Kickstarter Keeps Funding Bigger And Bigger Projects

from the watch-'em-grow dept

Wed, Apr 18th 2012 1:32pm — Mike Masnick

One of the things that we always hear about new business models from critics is that they can't possibly "replace" some of the old business models. Often the talk is about how they're only good for "small" things, and how they simply can't scale. Of course, this seems to underestimate the nature of early experiments and how things grow over time. For example, Kickstarter has certainly become quite an amazing tool for helping to fund projects in the past couple of years. However, when discussing Kickstarter in the past, I've heard people complain that while it may be great for "small" projects of a few thousand dollars, it couldn't ever fund something "real," like more traditional sources could.

And yet... we've discussed how last year, Kickstarter users funded nearly $100 million in projects, and this year it's predicted to go much higher. And, already, we saw Kickstarter pass its first few million dollar projects. Then, late last week, the folks behind the Pebble e-paper watch announced that they were using Kickstarter to do pre-sales of their new iPhone and Android versions (previously they'd only offered a Blackberry version). The watch itself is certainly pretty cool. A smartwatch which is totally customizable, has a variety of apps, and basically acts as an interface with your phone (and it looks good).

And lots and lots of people agreed. Within just 28 hours they had already passed $1 million. $2 million ticked off soon after. It's now approaching $4.5-million, making it the highest revenue Kickstarter project ever—and it's the fastest to get to those kinds of numbers.

No, we're still not talking about the huge budgets around Hollywood blockbuster movies -- but we're already going well past what the most expensive albums cost to record. But, more importantly, it's not difficult to see the trend lines here. And, Kickstarter has only been around for about three years. Go back to the beginning of Hollywood. How long did it take the traditional methods to get around to funding $3 million movies?

As Kickstarter (and similar platforms) become more and more popular, it's certainly not outside the realm of possibility to see a major motion picture funded via such a platform. This isn't to say (as I know someone will accuse) that this is the only way that such things will be funded. But it does highlight, yet again, that if there's demand, there will be ways to fund these things. If you don't think the future is full of amazing opportunities, you're simply not paying attention.

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Filed Under: budget, crowdfunding, hollywood
Companies: kickstarter

47 Comments

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bob, 18 Apr 2012 @ 2:11pm

Paywall ++
Of course I like Kickstarter because I think of it as a super paywall. No one gets anything unless they pay AND the creator doesn't need to take much of a risk until enough people commit to buy it. So it's like a superpowered Paywall complete with extra creator-protecting powers. Whoo hoo.

Still I think people should be very careful about embracing these ideas. There's a reason why the SEC was created in the first place. Even with all of the insane regulations, Enron, Bernie Madoff and MF Global were able to destroy other people's money. Kickstarter doesn't have half of the regulations that the NY Stock Exchange offers to protect investors.

To make matters worse, I can imagine that many Kickstarter projects will fail because, well, projects often fail during development. In the old world, the consumer didn't buy something until it was built and reviewed by others. Kickstarter projects usually offer a movie with happy music and some clean-scrubbed young thing promising to try really hard to build something. Honest it will work.

Then there's something unfair about the second round of sales. If the early investors/purchasers fund the creation, how much should the second round purchasers pay? Usually, the cost of the product can go down once the dev costs are paid. But it seems unfair to me that the people who hold back get a lower price even if that's the way that business usually unfolds.

In essence, the first rounders are investors without any of the benefits of investors except seeing the product they want.

I think it's nice to take a chance on some projects especially cool ones like Pebble, but we need to keep in mind that this is a very, very consumer-unfriendly process. The creators hold all the cards behind the magic Paywall++. It can help everyone by estimating sales. It can save marketing costs and the gambling process of product development, but it largely accomplishes this by forcing the consumer to take plenty of risks that it will all work out.
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Dark Helmet (profile), 18 Apr 2012 @ 2:19pm

Re: Paywall ++
Bob....you really don't understand what a paywall is, do you?
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:Lobo Santo (profile), 18 Apr 2012 @ 2:20pm

Re: Paywall ++
9 of 10.
Thoughtful, well written, addresses the topic at hand.
In short, best trolling I've seen all day.
You need a little ad hominem and a couple buzzwords to get 10 of 10, but over all, excellent, just excellent.

