Kickstarting the Creative Funding Future

In this essay, I examine the creative funding landscape, using Kickstarter as a lens through which to explore questions of value, community, and the link between arts and commerce. 

Some of the topics I cover include: what the best source of funding might be for creative projects; how we can (and can’t) measure or approximate the types of value and incentives that lead people to back such projects; the special hybrid of gift and market economies, and the nascent web of networks and communities, that Kickstarter engenders; and the applicability of potential models of “equity” to the space between Kickstarter and the venture capital-driven world of startups.

My starting premise is that Kickstarter is the most successful model we currently have for supporting creative projects; the purpose of this essay is to interrogate that assumption, to consider the reasons behind the company’s success and continued growth, and think about what solutions the future might bring as various funding platforms continue to evolve.


 

I’d like to talk about the present and future state of funding for creative endeavors. I speak with a fair amount of both first and secondhand knowledge, but am constantly learning more about the full implications of the myriad platforms, systems, opportunities, and pitfalls that are evolving daily. If this topic interests you as well, I’d love for you to join me in the conversation.

The big question that I take as a starting point is: on whom does the arts-funding onus lie? Who do we want to fund creative projects, who is realistically capable of it, and who do we expect will do it? I suspect there may be many answers to each question. But the core question seems to be: should market forces dominate, or are creativity and art “greater goods” that society as a whole (read: government) must be obligated to support?

This primary dynamic can be roughly typified as Kickstarter vs. the NEA. I take this as a starting point because of a statistic that’s been touted and discussed quite a bit recently: in the past year, Kickstarter has surpassed the NEA in level of total funds disbursed. This is of course a comparison we can make only in rough terms, as the two organizations have very different goals, Kickstarter based around individual projects and the NEA more oriented toward such aims as diversity and arts access, with grants supporting not only individuals but organizations and communities. It’s hard to tell which of the two—a for-profit startup and a nationally sponsored arts organization—has actually led to greater overall “good” or created the most total value, and there will likely always be a place for both these models (and many more) to coexist.

That said, I will be focusing primarily on Kickstarter, both because I’m familiar with its ecosystem and because its tremendous and rapid growth rate shows it to be an increasingly important force. Kickstarter-funded projects taken together have quite a wide reach and high level of visibility. Kickstarter continues to fund a huge number of projects, and has done much to democratize and simplify the funding landscape. However, it’s not yet clear what proportion of the results from these projects are of lasting importance—or if that’s even an important metric to take into consideration when evaluating the success of arts funding and thinking about its future. If it’s not the most important metric, what is?

I think it’s necessary to take a step back and consider what exactly a good measurement might be of the “value” (social/civic/personal/monetary/otherwise) provided by any sort of creative project. For now I’m going to entirely leave out the value-inflated, circle-jerk spectacle of the contemporary “art world” (see: NYC gallery scene; Koons and Hirst, etc.) because as far as that scene goes it’s impossible to parse out true value from social and intellectual posturing and speculation. I want to focus on projects that can roughly be defined as populist, public, or democratic—in some way oriented toward the public good (contrasting to art-as-pure-commodity as in the “art world” of my obvious derision). By this I mean projects intended for an audience or market of real people; ones created in the name of authentic love or passion or a vision of progress.

Who is best suited to mete out judgement of what projects, and which creators, “deserve” support? On the one hand, we have a relatively free market of consumers who vote with their pocketbooks in small increments; on the other we have an organization that almost by nature is subject to some degree of government bureaucracy, but also supposedly experienced in making merit-based value judgments. Both systems contain complex mechanics and dependencies, and entrenched biases, but my initial impression is that the former model—the Kickstarter model—is better suited at present. From what I observe, it is, if not the ultimate, optimal model, at least the dominant, ascendant one, and likely to continue growing in influence. I recognize that this is an assumption worth testing, and I’m actively attuned to developments in this area, looking with excitement to signs of evolution.

