The crowdfunding site Kickstarter updated its policies for hardware and product design categories today in a manner that will absolutely cost the firm money, but relieves a bunch of the tension that's been rising over the last year with million-dollar-plus fundraising for items that see substantial delays in delivery.
Kickstarter won't allow drawings or simulations for products and electronics. Only the current state of a prototype can be pictured or shown in action (if there is any action) in video. Further, project creators can't sell multiples of an item, except if it's a set of disparate things. This will change things in a big way that should be good for Kickstarter and creators both. (All project impresarios will also have to fill out a "risks and challenges" section about what could go wrong and why someone is competent to fulfill the project. I encouraged this already to anyone asking me how to plan a project; I'm glad it's codified.)
Kickstarter began as a way for creative projects to bring their audience to a place where it was easy to give money that was primarily support for an idea and secondarily relied on rewards, much like public radio and TV. You don't back a ballerina choreographing and staging a performance because you want the tote bag she designed, and you could always buy a ticket to her show later. No: you're buying into her success.
In that model, the reward is a separate thing from the thing being backed. For instance, 99% Invisible, a radio show I love, raised money to fund its third season. The rewards are notepads, T-shirts, audio recorded by host Roman Mars, and more. But the true reward is that we all get the show (and 40 episodes instead of 30). The $170,500 raised (for a $42,000 goal) doesn't mean more gizmos must be made; rather, Mars hired a near full-time editor, can produce a video episode, and will create a smartphone app, as well as hire designers to revamp the Web site. (He can also sleep a bit more.) The scope changed slightly, but not overwhelmingly. He has a bunch of shipping envelopes to stuff for a short period of time.
That's distinct from the rising trend since not long after Kickstarter's early days for both newbie and professional industrial and hardware designers to turn to crowdfunding for new projects. In this model, the project and the reward are essentially identical. Some rewards include intangibles, special editions, and the like. But the essential process is a pre-order: "Give me that thing." Those backing a project are mostly not patrons of an idea. When the thing is late or it never emerges, that then turns into a consumer-protection issue rather than one of disappointment or frustration.
Way back in November 2009, I backed John Sundman's new book "Creation Science." It's still not in my hands. He wound up becoming more successful than he'd imagined in other areas, and the funding for the book was relatively tiny. He works a living. I didn't give $15 to demand a book in a year! I gave it because I liked his writing. Someday, I hope, to read the book. But I'm not disappointed that it's not done, because his career and life have improved so much. That's what being a patron is about, as opposed to being a consumer.
Arts that become expressed as an instantiation—like a book or movie, rather than performance or an event—float a little between product and idea. But I'd argue that you're still backing bringing something into intellectual existence, which then gets manufactured in a very standard way into something digital or physical. An iPhone dock, however pretty, is an iPhone dock. A film is an idea made manifest in its creation, and the arts of mechanical and electronic reproduction puts that idea in your hands.
There's also a reason to call out hardware and products as opposed to computer software. Software has much the same problem whether you fulfill 100,000 copies or 1,000 copies through a digital download. Software has a much higher risk of delay. (Go read Scott Rosenberg's Dreaming In Code for an exegesis on why.) But that risk is better implicitly understood by most of us who have waited for a software update or new release than tapping our foot for prototyped things made of atoms that appear to be ready to head into a manufacturing cycle.
Conflict over the patron/consumer worldviews has grown this year as computer hardware and other projects started bringing in dozens to a 100 times the original goal amount to receive funding. Delays abound with completed projects, and concerns remain over projects that haven't passed their deadline. This is partly because of scale.
The makers of the Pebble E-Paper Watch set out for $100,000 and brought in $10.3 million before halting the campaign. Delivery was planned for September, but now is "soon." A target of 15,000 watches a week is the goal towards making about 85,000 total. That means even were shipping to begin in October, some backers wouldn't see a watch til December.
People are also concerned about Ouya, an open-platform video game system that raised $8.6 million against a $950,000 goal, and has rewards to fulfill of roughly 60,000 controllers by March 2013. It has to go from production to manufacture, as well as finalizing the software platform and releasing a developer SDK.
I could go on. Wired ran a story about five overdue Kickstarters a few months ago (a couple of which have now finished fulfillment), and I have a clipping file in Instapaper of more than a dozen articles that look into which big projects are late.
Many people ask me regularly, knowing my interest in crowdfunding, whether Kickstarter has hit the inflection point of having too many big projects too fast that are out of control. I say, no: every project has its own community and audience. Failures or delays in big projects won't necessarily have a halo effect outside the group that backed them, although a continued pattern in that direction (especially if a complete, million-dollar-plus wipeout occurred) could certainly cause a broader level of aversion.
Yancey Strickler, one of the company's founders, spoke at the XOXO Festival last weekend, and I had a moment's chat with him. As he did on stage, he emphasized to me that the staff isn't as fascinated with the blockbusters as the rest of the world appears to be. Thousands of projects run through Kickstarter every month, and most are modest. A healthy half are funded, putting hundreds of dollars to tens of thousands of dollars towards quite achievable goals. They love the little stories, of which there are so many.
This new policy seems absolutely consonant with Kickstarter's chief stated goals: turning ideas into reality, not selling stuff. Kickstarter takes 5% of all funded projects. With these rules in place, perhaps Pebble would have funded at $1,000,000 instead of ten times that. That would have reduced Kickstarter's fee from $500,000 to $50,000. But the potential drop in commissions doesn't seem to bother the founders as they recalibrate against their founding mission. It doesn't hurt that many of Kickstarter's investors are community builders who may want a financial return, but not at the expense of the broader mission.
One of the bits of buzz about Kickstarter, including at the XOXO conference, was how a new model might emerge for dealing with things being manufactured in large quantities that had never been made before. It's possible Kickstarter closing some doors here means another company will open them, with a different set of rules and expectations, and perhaps a real focus on incubating, accepting pre-orders for, and releasing mass-produced products when the time is right.