Mar 25 2012
Mass Patronage for the Arts: The Evolving Relationship Between Fans and Creators
Publishing is being remade every day, from print only to digital first; from traditionally published to self published. With the advent of coordinated fundraising sites like Kickstarter, there is a move toward mass patronage. Patronage is a system of private support of the arts that has existed for centuries. The Medicis, for example, were well known for their patronage of the arts. A wealthy person would provide funds for an artist to live on while the artist produced, not necessarily for the patron. But in a patronage system, there is always the question of equality and freedom of expression. What does the artist owe the patron?
Kickstarter works by artists posting about a project and setting different levels of donations. The pledgers agree to pay one of those different levels. If the project reaches its goal, the money is delivered to the artist. If not, the project is cancelled and the money returned to the pledgers.
The Kickstarter pledger gains two things. First they gain some kind of momento. Sometimes it is a mention in the acknowledgments and sometimes it is the product itself. In the case of Scheherazade’s Facade – Fantasy Anthology with big name contributors like Tanith Lee and Sarah Rees Brennan, the base level pledge of $5 gets you a bookmark. To get a copy of the book itself, you must pledge $10 or greater. The second is bragging rights, a sense of ownership and investment in the product. Says the owner of kickstarter:
He also points out that backing a project gives you bragging rights. “You’re not just buying the thing, you’re creating it. You’re in on the ground floor. Getting a bird’s-eye view of how it’s made is exciting.” Good point — one that explains why random, otherwise unaffiliated people are pitching tech journalists on their pet Kickstarter projects these days.
Kickstarter projects lay out the terms, but there is no contractual relationship. The money pledged is a gift and there is no recourse if the Kickstarter project does not deliver. As the terms of service states:
Kickstarter shall not be liable for your interactions with any organizations and/or individuals found on or through the Kickstarter service. This includes, but is not limited to, delivery of goods and services, and any other terms, conditions, warranties or representations associated with listings on Kickstarter. Kickstarter does not oversee the performance or punctuality of projects. Kickstarter is not responsible for any damage or loss incurred as a result of any such dealings.
The backers of a project have no control over the project itself. If it takes 3 years for the project to come to fruition that is part of the process. Should the author decide to give away the product itself, the backer has no recourse. For instance in the case of Tim Pratt, he received $11,241 to fund his next novel in the Grim Tides series. A digital book was given to each backer at the $20 or more level. Pratt then serialized the novel online for free. None of the backers appeared to have commented on this move negatively.
A fan’s generosity is a glorious thing. Cassandra Clare and her flatmates received money from their fans after Clare’s laptop was stolen. The donations were so generous that the amount exceeded the cost of the laptops and an unspecified amount was purportedly sent to charity. In 2008, Vera Nazarian of Norilana books raised over $30,000 to save her house from foreclosure. Vera ostensibly needed only a little over $11,000. A year later, however, Vera was back with news that she was metaphorically under water again. She doesn’t ask for money, but she asks for help selling her book.
Let’s be clear here. No one is forcing people to give money. No one is forcing people to be backers. We presume that everyone is of sound mind and donating funds because they are financially capable of doing so. But at what point does the backer’s money move from charitable giving to an actual investment with an expected return?
In today’s Kickstarter world, what should readers and authors expect in a small number patronage system? I asked around. One reader shared with me that she would never participate in a Kickstarter program because it was simply too close to internet panhandling. An author expressed fears about becoming beholden to the reader in terms of the direction and production of a piece. Another reader shared she had invested in a few kickstarter programs but that she received a product in return.
Sometimes people are irresponsible with the money. As an investor, you might be entitled to an accounting of how your investment is spent and you also get a portion of the profit. The profit is actually what makes investing losses okay because your investments are spread out over a number of projects and the hope is that one succeeds even if ten fail. Some portion, however, of the Kickstarter projects are mere charity. Or gifts, not investments.
When artists start asking for charitable giving from readers and fans, does the “George RR Martin is not your bitch” philosophy apply? Do the rules change?
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Mar 25, 2012 @ 07:44:53
This seems to be related to the “ransom” model that is used in the roleplaying industry.One guy (I forgot his name) basically calculated how much money it would take for him to live of/pay his expenses to write a gaming supplement, so he wrote the outline and pitched it to his friends/followers. If they wanted the book to be written, they put in money.
If/when the creator received the total amount, he wrote the book and put it up for free, and also created a hardcopy version (I believe via Lulu), which was one point where I think he made some extra money.
I believe this was one of the responses to a) the really pathetic amount of money that roleplaying authors got paid, and b) the widespread scanning and sharing (aka: piracy) of gaming books, which, admittedly, were quite expensive and some publishers (like White Wolf) definitely used a “volume model” paired with a “restart and re-issue” model to make a lot of money.