The following are some of the reasons I think Kickstarter is the best model we’ve currently got for funding creators, and why it shows so much promise:

  • The platform is democratic in nature; it is open to anyone, and the process has a high level of transparency, with (mostly) clear expectations and guidelines laying out how campaigns will function and how the finances will break down. This removes friction from the process and allows the market to speak in determining a project’s success.
  • Kickstarter makes possible a wide diversity of projects, including many that otherwise likely would never gain wide traction—partly because it’s gotten large enough to become a discovery mechanism, used and appreciated not just by artists and their fans, but general supporters of arts or particular niches.
  • It allows projects to reach a wide audience—by taking advantage of networked sharing, social media, low friction for sharing and spreading information, the best projects have the potential to go viral in a way that was far less common pre-Kickstarter.
  • Kickstarter can be a useful platform for people who aren’t yet well established—by its democratic nature, the best projects tend to rise to the top; and of course well-known creators are still more likely to raise huge sums, but with such a platform it’s a lot harder to maintain biases based on criteria like fame, age, etc. that are secondary to a project’s intrinsic merits. Traditional paths for arts funding (e.g. government grants; the high-end art market) can be problematic for emerging, early-career artists, as there’s little information depth regarding their true potential and value. Kickstarter flattens the hierarchy, leaving (to simplify a little) only good projects (those that reach their funding goals) and bad projects (those that fail to raise money).
  • Somewhat paradoxically (or maybe not, if you’re an art-world cynic) the market economics Kickstarter implements is more fair, and leads to more interesting work, than the stratified parallel universe of galleries, expos, and museums. Sure, the Whatever Biennale has works of a larger scale—but Kickstarter projects reach far more people, and the best are far more useful than gallery art, and often smarter and more meaningful to boot.

Here, a brief but important aside, on what exactly Kickstarter supports, and what we mean when we talk about artistic/creative projects: I started this article referring to the funding of “creative endeavors”, and have talked about them mainly as projects of an artistic bent. I want to clarify what this encompasses, because I’m really interested in a whole range of things within the artistic-creative purview—all sorts of creative works and experiences, from installations and performances to technologies, organizations and spaces—and I think the range and diversity of projects that have been successfully funded via Kickstarter is fascinating.

So far, in just the past year, I have backed: a book on design entrepreneurship, five films, an iOS game, two innovative online journalism projects, an underground park, a film festival, a play, a coding environment, a children’s book, a creative lecture series, a logic textbook, handmade cocktail mixers, an album, another book, a travel magazine, a system of urban gardens, a comics collection, a collaborative film project, a food magazine, and an interactive documentary on creativity and code.

Many of these projects exist outside of the commodity-space (the set of things that can be purchased and owned), so one thing that really excites me is seeing the ingenuity displayed by creators in defining rewards tiers which incentivize people to back their projects even without necessarily tangible rewards. There is a wealth of innovative and worthwhile projects on Kickstarter, and supporting them is valuable to me for many reasons beyond the various tangible backer rewards I receive. Which brings me to the next point I want to explore.

In working through the merits of Kickstarter and exploring the future in this space, I think it’s very important to consider, and question, the economics of art: What types of value lie in supporting creative activity, both in terms of the tangible investments yielded and the intangible pleasures and improvements to life such support may bring? What “returns” do you gain from an “investment” in something creative?

As people have many different reasons for supporting creative work, there are numerous possible answers to this question, including motivating factors like intrinsic satisfaction, inclusion in the creative process, tangible rewards (digital or physical products), recognition, and a gratifying sense of community support. Many of these factors will remain unquantifiable, but one thing we can do is look at the available metrics that do lend themselves to measurement, and from these attempt to tease out some of the implications for our thornier questions on human motivation, etc. Luckily, Kickstarter has reached a large enough scale to produce a lot of useful data; by digging around in publicly available information, we can analyze some interesting things:

  • We can measure financial support (total dollars raised) as a proxy of overall market interest in a given project or category
  • On a project-specific level, we can see the total number of backers and their distribution by funding tier—and if we wanted to we could even derive some measure of their engagement by counting Kickstarter comments, Tweets, etc.
  • We can get a breakdown of what types of projects are most supported (there are twelve categories), and we can even get a rough idea of how the projects-funded-per-backer statistic breaks down.

