing all sorts of opportunity for abuse.
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I think maybe you're saying there are laws being abused to facilitate copyright infringement, but I don't want to put words in your mouth. Maybe you can clarify.
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Just a note
Kickstarter's mission is to fund "creative endeavors." While that definition is often stretched (one project was a solo circumnavigation of the globe) it's not surprising that movies and music top the list. (I helped fund JourneyQuest's second season, myself.)
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You do realise that these aren't the people being supported through these projects, right? That the very people being supported are outside of the industry you wish to boycott? How would not funding these people help?
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That is one of my greatest wishes.The public rises up against these big dickheads as they learn how the Big Content People are trying hard to Censor their lives.Please wake up and Censor them from your wallet.
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Great stuff, but...
Isn't this just crowd-sourced commissioning? I agree it's cool and I'm ecstatic that it's becoming a hot trend and folks are using tools like this, but I don't know if I'd be inclined to call it "new". Certainly "updated". i.e. we have web-based markets where people can hunt for a commission to support and artists can submit ideas for commission.
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Had there ever been crowd-sourced commissioning before these web sites started up a few years ago? I think it's pretty new.
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I say macro only because the studios and labels provide more than just investment capital. They also have on hand facilities, equipment, services, and other necessities for movie and music production.
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But as with everything else in this life, while the idea itself isn't 100% unique, the execution is what matters. The point isn't that Kickstarter are doing something that has never existed in the history of mankind, but they are successfully helping independent artists from achieving their goals with funding from fans in a way that benefits both, all without having to sign away their rights.
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Well that is pretty cool!
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I'd have donated myself if I had the money at the time or could have gone a more granular route a la Kickstarter but, alas, the student me didn't have £500 lying around...
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I wish I had something to kickstart
I do wonder if some of it is a fool and his money though. For example, there are some guys who far, far exceeded their funding request to create parachute fabric hammocks. There are already lots of hammock makers and most of them sell for half the price these guys are selling for. They even imitate the color patterns of the existing manufacturers. If there was some new innovation here, I could see why they were so successful, but there isn't except maybe their tie to charity. But as long as you get what you pay for and you are happy with the price and the product then to each their own.
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A New World
So they funded 3284 film and video projects which works out as $9888.49 average per project. Let us hope they can pony up some serious funding for very serious people with very awesome projects.
From what I can see the market still has a long way to reshape and to get the right people doing the right jobs to benefit the whole community.
One point of happiness I enjoy these days is Imgur. This website clearly shows a free sharing culture. What is most interesting is that when people upload a photo others with impressive photo editing skills can edit these to make the photos more enjoyable for the benefit of the whole community.
This reflects key attributes of the new market where people join the community and offer their skills simply because they want to where them being part of that community provides its own rewards.
My only concern is that it is a long, long, long way to go before the Internet can turn out something like Avatar. Let us keep in mind one fact though when this $9888.49 average is not far below the budget for the first Paranormal Activity movie.
So what the Internet most needs now is a creative genius to produce a movie of like-standard that uses the Internet to become viral. Then the World and Congress would sit up and take notice.
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There will always be room at the top of the budget for the movies that push the very bleeding edge of film making technology. Look at the history of ILM, Pixar, BlueSky, Weta Digital and others.
That same tech very rapidly moves into the realm of affordability to the garage production company, usually within 12-18 months, if not sooner.
As for budgets, keep in mind that a huge chunk of the hundreds of millions goes to actors, marketing and other such costs. With alternative means of marketing, alternative casting, etc.. you can create something with the visual and production quality of the big budgets without spending the big budgets.
Scott
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Well, to be honest, that isn't necessarily a bad thing. Avatar, quite frankly, was an impressive tech demo but little else in plot, characters, etc. Keep those movies for the corporations, independently produced movies tend to shine when they aren't trying to emulate those who think that throwing money at the screen makes a good movie. While effects movies can be great, they're not the only thing out there (and even so, I'd personally rather watch a Monsters or Splinter than Battle Los Angeles for example).
"Let us keep in mind one fact though when this $9888.49 average is not far below the budget for the first Paranormal Activity movie."
Indeed. For all the talk of $100 million dollar movies, the ones that tend to be most profitable (as in percentage return on investment, rather than sheer dollar return) are the low-to-mid range genre pics. PA and Avatar are probably outliers on either end of the spectrum, but at low budgets all a producer needs is a couple of medium-to-large hits to be able to fund future project and make a healthy profit in return. Much better than ploughing ridiculous amounts of money into a film that would have to become the highest grossing of all time to make a profit (a gamble that happened to pay off for Avatar, but could have gone so wrong...)
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Rumor has it J-Cam has a documentary about this ordeal coming out... called The Butthurt Locker. XD
By the way, speaking of no more original content, they're re-releasing Titanic in 3-D for the 100th anniversary of the actual event. Maybe this time they'll throw Celine Dion off the ship first. XD
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This is the point, the MPAA/RIAA do not want these new services to live. They see the day approaching where the new services/distribution methods have out innovated them into irrelevance.
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Kickstarter connects investors emotionally to products.
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Follow along with the comments on the article.
Elsewhere in the comments, someone from Kickstarter said "84% of dollars pledged on Kickstarter are eventually collected," which seems to suggest that even though only 46% of projects are successful, they account for 84% of the total amount of money pledged. At any rate, it's more like $84 million actually passing through Kickstarter rather than $100 million.
I think Kickstarter is great, so I'm not pointing this out to suggest any problems. I just think it is useful to have an accurate understanding of the numbers.
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I don't think anyone is for limiting options. You dont see the RIAA trying to shut down Kickstarter. Who are you quoting saying that alternative business models don't exist? They are ALTERNATIVE business models because they are outside the norm.
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Great, invest your money elsewhere then. Why are you bitching about the way other people choose to invest?
"Who are you quoting saying that alternative business models don't exist?"
Where does he say that?
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Keeping our kids healthy - one school lunch at a time...
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