The Downsides of the High Risk, Low Reward Kickstart Business Model
This past week an author who writes young adult books as well as erotic romances posted a Kickstarter weeks after the release of her latest YA novel. The novel failed to have a strong buy-in from retailers and because of that the publisher, Random House, did not invite the author to go back to contract for subsequent books in the series.
The author was asking for production costs as well as living expenses for the time it would take for her to write a sequel to this underperforming YA book. She admitted in the Kickstarter that she had been writing full-time as an author for several years and that she had self published 10 novels under a pseudonym in the previous year successfully.
Ultimately the author removed the Kickstarter after someone who knew her sent her an arial photograph of her home. I guess the suggestion was that she had plenty of money to fund her own writing projects. I feel like I shouldn’t have to say this, but this is so obviously wrong. Stalking is wrong and it’s no way for civil human beings to engage in a disagreement.
If you aren’t aware, Kickstarter is a micro funding site where project ideas are submitted to the general public with a set fundraising goal. If the goal is met, the pledged monies are released to the project owner. If the goal is not met, the pledged funds are automatically refunded. Kickstarter’s liability or responsibility begins and ends there. It claims no responsibility for any failure on the project owner to fulfill the project.
In exchange for a donation, an individual is entitled to receive a reward. The reward is different based on how much you donate. For this particular Kickstarter, $10 would get you an ebook package and personal thanks in the acknowledgement along with a mention in a song the author promised to release later down the road. For $20, you received the book, swag (unspecified other than a bookmark), and if you were a blogger, you got to post promotional materials like an excerpt or interview. The reward levels went up from there to $500 wherein you got to choose the character of novella of approximately 20,000 words and the story would be dedicated to you.
This is not unlike a patronage system of old wherein wealthy individuals would provide living expenses in exchange for the prestige of being connected to the artist. Any donation in a Kickstarter is really a gift because despite the KS terms of service indicating that you do have the right to pursue the project owner in case of failed delivery, it encourages you not to do so and feasibly, the monetary costs would be enormous. Ergo, the likelihood of any KS project owner being sued for failing to deliver is probably close to zero.
One well-beloved artist who had his Kickstarter funded to the tune of $51K ended up burning all the books in an alley and posted a video of himself doing the burning because he ran out of money to ship the books.
It’s one story of non-delivery but that’s the risk you take as someone donating to a KS. Non-delivery, production problems, and delays are all part of the process. The Lizzie Bennet Diaries, for example, was funded in two days but it took over a year to get the DVDs delivered after it was funded and missed over a half a dozen deadlines in the process. To say people were antsy about this was an understatement. There were also some complaints about what was done with the DVD distribution after the fact.
Many of us are aware of the Vera Nazarian situation in which several fundraisers were held for her and she was given over $30,000 to save her home, save her life, and pay authors. None of which actually came to fruition, including the payment of the authors of her small press.
The problem with Kickstarters is multi-layered and it requires anyone who donates to understand a couple things.
- The reward may be a long time in coming
- The reward may never come
- What the creator does with the end project isn’t up to you even if you did donate, no matter how much you donated.
So in general, those are my issues with Kickstarters. This is not to say I haven’t given money to a KS. I have. One. I bought the Nomad charge card because Nomad didn’t have a separate purchase site available. It was a product fully funded and delivering at the time I donated. But I did donate, technically.
As it relates to books and readers, I have another set of issues because as this issue was discussed around the publishing blogosphere and social media, a couple things were alleged:
1) People who objected to the KS were anti-author
2) People who objected to the KS were misogynists
3) People who objected to the KS were bullies
4) People who objected to the KS wanted stuff for free / didn’t want the author to get paid.
5) The KS was an advance
So, of course, I said something. (And then was subsequently accused of being a Mean Girl who drove yet another author out of publishing).
1) The Kickstarter shifts risk to the only person in the publishing ecosystem that doesn’t benefit.
One of my primary problems with an author KS is that it shifts the risk from the author to the reader. If KS become the norm in publishing it would mean the reader is 100% responsible for books coming to the market. Yet they garner no reward. Yes, they get a book but in an ordinary publishing marketplace, readers get books when they purchase, rent, or borrow it. In the KS business model, no book exists until or unless the reader funds the project, ordinarily at a super premium rate.
In the case of the author above, she was asking for production expenses as well as living expenses and thus every sale after the release was money in her pocket. I saw a lot of discussions that centered around the fact that the money the author was asking for was less than what she made as a romance author under another pseudonym, but that argument works only if you presume that she sells no copies.
If she sells no copies and distributes the ebooks only to those readers who contributed, then yes, that calculation is correct, but given that the author had planned to sell the book after she had completed it, the amount of money she would have earned off the book would have been the KS funds + the funds of the sale.
The reader who donates, no matter at what level, may never see a return on her donation. This is why I call it a gift.
Readers who participate in a KS are not business partners or investors or in any kind of shared relationship with the author. Once they gift the money and the KS is fully funded, that money is gone and the reward may or may not appear. It might appear within the time period specified by the author but who can say what might happen such as an illness in the family or writer’s block or a new project that is more compelling. The reader who donates takes on all the risk for potentially no reward.