You can take a look at some of these things for yourself here on Kickstarter’s own stats page. The numbers on projects-per-backer are taken from Kickstarter’s “Best of 2012” recap—less detailed, but still useful. Although I’m not a statistics whiz, I can see how this sort of information could be used in tandem with powerful analytical techniques both to help Kickstarter (make more money and better serve their users) and enlighten the wider public (that would be us!) interested in such things. Following are a few examples of insights I think we can tentatively glean from a cursory look at these available statistics.

  • For one, it’s immediately clear that Kickstarter has tremendous traction; it’s funded over 35,000 projects to the tune of nearly half a billion dollars, an average of over $10,000 per project. Even taking into account that the average is skewed a bit by a few multimillion-dollar outliers, we can see that there are lots of projects raising real money. Over 20% surpassed $10,000 in funding, and 400+ raised more than $100,000. I think it’s fair to say Kickstarter is rapidly entering the mainstream.
  • We can see that there are many prolific backers on Kickstarter: 50,047 people backed ten or more projects, and 452 people backed at least 100 projects. This leads me to believe that at least a significant number of people are backing projects on Kickstarter not simply to support a friend or purchase a product, but because they fundamentally believe in the model the platform enables, and gain some sort of intrinsic satisfaction from being a part of a wide number of different projects.
  • Another thing that strikes me is that Dance and Theater, two categories on the smaller end of the spectrum in terms of total dollars raised, are the leaders in project success rate. Dance actually ranks last in total funding, but first in success rate. It’s hard to draw too many conclusions since this is admittedly not a very specific breakdown, but it interests me because it hints at how the tightness of support networks or communities varies across categories—from this data I’m inclined to infer that dance projects tend to have small but intensely passionate groups of supporters willing to donate heavily to their usually-modest fundraising goals, whereas projects in categories with the lowest success rates (Games, Technology, Publishing, and Fashion in last place) tend to have wider appeal and a few huge blockbusters but also more ill-conceived projects that never get any traction at all. That is, these latter types of projects may be more likely to appeal to the market forces that seek out pockets of high quality, whereas the smaller categories rely more heavily on tight-knit, project-specific communities.
  • The final idea that really interests me is the massive importance that gaining “any traction at all” actually has in determining a project’s likelihood of successfully reaching its goal. Over 80% of projects that reach at least 20% of their goal go on to success; for projects that hit at least 40% of their goal, the success rate jumps to an astonishing 94%. To again make a nonscientific inference, this tells me a lot about the importance of network effects and virality in creating and marketing a project, and the remarkable boon simple community-based momentum can be in propelling a project to success. As each project gets closer to reaching its funding goal, it seems a small, temporary market coalesces to rally around that project and see it through to success. This is certainly something that should be top-of-mind for anyone running a campaign.

I recently came across a thought-provoking New York Times article by Rob Trump discussing Kickstarter in the context of the gift economy—the idea, elucidated in Lewis Hyde’s seminal book The Gift, that transactions around art and creativity often rely more on interpersonal, reciprocal and mutually beneficial obligations than on the traditional forces of the market economy. This article makes the claim that transactions on Kickstarter follow the logic of the gift, rather than the logic of the market. To an extent I agree, but I’d actually argue that what makes Kickstarter remarkable is its demonstrated ability to successfully (if precariously!) toe the line between gift and market forces.

The article states “…it’s almost always the case that the rewards for donations have a lower market value than the money being asked for…”—making the claim that most project rewards are akin to the token tote bags given to supporters of public broadcasting funding drives. There’s no citation for proof on this claim, but I at least anecdotally find it to be not entirely true. In my experience, many project rewards on Kickstarter actually in some sense are the project being supported; to see how this is the case, it’s worth looking in more detail at the significance of the tiered structure of funding and rewards that’s such a key element of the Kickstarter model.