Response: Yeah! Totallly! It's not like anybody on the planet would be willing to kick in a few bucks to make a product they'd like to see a reality! Who wouldn't want to also get something more out of it?

Also, there's nothing like "if you spend this much money, you'll get 'x'"!! That sort of thing is why gambling, oop, I mean investing in the stock exchange is a far safer bet--no 'real object' will ever be created there, and there is a guaranteed motion to your investment; namely from you to your stock broker and *poof* gone.

/troll-shill (trill?)
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jupiterkansas (profile), 18 Apr 2012 @ 2:20pm

Re: Paywall ++
Kickstarter is a donation, not an investment. Nobody expects a return on their dollar. All people want is the product.

I'm hoping in the future the projects funded through Kickstarter will be offered to the world for free, at least with digital media. If you can cover the cost to produce an item up front, it should be released to the public domain.

With support from just a few people, the whole world can be enriched, and not just those who can afford to pay.
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Anonymous Coward, 18 Apr 2012 @ 2:22pm

Re: Paywall ++
Quick, Bob, change your password! Someone has stolen your account and is using it to post articulate, well-reasoned opinions. Your reputation as top astroturfer is in danger.
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Anonymous Coward, 18 Apr 2012 @ 2:24pm

12:15:26
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akp, 18 Apr 2012 @ 2:31pm

Re: Paywall ++
I think using Kickstarter to perform pre-orders is a mistake. Yeah, it's great for the project owner, but in this case (now that they have their funding goal) it's better to just wait for the product to come to market for outright purchase.

If you think of a Kickstarter project as an investment, you're doing it wrong. I haven't contributed to a single project where I actually expected a widget in the mail. I've received some widgets, to be sure, but I didn't EXPECT them.

Showing support for an idea is the point. Not buying a product. No one should put any money on a project they aren't willing (and even expecting) to lose.

It's not venture capital, it's not an investment. It's a show of support for an artist or an idea. It's more like charity, after which you might actually get to see the cool thing made.
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Anonymous Coward, 18 Apr 2012 @ 2:31pm

Re: Paywall ++
" Kickstarter projects usually offer a movie with happy music and some clean-scrubbed young thing promising to try really hard to build something. Honest it will work."

Why do you always proof that you have no idea what you are talking about? Your made up arguments would be way more convincing if anyone who isn't even remotely familiar with the topic can't see that you have no experience with the topic at hand.
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Anonymous Coward, 18 Apr 2012 @ 2:35pm

Re: Re: Paywall ++
Excuse him, he's old and out of touch.
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bob, 18 Apr 2012 @ 2:39pm

Re: Re: Paywall ++
Showing support for an idea is the point. Not buying a product. No one should put any money on a project they aren't willing (and even expecting) to lose.

This is incredibly generous of you. Sure it's a practical position, but let's not forget that they're putting up a web page and offering an explicit quid-pro-quo. Indeed Kickstarter won't post the solicitation unless there's an explicit reward. So while you can be relaxed about actually getting what's promised, I think they need to be explicit about how it's all a gamble and there's a significant chance the product won't show up. If it does show up, there's a significant chance it won't work as well as you expect. That's just the nature of product development.

I realize there are times when it helps to be cool about projects that fail, but remember these are human beings we're talking about. Every grifter in the world is probably working on their video right now. They're finding clean, cute 20 something fronts and putting a happy face on their dreams.
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Mike42 (profile), 18 Apr 2012 @ 3:00pm

Re: Re: Re: Paywall ++
Has anyone ever noticed that people tend to think of others as behaving the way they themselves do? Kind, generous people believe that other people will generally behave in a kind and generous manner. Mean-spirited greedy pigs, on the other hand...
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Anonymous Coward, 18 Apr 2012 @ 3:22pm

Re: Re: Re: Re: Paywall ++
I'm sure Bob already a kickstarter selling paywalls.
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Anonymous Coward, 18 Apr 2012 @ 3:22pm

Re: Re: Re: Re: Re: Paywall ++
*has

type very well i today!
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Anonymous Coward, 18 Apr 2012 @ 3:42pm

Re: Re: Paywall ++
"I'm hoping in the future the projects funded through Kickstarter will be offered to the world for free, at least with digital media. If you can cover the cost to produce an item up front, it should be released to the public domain."