This ensured that the creator at least made what he considered a fair wage for his work and also pulled the teeth of piracy, because all piracy of his work then effectively became pure promotion.
I do see some problems with this model for fiction books: a) What is a fair payment for a novel? b) You already need a platform. c) From this follows that a no-name author might be unable to raise more than, say, $50 (from friends and family). d) An outline of a novel that’s widely available would spoiler the prospective audience, unless you forego the outline, at which point the pitch would be more important, and I know a great many amazing authors who are awful pitchers.
Lastly, putting the book out for free afterwards might kill the royalty stream that people depend on. (There’s a reason why authors like the payment model of advance + royalty – the hope is that the monthly royalty payments will one day stack up enough that people can quit their day jobs).
To forego royalties, the amount to be raised would have to be quite high – unless you want to incur a loss over the lifetime of the novel (which in this day and age is potentially “forever”), you’d have to not only calculate the total gain you’d expect from the novel in any other model, but also fiend enough people who are willing to plunk down a five-figure (say) sum.
It’s an interesting model, but I’m not quite sure how it would work, and I’m skeptical about giving up the royalty stream, since I do hope that that will one day supplement my (very low) state pension and private pension.
Mar 25, 2012 @ 07:47:20
Rich Burlew, the artist behind the Order of the Stick web comic, just raised over $1.25 million through Kickstarter.
http://www.publishersweekly.com/pw/by-topic/book-news/comics/article/50797-rich-burlew-talks-about-his-1-million-kickstarter-book-project.html
(By the way, if you’re not reading Order of the Stick, you should be. It’s fantastic.)
I have only recently become aware of Kickstarter. I love the idea behind it. As a likely Kickstarter donor, I consider the primary benefit to be the potential for future work, or more or better future products, from artists whose work I already value. I do not consider it the same as a business investment and I wouldn’t expect the same level of accounting as I would if I were investing in a company in a more traditional way. Still, if I got burned too many times by artists who failed to produce I would have to reconsider future donations.
Mar 25, 2012 @ 07:48:40
I was a backer of Richard Burlew’s The Order of the Stick Reprint Drive ( http://www.kickstarter.com/projects/599092525/the-order-of-the-stick-reprint-drive ). He needed a littel over $50K to reprint his selfpublished webcomics. His backers gave him $1.2M+. Amongst other things, Burlew promise to publish OOTS every day for a week 3 times until the end of the year. Some pledges also included the publication of strips with OCs from backers and special requests from backers (he’ll write a story featuring the backer’s choice of any character that ever appeared in OOTS), which I think doesn’t imply that he’ll suddenly change what the comic is all about. Oh and through the pledges, he’s pre-sold 25,000 copies of his to-be-reprinted books, which I think is fantastic for a self-publisher. (I think his Update 28 [ http://www.kickstarter.com/projects/599092525/the-order-of-the-stick-reprint-drive/posts/178261 ] is worth reading.)
All this to say that I think I’m ok with fans pledging, so long it’s clear where the money goes. And anyone considering asking for pledges/doing a kickstarter should keep in mind that this is the Internetz. Don’t backstab/back out on your pledgers unless you’re ready for the backlash that comes with it.
Mar 25, 2012 @ 07:56:23
Wow, this is so timely (I am a huge Tanith Lee fan and just donated $10 to Scheherazade’s Facade!)
In answer to the question, I don’t expect anything beyond what’s stated in the project. I do expect that the owner will fulfill the promises he makes. And I’m aware that not all owners do, but that’s a risk I have to take. I do think that there should be some kind of consequences for people who essentially take the money and run… some kind of black mark portion of the website. Although this may exist, for all I know (I’m not a heavy Kickstarter user).
I like the fact that the system removes some of the layers that makes it hard for niche content to reach a wider audience. That’s usually how I donate. For example, I helped fund the Asian-American Writer’s Workshop in New York, which launched on Kickstarter. Funding Scheherazade’s Facade is also somewhat political, in my mind, and I’m satisfied by looking at the names that the artistic content is going to be really high.
The contrast with the stock market is interesting but doesn’t work as well when it includes stuff like penny stocks, which are known for lacking information… and some people still buy them. Lots of business ventures fail quickly and without warning to investors, whether on the small level or the giant. I don’t think these Kickstarter projects are an either-or situation—all-investment or all-charity—and there’s always going to be some ambiguity involved.
Maybe the Kickstarter system is going to evolve so there’ll be more rules and distinctions and accountability metrics.
Mar 25, 2012 @ 08:01:32
Addendum: Just checked the RPG writer’s name. It’s Greg Stolze.
