What is crowdfunding? Why do we crowdfund? How will it shape the future of the independent creative industries?
Bees Make Honey are currently one third of the way through our first experiment with crowdfunding, a publishing project called The Dust on the Moth, so I thought it was a good time to have a blog-style brainstorm about this topic. If you’re already plenty familiar with Kickstarter, Indiegogo and the likes of Just Giving, you can skip the intro and go for the meaty bit.
What is crowdfunding?
I’ve been asked this by my retired parents and also a friend my age via text message, it’s not that easy to explain (especially via text), so it’s a fair question. The most typical form it takes is the one Kickstarter has made famous. An individual or collective (like ours) pitch a project to the online community (the crowd) in order to receive funding. They state what the project will achieve. This can either be a physical product or artwork like a book, an album, a film or an innovative piece of design or tech like Ototo (see below), or it can be an event, activity or positive outcome such as a music festival or exhibition.
The idea is that you pitch to the general public to invest modest amounts of money, rather than pitching something to investors, a bank or a funding body like the Arts Council. However the caveat with Kickstarter (and most other crowdfunding platforms) is that you have to reach the financial target you’ve set yourself, in order to prove the project is popular enough. It’s gauging demand before you supply. If you don’t make the financial target and thus prove the project is likely to be unsuccessful due to the response, then nobody loses money on the investment.
‘It’s gauging demand before you supply.’
In some respects crowdfunding has always existed, it’s just crowdfunding platforms and the internet have altered the structure of it and made it much more public. Just ask Spike Lee who claims his early work was essentially crowdfunded.
What’s in it for the investors?
There are two main motivations for putting your money in a crowdfunding campaign. One is the rewards and the other the feeling of being part of something. Most campaigns have different tiers of reward according to how much you invest. The rewards can be all sorts of things such as a thank you gesture, a physical product (like the finished book), or an experience (like our more expensive rewards ‘Shoot the team!’ aka laser quest or ‘Die in the book!’). In the case of it being a physical item, it’s like pre-ordering something before it’s been made. You do generally have to wait many months to get your mitts on it, but you get the added feeling you had a hand in making it happen.
‘In the case of it being a physical item, it’s like pre-ordering something before it’s been made. You do generally have to wait many months to get your mitts on it, but you get the added feeling you had a hand in making it happen.’
This involvement in the story of something coming to be is the most powerful thing about crowdfunding. The internet has brought a huge amount of power into the hands of its users (for good and for ill). Rather than leaving us at the mercy of those with power and influence to decide what products we want and what things we’d like to see happen, crowdfunding is a opportunity to vote with your pocket money. Rather than hoping that new band you really like gets signed to EMI so they can put an album out or that creative project gets funded by the Arts Council you can chip in to help these things happen. In fact with all the cuts to arts funding and the like, if you can prove the popularity of a project through crowdfunding, the Arts Council themselves are more likely to invest.
Isn’t this just another type of begging?
Yep, crowdfunding is people asking for money and you don’t always get something in return for that money. But really doing a funding application to get a grant is also begging. And that money is often also coming from the public purse, it’s just that this way the audience actually get to choose how their money is spent. Want to save that homeless hostel that ‘austerity’ is forcing closure upon? Try crowdfunding. This is why many charities as well as small businesses pick this route.
‘But really doing a funding application to get a grant is also begging. And that money is often also coming from the public purse, it’s just that this way the audience actually get to choose how their money is spent.’
It also means that you can gather word-of-mouth and publicity while a thing is still being developed. Many PR companies are beginning to look to it more as a publicity tool than a mere funding stream. And here there is abuse of the system with projects that are already fully funded using it as a tool to get more money and more column inches. I won’t mention examples because that would be giving them more publicity!
But isn’t crowdfunding just a hipster fad?
Yes and no. The popularity of crowdfunding has spread at a similar speed to finely sculpted facial hair and craft beer, and tends to get in the news as part of the ‘hipster-bashing’ that has become a popular British pastime. Look no further than Channel 4’s coverage of that Cereal Killer cafe in London (the cafe had a not-so-successful Indiegogo prior to opening).
In fact Brewdog, one of the main reasons craft beer is now so popular in the UK, kind of crowdfunded their insatiable growth through their Equity for Punks scheme. This wasn’t through a crowdfunding platform though, but simply an ingenious thing they made up themselves. Rather than going to big shot investors in suits, they asked their fans to buy shares. But these shares can’t be sold on the open market, only at certain times through their own system. It’s easy to take the piss out of the hip, but there’s some genuine innovation happening in amongst the beard growth.
In some spaces crowdfunding has reached the level of overkill and I’m sure plenty of people are already sick of it. Many campaigns rely too heavily on a novelty-factor than can so quickly wear thin. Plus asking for money is cringe-worthy both for the asker and the audience and the more often you’re asked for money the less likely you are to give because it’s annoying. I can’t stand chuggers because I pass them every day. Case in point.
“But I genuinely think that crowdfunding is a revolutionary force for the creative industries in particular. Putting more power in the hands of niche audiences upsets the system we’re so sick of.”
But I genuinely think that crowdfunding is a revolutionary force for the creative industries in particular. Putting more power in the hands of niche audiences upsets the system we’re so sick of. The system than delivers insipid lowest common denominator art forms over and over again: endless sequels and remakes from Hollywood; manufactured pop backed up with a tabloid-friendly sob story from The X Factor; badly written erotic novels destined to become badly written erotic films. All this stuff will still exist of course, because there is a huge audience for it. But there will be more variety in between. More people with great ideas able to make it happen. I wouldn’t expect that to disappear any time soon.
By Kirsty Fox, creative producer with Bees Make Honey Creative CIC