That's a lovely sentiment that works on paper, (or in this case, pixels) but artists and creators have bills just like the rest of us. No reason why they can't make a decent amount for themselves too!
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jrsurfs (profile), 18 Apr 2012 @ 4:02pm

the CROWDFUND Act
Watch this space because Obama signed the JOBS Act into law earlier this month, and it carries with it the heavily revised CROWDFUND Act (Bill S.2190). Unlike with Kickstarter the new rules found in the JOBS Act should allow for small, even micro investors to hold equity (stock) in the crowdfunded companies they support. A regulatory organization has already appeared calling itself the Crowdfund Intermediary Regulatory Association (CFIRA).
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Eileen, 18 Apr 2012 @ 4:29pm

Re: Re: Re: Paywall ++
I believe that was included in "cost to produce" i.e., line item "pay artist". Don't be dense.
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jupiterkansas (profile), 18 Apr 2012 @ 4:48pm

Re: Re: Re: Re: Paywall ++
Exactly. Artist is paid well. Creation is free for all.
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Zenstrive (profile), 18 Apr 2012 @ 5:38pm

Re: the CROWDFUND Act
Now that's ripe for the vultures of wall street to come and cancel capitalism democracy
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Anonymous Coward, 18 Apr 2012 @ 5:59pm

"One of the things that we always hear about new business models from critics is that they can't possibly "replace" some of the old business models. Often the talk is about how they're only good for "small" things, and how they simply can't scale."

Way to make a strawman Mike! You are skilled. It's amusing to see you start a story that should be a positive by poking at people, rather than just getting to the meat of the story.

The meat of the story is that Kickstarter isn't a business model, it's a FINANCING model. It's one that plays on the public's trust, and at some point, is likely to have issues. I keep waiting to hear a story of a massive fraud, because clearly this one is ripe for the taking.

Remember too that, for all the millions raised, Kickstarter still isn't really a drop in the economic bucket. It's a nice idea, and one that may work until legal or regulatory requirements come down (like the money getting held in trust, example).
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Anonymous Coward, 18 Apr 2012 @ 6:50pm

Re:
CitiBank perpetrated fraud against the public and they're still in business. You're adorably naive.
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DC, 18 Apr 2012 @ 8:08pm

Re:
Yes, fraud happens and can be prosecuted. Full stop in case you are looking for nuance.

A Financing model is a business model (I'll leave the invective out).

You post here all the time. Why don't you at least use a consistent name if you won't reveal who you are and what your interests are?
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Anonymous Coward, 18 Apr 2012 @ 8:12pm

Re: Paywall ++
It's not a paywall. It's a donation system to fund projects.

Retard.
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Anonymous Coward, 18 Apr 2012 @ 8:47pm

Re: Re: Re: Re: Paywall ++
... join the MAFIAA
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Anonymous Coward, 18 Apr 2012 @ 9:14pm

Re: Re: Re: Re: Paywall ++
I'm not "being dense." Kickstarter only allows you to raise money for the PRODUCTION costs of things, not pay your bills while you're producing the thing. (they say they don't let you use money for "fund your life" type of deal) Most of the projects I've seen break down the money they want into how much is used for each aspect of production...never found one that said "X amount goes to pay my bills while I'm working on this."
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Anonymous Coward, 18 Apr 2012 @ 9:24pm

Re: Re:
"Yes, fraud happens and can be prosecuted. Full stop in case you are looking for nuance. "

Yes, and just like many things in the world, if the government gets wind of a financing system being used in fraudulent ways, they will likely be very quick to "regulate the burgeoning industry".

The very nature of this service is entirely trust based. Blow that off (and someone will soon enough) and the whole thing folds like a cheap suit.
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That Crazy Freetard (profile), 18 Apr 2012 @ 9:27pm

Re: Re: Re: Paywall ++
Damn bob, you're one cynical sumbitch.
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That Crazy Freetard (profile), 18 Apr 2012 @ 9:31pm

Re:
...plays on the public's trust, and at some point, is likely to have issues...

Kind of like anonymous commenters, right?
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PaulT (profile), 19 Apr 2012 @ 1:17am

Re: Re: Paywall ++
While bob is less obnoxious than most of the trolls here, no he doesn't. That actually makes him rather more pathetic, to be honest.