The author risks nothing. She gets the money; she gets all the production expenses paid. She starts the project knowing that no matter how poorly it might sell, she’s already made a profit–a substantial one. For authors, the KS is amazing. You get your expenses all up front and you get to pocket all the profit. There isn’t any better set up for an author that exists in the current marketplace. I completely understand why there is such a huge pushback against criticism of the KS business model.
But from a reader standpoint, there is little reward and a lot of risk.
2) This is not an advance.
I saw a lot of authors refer to this as an advance or like an advance. It is not. An advance is money a publisher pays an author in advance of royalties earned. And the publisher keeps the first dollar of every sale until the amount of the advance is met and only then are additional sums of royalties paid by the publisher. Additionally, advances are paid in splits. Some part of the advance is paid upon signing, another part on the delivery and acceptance of the manuscript, and finally the last portion on the publication. Some contracts have escalation clauses which pay additional advance money if certain achievements are hit like placement on a national bestseller list.
So in traditional publishing, where the advance appears, only a portion of it is actually paid before the author starts writing.
There are many other ways other than the monetary aspect in which the publisher relationship differs from the author and the donator.
For instance, publishers often do not pay advances until there is a several page synopsis delivered by the author. Sometimes (particularly with new and unknown authors) publishers will only look at full manuscripts, which again, strikes against the pre-payment of an author’s work before it is complete. Additionally, submissions to publishers often include sales numbers to signify past successes. Once the submission is accepted and the advance is paid, the publisher has additional rights. They can refuse a manuscript if it doesn’t live up to their standards. They can ask for changes not only in the cover but also in the content of the book.
The reader/donator has none of those rights. She doesn’t have the right to tell the author that the author should go back and rewrite the ending because it isn’t satisfying or to flesh out characters who aren’t fully developed.
In the ordinary economy of publishing, the author owes the reader nothing. Neil Gaiman is nearly universally celebrated by authors for saying “George RR Martin is not your bitch” in response to demands George RR Martin put out his work faster than once every five years or so. But in the KS business model, you are creating a system in which readers are placed in a position of having the right to demand things from “this isn’t the cover I was hoping for” to “this isn’t the story I wanted” to “why are you giving it away for free” or “why did you blog at this blog when they didn’t donate” to “why isn’t it out yet?”
There are a whole host of unwritten obligations that, fair or not, the reader will start to create due to the super premium that they paid.
Additionally when a project is pitched to publishers, it usually indicates if this is a three book series or five book series or a duology. This is because the publisher wants to know what they are in for.
Recently I saw two authors come out indicating that their books would be trilogies but then extended them beyond that with no determined ending to them. If you funded a Kickstarter, the reader would have no right to have the author wrap the series up and the reader might very well find herself facing another KS.
I read one author share how she did one KS for her book. It was funded and she sold copies after the fact but she overspent her marketing budget and had to go back and do another KS for book two.
So, no, the KS donation is not an advance in any way but one. The author gets money before a project is completed. The reader? She gets nothing until the project is completed, if the project is completed.
The KS is unique in this way and not even traditional publishing gives such beneficial terms.
3) The issue of living expenses
This is not a complaint of mine because I don’t support KS in general, which many long time readers of DA know, as this is not our first go around with KS. Remember the Popular Romance Project? The creator had already received over $1.2 million for her project and was calling on the romance community for even more. http://dearauthor.com/
I was troubled with the lack of transparency and ultimate goals. One of the project’s goals was to maintain a website. Not two years later and the site is stagnant. I’m not sure if even the project creator visits it anymore.
But some readers balked at paying living expenses. They said that they would pay production expenses but they didn’t want to fund the author’s living expenses while she wrote. This was used by authors to proclaim that readers did not either understand that authors needed to eat but also that readers didn’t want authors to be paid for their work.
I’m not sure where “I don’t want to donate in advance to someone’s living expenses” morphed into anti-author, reader entitlement but it did. That logical leap over a big canyon occurred. I deliberately excluded the author’s identities because it’s not about authors, but the concept here.
As to why other people are talking about living expenses, it could be because living expenses are something we all have to pay regardless of our avocations or jobs whereas the hard expenses are something that are above and beyond living expenses. The truth is in every fundraising organization, the hardest thing to get anyone to donate money for is a general fund that pays salaries. People will give money for libraries, monuments, science labs, but they do not like to donate for salaries.
Readers work hard and often work at low paying, thankless jobs. To see a person ask for donations to live when that person is able-bodied and can hold a job, then it becomes less obvious why they need donations for living expenses.
Further, the prospective donor might want more information such as how much are the living expenses. How much is the mortgage, rent, and utilities? If you are asking for donations, is there any way you can live on less and still bring the book to fruition? Are you making sacrifices as I will be to donate to your project? One of the above tweets said that a livable wage is different for everyone and no one should judge but when you are asking people to donate money to make up your livable wage, then people will question it. Just like in a charity, people want to know where their money is going and will it be used responsibly.
