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Kickstarter: Not just for your friend’s terrible CD anymore

The Kickstarter homepage. The JOBS Act will let sites like Kickstarter play middleman between online investors and small startups.

Kickstarter is not a new phenomenon. People have been using the site to raise money for small projects for a while now, things like tiny independent films, music, an odd art project or two. The creator will post the project, generally accompanied by a promotional video, and include information about how much money they will need to complete the project. Then regular folks drop by the site to see if there’s something they’d like to see happen. If there is, they pledge some money to the cause and, depending on how much they give, they might get a copy of the movie on DVD or a CD of the music or something. If the project doesn’t get fully funded, the money is never taken.

It’s all been very charming and most of the projects are pretty limited in terms of what they’re setting out to raise. But that’s changed lately, and pretty dramatically. Double Fine Adventure is an adventure video game that its makers were convinced could never get published right now. If it ever got created, it would be thinky, word-driven, not the kind of high-action game that one thinks customers would want. So the people who wanted to make it went to Kickstarter and made a pretty funny and detailed pitch for it, promising to open the window to the process of how the game got made. They set a goal of $400,000 and ended up hitting that mark within eight hours. The game went on to raise nearly $3.4 million.

Big ticket stuff. But people who have been watching the site are not surprised. “They've been steadily increasing and doubling everything from traffic to number of projects pledged to the actual dollar amounts given to the number of pledges themselves,” says Jeff Howe, a professor of multimedia journalism at Northeastern University. “So, Kickstarter has not changed the secret sauce, they've always had a great secret sauce, it's just that more and more people are coming into contact with it.”

Howe says the projects that tend to get funded are the ones that can make their value propositions succinct. “You can think of it this way: if you can condense the idea for the project into a tweet, you're in great shape,” he says.

Donors to Kickstarter projects aren’t investors, they don’t get a stake in the success of the product, just a little memento. That makes the whole process a little more friendly. “People love the association; they love the feedback loop that's built into Kickstarter,” says Harvard business administration professor William Sahlman. “They love the memento they might get from having providing some sort of funding. So, I think it's social, I think it's engagement.”

Kickstarter's growth is drawing notice from more traditional fundraisers. “It's raising more than two million dollars a week in pledges,” says journalist Amy Cortese, who has covered the company. “And at that rate, they'll be approaching the entire operating budget for the National Endowment for the Arts, so that sets them up to be the largest source of arts funding in the U.S. “

Not all projects are arts-related but Cortese says Kickstarter-funded films have played Sundance and South by Southwest. Considering this is still a rapidly growing platform, Cortese sees it democratizing arts funding as we know it today. “You don't have to be a Medici or a Guggenheim anymore,” she says.  “Anybody can fund a project that they like. It's also a threat to the established studios, the traditional gatekeepers like music studios, art galleries, publishers, game studios.”

But maybe those publishers and art galleries can start a Kickstarter page.

Also in today’s program, good news for Dunder Mifflin! Paper isn’t out of style, there are huge new advances: laser erasing and touchscreen capability for posters.

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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