Most projects have several (at least three or four; sometimes dozens) of funding tiers, with corresponding rewards. At both the lowest and highest ends, Trump’s argument seems to hold: pledge/reward values don’t often align at the bottom of the ladder, where a pledge of $1 or $5 tends to correspond to a reward of “we’ll thank you on our website”; likewise, the commonly listed tiers in the $1,000+ range often bring rewards like “producer credit” or “dinner with the project creator” which may not even have a market value. However, the real money is exchanged in the middle—the vast bulk of donations (not only in number but also in dollar value) tend to come at the $20-$100 range, a fact confirmed by numerous project breakdowns and postmortems written by successful creators.

In these middle tiers, pledges often do have some equivalency with purchasing a product. Indeed, for many of the most successful projects on Kickstarter, in categories like Technology, Games, Music and Film, the predominant funding tiers correspond to rewards—a gadget, a completed game, a DVD, a digital download of an album or video—of rough equivalency to the typical commercial market values of such products. So, even though the commercial aspect may not be the primary, most important function of a Kickstarter project, the platform certainly does function more like a store than an NPR drive does, and this is critical to the success of projects and Kickstarter alike.

This can cause some difficulty; toeing the line successfully isn’t easy because it doesn’t take much to violate expectations, and this is in fact something that’s been problematic for Kickstarter, prompting more explicit declarations of its own non-store nature. But the enmeshing of the supply and demand logic of the market with the expectations of community and generosity engendered by the logic of the gift economy is critical. When it works—and it often does, as evidenced by Kickstarter’s tremendous success thus far—it can embody the best of both economic worldviews.

One of the best points in Trump’s article gets at why such a platform can be so powerful and provide value beyond that of the commercial transaction: “[Kickstarter] provides something increasingly rare in today’s society: a platform for an essentially noneconomic transaction, the kind that builds friendships and communities.” A great comment in the Hacker News discussion of this article notes that, for a certain subset of backers, donating regularly to Kickstarter is almost akin to contributing to a religion or charity—it’s not only a way to support cool projects individually, but also to improve one’s local community and experience of the world around them.

Bringing this back to the dichotomy established at the beginning of this essay, of Kickstarter vs. the NEA, I think it’s easier now to articulate some of the areas where Kickstarter is superior to a system like that of the NEA.

Kickstarter is not simply a commercial platform on top of which gift economies can be built. It’s more an organic blend of the two on all levels—a platform that, of vital importance to its success, both enables creators to harness the “1,000 True Fans”-type potential interest in their work, and establishes a wider community based on this hybrid economy, situated within the larger discourses and markets of our society.

As I’ve recently learned from a handful of great books (see: A New Culture of Learning, Impro, and Oulipo: A Primer of Potential Literature) it’s important for spaces of learning and creativity to have boundaries within which one can explore and create. Kickstarter exists in a space between the limited, opaque world of grant funding, and the unbounded commercial market. It’s success is as a place where the two sides of this hybrid sort of transaction can find each other, enabling a framework with certain boundaries and expectations upon which a remarkably diverse and innovative array of projects can become possible.

The interests of the public, in aggregate, are much more powerful than those of any given decision maker, or even of any single arts funding organization. This may lead to different outcomes—popular projects, rather than those that an elite corps deems best—but as the latter is tenuously determined and the former by definition as democratic as possible, I see that as a net good.

Kickstarter is not perfect. The company is only about three years old, and it’s still developing as a platform and a community. I can think of a few potential caveats or problem points that may become more important as it grows and matures:

  • The company has editorial control over both approving and promoting projects; it’s reasonable to wonder what influence this has on determining what sorts of projects succeed, and the approval process isn’t always completely transparent. Also, projects can benefit by other externalities, such as fortuitous press coverage or fan evangelism, which may not necessarily correlate to a project’s intrinsic merits.
  • The platform can be abused, and it could be argued there aren’t yet sufficient oversights or safeguards to ensure that projects are actually completed and delivered as promised after money is collected. I will say though, any system of this scale is liable to be gamed, and Kickstarter seems to have done an admirable job thus far ensuring the platform is used as intended; after all, it depends on this basis of trust for the service to last.
  • The question of “Is Kickstarter a store?” looms large, and many people treat it as such; the company has tried to make it clear that’s not their intent, but as it’s in their financial interests for projects to raise as much money as possible, this remains a thorny question.
  • Due to the project restrictions Kickstarter imposes, as well as natural external factors (for example, the barriers to entry for small projects are disproportionately higher than for large projects given the time and effort required to produce a promotional video), Kickstarter isn’t an equally good funding solution for all types of projects—as it stands, there’s clearly room for more players in this game.

Another point that I find interesting: Indiegogo (probably Kickstarter’s biggest competitor in crowdfunding) is much smaller than Kickstarter, but is actually a more democratic platform. On Indiegogo, one can instantly create a project with no application required; it works in any country, not just the United States and the UK; and one can create a campaign for anything, rather than being restricted to twelve categories of creative projects. It also appears to have more financial flexibility, allowing donations with various payment methods (Kickstarter exclusively uses Amazon Payments) and even catering to nonprofits. I wouldn’t say these are necessarily advantages over Kickstarter, though—in fact it may well be that Kickstarter’s more clear focus and mission, coupled with its excellent design and great community (overall a much stronger brand), explain its dominance thus far. But it’s an interesting comparison and I find it worth keeping an eye on Kickstarter’s alternatives and competitors.

Veering to a more high-level, future-searching plane of questioning, I’d like to look at how, keeping in mind Kickstarter as a base of reference, we might go beyond the currently prevalent model to extract more meaning, more connections, and more value from the total world system of creative funding. How might it be possible to, instead of relying on surface-level contact and viral spread via the web, establish deep and long-term relationships that marry the most driven creators with those whose deep pockets coincide with a strong interest in seeing radical and transformative projects achieve great success?

For certain subsets of driven and creative people this system already exists. In the most obvious example: these people live in the world of tech startups, and their mythical patrons are venture capitalists. True, it’s still difficult to raise money in this system, but it’s commonplace. The players in this ecosystem are driven by profit and growth, and put a notable focus on providing value—after all, that’s ultimately the most essential factor in a company’s survival. Of course, in companies as well as in creative projects there are types of value beyond what one can tie to dollar signs, but I find the startup model to generally exhibit a high degree of intention to create positive value and better the world.

This makes me consider more deeply the idea of equity, and how it might translate to creative projects that exist tangential to, if, as we’ve seen, not entirely outside of, the capitalist market system. For venture capitalists, startups are investments with quantifiable returns a few years down the road—usually many small losses offset by the occasional massive win. Is there potential for some kind of “equity” system of relevance to creative projects? If so, what might it be? I’ve already discussed some of the types of value projects can give those who back them. But as I noted, on the surface it seems there’s fairly low correlation between what is measurable and what is important. How can we put numbers on such things as cultural improvement or intellectual cachet? The equity of creativity can take many forms: as a mark of status, a symbol of public good, a feeling of personal satisfaction—a wide spectrum of things, all with potential pitfalls and side effects but also real benefits. And of course, not all of these forms of equity translate well to Kickstarter rewards tiers.

What I’m particularly curious about are the structures (and societal expectations and systems) in place to support those people who may not have in mind a specific business venture, the success of which is determined largely financially (and perhaps by “buzz” and “market share”), but whose interests instead lie in the pursuit of things that are paradigmatically different, almost unthinkably so, from what other people are doing. Projects that truly disrupt. That perhaps don’t attempt profit at all, but aim to create value in ways less tangible, less quantifiable, and in fact defined by constructs completely divorced from the dominant capitalist ecosystem and worldview. Projects that are creative in the highest, most noble sense of the word.

So that this doesn’t come across as a bit of a barrage of head-in-the-clouds abstraction, let me throw out a few tentative ideas of the shapes that things like this might take.