This does not mean that readers don’t think authors should be paid, but some prospective donors might want more information before they feel comfortable donating. And it could also mean that readers would simply rather fund an author’s life by buying a book when it’s complete.
Not wanting to fund an author’s living expenses or questioning the amount of the living expenses does not mean that the reader is anti-author, entitled, or wanting something for free. It merely means that she might have more questions or she might rather fund a different author’s living expenses that seem more reasonable or she might rather buy the book at the end, knowing in the case of a self published author that most of the money is flowing back to the author’s pocket.
4) If you don’t like the KS, then why are you even talking about it?
I’m talking about it for all the reasons we talk about book pricing and unfair publisher practices and different publishing models and different royalty issues. I’m talking about it because it affects readers and because I believe strongly that a publishing system funded largely on the donations of readers is not only wrong, but would lead to an even greater narrowing of books published.
Why? Because people are generally risk averse. They will donate to the authors who write books that they know and love rather than unknown, risky projects. If KS are the exception rather than the rule, then it might work in reverse but if KS became the norm? Only the most popular authors, with the largest fan bases, would get funded.
And book buying itself would contract because these projects require super fans to fund at a premium. Most of the kick starters I’ve seen require the buy in to be above and beyond what the end project would call for. In this particular Kickstarter, the author admitted she wouldn’t charge $10 for an ebook, but that was the lowest buy in where an ebook would be provided as a reward.
If superfans are required to pay a premium for each book that they want to read there would be a contraction in the overall volume of sales. Money isn’t infinite for most readers.
5) Bullying, misogyny, etc.
I barely feel like I should spend time on this topic. Maybe bullying happened behind the scenes. I certainly saw none of it and when I asked others to show me where the bullying was, I got this:
Disagreement does not equal bullying, even vigorous disagreement does not equal bullying. There was a lot of name calling on the other side with authors and others saying that those who disagreed with the kickstarter were “evil”, “cruel”, and “mean” and basically should just sod off.
I should note that many people discussed this project without linking to or specifically mentioning the author in question, much as I have done here.
By placing a public plea for donations, this became a public issue and disagreement or discussion is not bullying.
6) But, but what about Veronica Mars, Amanda Palmer, and the fact that kickstarter has existed for four years and you are just now complaining.
Um, no. I’ve never been a fan of KS. It’s not used frequently in the romance community although I understand it has been in the fan fiction community and science fiction community so my guess is that people were talking about it now and learning about it now and forming their opinions now because it was new to some people.
And Amanda Palmer got a lot of flack both before and after her KS. After her KS was fully funded, she then went on and asked others to perform for free for the project she got funded through KS. Lots didn’t like that. Zach Braff KSed a movie and received a ton of criticism for it.
Just over 24 hours later, Focus Features picked up the North American (and some foreign) distribution rights for Wish I Was Here, for roughly $2.75 million. Traditionally, in the indie film world, that acquisition fee would be used to pay back the budget of the film. According to producer Stacey Sher, however, Wish I Was Here’s Kickstarter backers will not see any of the money from the film’s sale. “That’s not the way Kickstarter works,” Sher, a veteran producer behind movies like Get Shorty, Pulp Fiction, Contagion, and Django Unchained, told BuzzFeed via phone. “That’s not what we promised anybody.”
Veronica Mars was slightly different in that it started with a major studio distribution via Warner Brothers. The money was to be placed in a “production account” and would be used for expenses related to production and one part of that would be salaries. Was the breakdown 70% salaries and 25% production expenses or was it something else? I don’t know.
But here’s the major difference between creative KS and ones for movies, technological products, and the like. There’s a big barrier to entry into the market. The costs of production are enormous for a movie, even setting aside salaries. Ditto with manufacturing a product. The barrier to entry for a self published author is minimal and in this case the author herself had successfully brought at least ten books to market by herself without funding.
Further, the rewards that author KS have are generally not really enticing (at least not to me). Other than the book that is signed (which can be obtained for free in many cases), the donator is not rarely something unique. So the reward to risk may feel flimsy compared to the rewards a movie production might offer. The reward to risk ratio may lend itself to part of the discontent readers have with pre-funding a project for an author.
The KS allows the author to shift all the risk of a project onto potential readers (largely super fans). In the above author’s case, she was asking for readers to reduce the opportunity cost—the foregone income she could be making working on a more profitable project such as her romance titles. Obviously only the people who donate can decide for themselves whether that risk is one they are willing to shoulder.
However, not wanting to participate or not wanting to donate for particular expenses doesn’t make a reader anti-author. It merely makes that reader a consumer, maybe a savvy one, who would rather fund the author through buying a completed project. Does that mean some projects the reader loves might not get published? Yes, that might be.
That’s the risk I’m willing to take by not funding KS and continuing to buy books, recommend them to my fellow readers, and give them away. If that makes me a misogynistic, anti-author bully who believes creators should not be paid, then I suppose I’ll have to accept that label even if I don’t believe it’s accurate.
Next week I’m doing my 2015 publishing predictions.