BY VINCENT VARNEY
I’m a firm believer that people should talk with their wallets. If you’re concerned by Nestle’s treatment of workers, buy a different brand. If you’re not happy with Vodafone’s erratic service, find another provider. It’s the basis of consumerism, and by thoughtfully choosing where your money goes, you’ll help shape the market.
Crowd-funding services – the most popular of which is Kickstarter – are built on this exact ideal, allowing the average credit card holder to help fund a project, eliminating the need for corporate dealings. Essentially, a creator pitches their project (whether a film, stage production, comic, etc.) to the masses, who then decide if they want to back the project, and if so, with how much money. The concept is fantastic: Taking power away from marketers and Venture Capitalists, allowing consumers to decide ‘what people want.’ But is it also taking advantage of project backers?
Without Kickstarter, funding a project works this: You pitch your product to an investor, and if they decide to give you money, they’ll expect an agreed upon share of your profit, also known as their Return On Investment (or ROI). Kickstarter doesn’t offer the same mechanism. Instead, backers get the warm and fuzzy feeling of knowing they helped bring a product into the world, and in most cases, backers who contribut a large amount of money get gifts, such a posters and or even the product itself. Considering over 32,000 projects have been funded in the past three years, clearly people don’t mind the warped ROI.
There instances where I find Kickstarter’s approach to ROI (or lack thereof) entirely reasonable. One such example is Retronauts, a podcast that has existed since 2006, free of charge. Earlier this year, the Retronauts host Bob Mackey lost his job, along with the equipment needed to record the podcast, much to the disappointment of the listener base. Mackey decided to create a Kickstarter fund to revive the podcast, asking for US $12,000 – enough money for the recording equipment he needed to keep making the programme, again free of charge. With Retronauts, there’s no profit and there never will be. ROI isn’t an issue here.
But what about Zach Braff’s upcoming film being funded through Kickstarter, or more concerning, the Veronica Mars film? These movies will turn a profit without a doubt, considering the publicity they have received through the unusual use of crowd-funding and, in the case of Veronica Mars, the fact that fans have been asking for the movie for seven years. Yet, for the thousands or millions who backed the projects, they won’t see a cent of the money. Instead, backers who contributed a large amount get a digital copy of the film on release, limited edition posters and may visit the film set.
Marketers and Venture Capitalists will call a limited edition poster a sorry excuse for ROI, but does it matter? This is Kickstarter’s service – if you don’t like it, don’t hand over your money. Ultimately, while backers aren’t sharing in the potential riches, they like the freebies. They’re thrilled to visit the Veronica Mars set, and if they’re happy, is there even a problem? When you give money over the Internet, you click “Yes, I have read the Terms & Conditions” (whether or not you actually read it). People know what they’re buying into and they’ve spoken with their wallets, so even if you think the model takes advantage of consumers, the consumers are agreeing to being taken advantage of.
Kickstarter’s idea of ROI might be a bit unusual, and in the case of profitable projects, imbalanced, but the consumers have spoken. They don’t mind if they help someone become rich and can’t reap the benefits, because they got a cool sticker album for their efforts. Maybe these consumers are naïve to the business world, but maybe their values are simply different. As long as you’re putting your money where you think it belongs and you’re happy with the result, you’ve done your job as a consumer.
Vincent Varney is a Sydney-based writer who only places money with what he deems ‘worthy’ initiatives, and when someone pitches a working portal gun, he will be there. In the meantime, follow him on Twitter @VincentVarney