One of the most exciting present developments centers around the JOBS Act, a bill focused on deregulating certain aspects of small business funding to make it easier for startups to raise money. Of particular interest is the CROWDFUND Act, which extends the aforementioned bill to allow small investments (distributed across many people, as with crowdfunding) from unaccredited (read: not necessarily rich) investors. It remains to be seen when these measures will take effect, and what intermediary services will develop to facilitate this sort of investment, but it seems a quite promising way to more directly link the philosophy and methodology of crowdfunding to the risk-and-return seeking mentality of startups and the surrounding ecosystem of angel investment and venture capital. It also seems poised to encourage bolder ventures—as the investment risk could be distributed across a wider number of stakeholders without the red tape and legal legwork that adds friction to the current system—which would allow for exploration of a wider total possibility space and lead to new innovations in many areas.

Another thing that I think will be important has to do with cultivating both intricate networks and deep relationships, to further explore different ways of replacing the “artist + patron” relationship. Elusive and fortuitous are a creator’s connections to wealthy, enlightened individuals (or simply risk-defiant eccentrics with nothing to lose) whose interests aren’t exclusively monetary and align in some way with their own. Networks and aggregated interest, as evidenced by crowdfunding, can be extraordinarily powerful, but we shouldn’t forget that individual relationships remain critical as well. I’m curious what services or platforms might serve as useful tools in this realm—I can envision something like a concierge or dating service for pairing creators with individual patron-like investors compatible with their particular interests, the creative funding equivalent of an entrepreneur-meets-angel investor platform like Gust or AngelList. One intriguing model along these lines is that recently created by Upstart, wherein promising young people can get funding and mentorship from investors on the platform in exchange for a certain percentage of ten years of future income—basically angel investment in people rather than in companies; I’m curious to see how these “investments” pan out!

I’ve shied away from discussing government and private grants, partly because I don’t know enough about the complexities of those systems to dissect them in worthwhile detail. But I can’t help thinking that, at least from the outside, these systems seem in many ways outmoded and maladapted to the modern era, and I wonder how it might be possible to reinvigorate them. There are promising signs that make me optimistic things are evolving in the right direction—things like Obama’s “Startup America” campaign and various other tech and entrepreneurship initiatives; or the Digital Media and Learning initiative of the MacArthur Foundation, one project of which is the awesome Hive Learning Network launched in collaboration with Mozilla Labs. I’m certainly keeping my eye out for any new and interesting attempts to inject new life into traditionally slow and stubborn models of funding important work, creative or otherwise.

As I wrap up my current thoughts on this topic, I find that many questions remain: What are the implications of Kickstarter “winning” this new funding paradigm for the time being? Does society have a greater obligation to nurture creators, and if so what accountability can be expected in return? What possibilities are ripe for disruption and innovation going forward; how can we advance the creative funding landscape?

I’m working through a number of ideas for incremental improvements for Kickstarter, and some new directions to explore that might be fruitful in developing the wonderful ecosystem of creators and backers that’s already growing so rapidly. For example, I’d love to see Kickstarter pursue greater education initiatives and work to bring in project creators who may be unfamiliar with their platform; study social graphs, network effects, and other deeper analytical applications of their tremendous data, and work with interdisciplinary teams to, for example, apply insights from anthropology or economics to improve and extend the functionality of the platform. I’m going to save the further idea-exploration for a later time though, as this post is quite long already, and I have a lot more thinking to do.

Crowdfunding is clearly the current major trend in creative funding, but I think it’s worth doing some hypothetic digging around to consider what might lie beyond. Patronage, in the original sense of the word, lives on—but it’s rapidly changing. Crowdfunding enables an interesting sort of micro-patronage, and has the potential to go beyond, to a model concerned with interests of commerce, personalization, and authenticity.

I see a promising possibility of social networks encouraging deeper relationships between creators and patrons of art. Kickstarter probably remains the best current example, but other crowdfunding platforms have demonstrated success—Indiegogo for one; and Selfstarter, a free and open source crowdfunding framework, is also promising—and other startups are bound to emerge in this space once the approved changes in investment laws are enacted. I’m excited to see what comes next.

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