The usual AC/TAM/whoever he is will rave like a lunatic and scream and shout and call names. On his better days he will address the actual points being discussed, but often he's just an annoying shill whose misdirections and lies have to be countered anyway just for the benefit of readers unfamiliar with his brand of failure. When proven wrong, he will disappear and spout the same lies.

Bob, on the other hand, almost seems to genuinely believe his claims. This makes is all the more depressing when he continuously and repeatedly fails to understand what's really being discussed. He's latched onto a false definition of "paywall", which somehow leads him to claim that any model where something is requested in return for a product is a paywall. He also fills his posts with wild conspiracy theories and constantly fails to heed the corrections clearly stated to him. If only he were willing to learn, the discussion could be quite interesting and enlightening, but alas...

He's the less obnoxious of the trolls, but he's still a pretty poor substitute for intelligent debate.
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bob, 19 Apr 2012 @ 4:26am

Re: Re: Re: Paywall ++
All this talk, but you don't give your definition of a paywall. You just say that I don't understand.

My definition is simple: if you don't pay, you don't play with the full product. No tip jars. No "tasting". No t-shirt buying.

I have no clue how you guys define it, but you might want to spend more time writing your own definition and less thinking up gratuitous insults. You aren't the International Paywall Administration and you don't control the word. Yet you somehow claim the right to decide that I'm being false. If you think the MPAA and RIAA is overreaching on their rights to control us, look in the mirror, bub.

(And btw, I'm not talking about wild conspiracy theories. Big Search is very open about how they give money to the EFF and Wikipedia. It's not a conspiracy held in secret.)
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PaulT (profile), 19 Apr 2012 @ 4:56am

Re: Re: Re: Re: Paywall ++
So, by your definition, everything that's ever sold is a paywall. Got it. Why don't you attack Wal Mart and your ISP for their "paywalls"?

"I have no clue how you guys define it"

Perhaps you should have actually read the posts and comments here before attacking them then. There were several years' worth before you turned up to attack them, and it's hardly a flattering admission that you didn't bother to read Mike's definition of a paywall before you started attacking him for questioning them. If you bothered to read any of the replies to you since you turned up with your attacks, it's been explained to you many, many times.

"If you think the MPAA and RIAA is overreaching on their rights to control us, look in the mirror, bub."

Explain how I'm trying to control anybody.

"Big Search"

This is the sort of thing that makes you look like an conspiracy-minded idiot who's too interested in labels to actually listen to what people are saying. Sorry, but it's true.

"It's not a conspiracy held in secret"

http://dictionary.reference.com/browse/conspiracy?s=t

Wow... you manged to cherry pick the one definition out of 5 from the dictionary that doesn't imply secrecy, I guess. So, now you're admitting you're attacking companies for operating out in the open to achieve aims they publicly discuss? A strange definition of a conspiracy, but valid I suppose... try holding off the stupid name calling though, it doesn't make you look good.
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PaulT (profile), 19 Apr 2012 @ 5:00am

Re: Re: Re: Re: Paywall ++
Oh, and I'm yet to see a valid explanation from you as to how Kickstarter represents a paywall. I don't have to support a project through Kickstarter in order to obtain the final product.
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Dark Helmet (profile), 19 Apr 2012 @ 6:07am

Re: Re: Re: Re: Paywall ++
Sigh, Bob, here's a simple definition of a paywall:

-An obstruction used to extract payment to customers before they are allowed to view an already finished and digitally available product.

And that's why Kickstarter is assuredly NOT a paywall. The product isn't finished (it isn't even BEGUN in most cases) and payment isn't an obstruction, rather it's funding creation.

I really would have thought all of this was obvious, but whatever. The point is that just because someone pays for a product at some point, that doesn't make it a paywall.
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Gwiz (profile), 19 Apr 2012 @ 9:36am

Re: Re: Paywall ++
Bob....you really don't understand what a paywall is, do you?

No, I don't think he does.

