CrowdFunding Economy, just getting started

2014013718crowd

By Kyle Chayka,

The Internet has broken down a lot of barriers in the world of what we have euphemistically deemed “content creation.” With websites, newsletters, and social media profiles, anyone can publish and promote anything, from blogs to books and feature films. In a perfect world, this means that the usual barriers to entry blockading creative people from reaching a public audience have fallen. But in the wide-open world of digital publishing, we’ve also all become a lot more accustomed to getting our media for free.

Such is the dilemma: Getting everything for free from creators who are only rewarded with exposure is unsustainable, but having to pay for everything we consume means we won’t get to see it all. Consumers are currently spoiled for choice, but content creators who want to make a living from their work have to decide on the best way to monetize their art.

Enter crowd-funding, which is remaking how money flows between artists and their fans. By gathering small amounts from many sources and aggregating it into more meaningful sums that are donated to single causes, crowd-funding sites are directly supporting creators who had previously relied on advertising or traditional publishing for income. And the crowd-funding economy is only just getting started. One report estimates that by 2025, crowd-funding will hit $93 billion annually.

Kickstarter, which handled $480 million in donations last year, and Indiegogo, which processed around $100 million, are currently the biggest names in crowd-funding. The two sites have raised money for major projects, like $10 million for the Pebble smart-watch and $12 million for a Linux-based smartphone.

But as big as they are, the sites have their flaws. By focusing on complicated reward structures, they often force creators into focusing more on mailing packages than working on their projects. They also have little accountability for creators to deliver on their promises, since donations don’t amount to outright purchases. This has lead to projects like the Galileo motion camera and the i+ iPhone case, which funders are calling scams after receiving nothing but excuses for their money.

Jack Conte, a California-based musician, set out to fix these problems with Patreon, a crowd-funding platform launched last May. Conte is one-half of the band Pomplamoose as well as the proprietor of a popular YouTube channel where he posts in-studio music videos. His videos were regularly getting 100,000 views, but YouTube’s advertising system was only generating $50 or $100 each. “I felt like there was a community around my videos,” he says. “I just felt that couldn’t be true, how can my video only be worth $50 on the Internet? The system was broken.”

http://www.psmag.com/navigation/business-economics/crowd-funding-gets-creative-kickstarters-2014-75426/

 

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