I caught an interesting article in The Economist yesterday about raising capital online (ie: Kickstarter, Indiegogo, etc) - I definitely agree that this is not a fad and we will be seeing a steady increase in its usage. The numbers below are astounding:
“Crowdfunding is booming. A report by Massolution, a research firm, forecasts that $2.8 billion will be raised worldwide this year, up from $1.5 billion in 2011 and only $530m in 2009.”
According to Slava Rubin (Indiegogo), the three main reasons people have opened their wallets to support various campaigns are:
- Caring about the person or company
- Wanting the product
- Being part of a community
Another excellent point is regarding intellectual property: “Instead of today’s approach of restricting access to content using copyright, crowdfunding facilitates an alternative, whereby the creator agrees to provide content if enough people commit themselves to paying for it. Mr. Varian (Google) argues that this overcomes the free-rider problem, a particular pain for makers of online content because it can often be reproduced at zero cost.”
It’s extremely important that the integrity of it remains, but it’s still going to be very interesting to see artists test the waters on new ideas and potential albums, knowing they can dictate the terms upfront. Yet another reason to build your tribe and increase interaction with your fans! According to Mr. Rubin, “projects that can raise 20-40% of their target amount from online “friends and family” do far better at getting strangers to contribute.” — More via The Economist.