That and the fact that Kickstarter might actually be able to fund his arbitrary $100 million move in the very near future has gotten bob a bit upset about all these damn young whippersnappers on his lawn.
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Anonymous Coward, 19 Apr 2012 @ 9:41am

Re: Re:
Sort of like Mike, actually. It's amazing all the lobbying work he does but never talks about here.
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jupiterkansas (profile), 19 Apr 2012 @ 10:24am

Re: Re: Re: Re: Re: Paywall ++
So what is the money used to pay the artists being spent on? Hiring someone (including yourself) to do the work is part of the production costs.
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Colin, 19 Apr 2012 @ 11:40am

Re: Re: Re:
Since he does so much, you'll have no problem telling us what it is, right? Like, with links and everything?
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Anonymous Coward, 19 Apr 2012 @ 12:33pm

Re: Re: Re: Re: Re: Paywall ++
"never found one that said "X amount goes to pay my bills while I'm working on this."

The recent 3.4 million that Double Fine productions got (~2.3 after fees and prizes ect) is being used to pay 11 people their salary for a year while they make the game. A lot of the projects on there are to pay for the staff that will be making the project.

Some smaller projects that do not take much time are purely asking for funds to pay for productions but a lot of projects are saying "please pay my bills for 6 months so I can devote myself full time to this awesome project."
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Anonymous Coward, 19 Apr 2012 @ 7:43pm

Re: Re: Re: Paywall ++
Agreed, but i dont think it would be unreasonable for a new market of cheaper products considering the development phase was paid by donations
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Anonymous Coward, 20 Apr 2012 @ 12:18am

Re: Re: Re: Re: Re: Re: Paywall ++
Double fine isn't a good example for the whole kickstarter thing though, since the developer is an actual company and probably does have the money to pay people themselves. I was talking about the 100% indie projects. Not a lot of them ask "please pay my bills for 6 months so I can devote myself full time to this awesome project."
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Anonymous Coward, 20 Apr 2012 @ 12:20am

Re: Re: Re: Re: Paywall ++
Never said the price should be higher. But still, I wonder when wall street is gonna try the kickstarter bandwagon...because even they have to see the money people are making on there. And when it happens, good luck getting your cheaper products! It most likely won't happen from actual companies at least.
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PaulT (profile), 20 Apr 2012 @ 12:33am

Re: Re: Re:
I'm, still waiting you to link to your proof of this, as I request every time you mention it. Yet, you've never supplied anything but innuendo and unsupported claims. Scared, or lying?
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PaulT (profile), 20 Apr 2012 @ 12:34am

Re: Re: Re: Re: Re: Paywall ++
"Most of the projects I've seen break down the money they want into how much is used for each aspect of production...never found one that said "X amount goes to pay my bills while I'm working on this.""

Which projects have you been looking at that don't include salaries and other overheads in their production budget? Your claims are getting sillier.
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PaulT (profile), 20 Apr 2012 @ 12:39am

Re: Re: Re: Re: Re: Re: Re: Paywall ++
I don't suppose you'd like to link to some of these so that we can see who's working on them and what their aims are (e.g. is it a company you haven't identified being involved? A side project that's not intended to be full time? A student project? A project that's completed but just needs money for distribution?).

While you continue with wild innuendo and unsupported claims, you continue to look silly.
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Anonymous Coward, 20 Apr 2012 @ 1:54am

Re: Re: Re:
The very nature of any successful business model is trust based. Blow that off and at some point it will fold.

The RIAA are very aware of this. Their proud disregard for collateral damage is not helping their PR. Their system of purchasing legislation will be met with sufficiently swift backlash and it will continue until their demise.
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Schmoo, 20 Apr 2012 @ 2:59am

We need the first to be someone with a point to prove - maybe the guy who was shafted over Forrest Gump and then shamed them publicly when they came asking for a sequel?

Get that film made on kickstarter, put a little interview in it where you would normally have a trailer that explains just a little about how it was funded and why... Wakey, wakey hollywood!

It'd be just like Neo's message to the machines at the end of the Matrix: "I'm going to show them what you don't want them to see, where we go from there is up to you" :)
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Tim Griffiths (profile), 15 May 2012 @ 7:50am

Re: Re: Re: Re: Paywall ++
Now if only there was a section on kickstarter that lists all projects that intend to realise under creative commons most of which intend to be go out for free... oh wait, there is! :P

http://www.kickstarter.com/pages/creativecommons
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Ralf, 18 Apr 2013 @ 8:03pm

Crowdfunding - Associations
Kickstarter is one hell crowdfunding platform successful. No doubt investors, creators and backers keeps coming to support everyday projects that is interesting, stimulating and innovative and superb designs. Kickstarter Rocks!
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