Mar 25, 2012 @ 08:42:09
I too am willing to presume that everyone who is donating funds is of sound mind but I’m not willing to presume that those being donated to are of sound character. Call me pragmatic or simply a bitch but I’ve seen too much online comedy and drama to presume anything about anyone who says they’re a writer.
Supporting the Arts is a wonderful and sometimes noble thing. If George R. R. Martin said he needed money I might send some but it would be because of what he’s already given the community and not because of some promise of future work.
There are all kinds of interest in all kinds of things and it’s great if like minds meet to make a successful product. The kickstarter thing is probably wonderful for some but for me my money will stay with PBS and supporting the writers that have already published (in any form) their completed work.
Mar 25, 2012 @ 09:35:46
I’d never even thought about Kickstarter for books until this post. I only recently became aware of it with an appeal from a local couple to help them fund their dream of a coffee-chocolate shop. Good chocolate a mile from my doorstep, plus helping grow the foodie community here? They’ve pitched to the right person on that one. In their case, they have established a reputation through years of hard work and quality product (selling coffee from a bike). I am aware coffee shops fail all the time, but they have a valid and convincing base from which to build.
To me, in the arts, the same model would work best. For example, an author who has established credentials, whether through traditional publishing or perhaps through giving some work away for free and drawing fans, etc., and who is now seeking backing to, say, finish a series that the publisher dropped, or start a new series she’s always dreamed of and fans express interest in but publishers find too risky. Of course, with self-publishing, you should be able to sell the actual book to pay for your writing career and not quit your day job until you do, but there might be circumstances in which that doesn’t work. (Your publisher went bankrupt. It will take you a good year to produce another good book, and meanwhile you don’t have a day job anymore because you thought your writing career was rosy…)
If someone wants to fund the writing of a book by someone who has never written one before or somehow convincingly established the ability to do so (an extended, well-written blog for example), well…caveat emptor and all that. The number of people I know who have a great book in their heads if only they could get around to writing it might actually exceed the number of people I know. :)
I, too, find people who panhandle for money just as a way to get money annoying. (Like the woman who begged for money on the internet to pay off her Prada shoe credit card bills. And got it.) But I do think something like Kickstarter has fascinating potential, and people can and will use judgement in who they choose to contribute to. It’s interesting to see the way so many models are being overturned or rethought.
Mar 25, 2012 @ 09:37:20
I have supported Kickstarter projects for a film maker, music producer and an art installation so far. All these projects in varying forms and degree were people with a history of producing art and creative projects; their bios were part of my decision-making in supporting the projects and as a backer I have received small elements of the projects as part of the support agreement. I have done this because I value the creative arts and believe the ideas and projects that go ahead add value to our world even if I might never see an art project displayed in Portland Oregon. I think if you are backing projects (I am poor so we are talking small amounts of money) it is important to be clear about why you are doing so and what your personal agenda is. I am less confident about the crowd sourcing funding model being able to work with books for publication except when it is continuing or finishing a favourite series a bit like the Serenity movie finished the Firefly series.
When I can buy an ebook for between $4-$10 would I want to contribute more than that to the book project? Why is this books publication so important that I would give money in support? I might for a non-fiction book and I think the long-form journalism might use this model too but I just don’t see it working for something that doesn’t have a following already or for the average fiction book that fills a generic bookshop shelf.
Mar 25, 2012 @ 10:11:44
I’ve never used Kickstarter, but I did purchase a novel from Steve Miller and Sharon Lee using Paypal with this method. They asked for so much money to write a novel, maybe $300 per chapter- not very much. And everyone who donated $25 or more got a signed hardcopy when they were done, if they met their goal for all the chapters. They posted the chapters online as they wrote them and in the end I got the book. For me, it came down to the fact that I’d purchase any Liaden novel hardcover anyway, and this way all the money went straight to them.
I’d be happy to do this for any author whose works I love. I often wish I could just send them money instead of them getting a pittance for the copy I purchase.
Mar 25, 2012 @ 10:28:11
Judith Tarr has a kickstarter project for a novel. I like her books so I contributed at a level to receive a copy of the ebook. I doubt if I would do so much for someone who is total unknown quantity.
Mar 25, 2012 @ 12:38:54
I contributed to a kickstarter campaign for the first time, where the artists were a known quantity (looking for supplemental funding for a second round of their webseries, and I loved the first round). I’d be uncomfortable with an unknown quantity, or if I’d put in a large amount on something that never came to fruition.
Mass Patronage for the Arts: The Evolving Relationship Between … | Crafty
Mar 25, 2012 @ 13:15:58
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Mar 25, 2012 @ 13:54:55
As a consumer, I think kickstarter is a nice way to have a voice early on about what kind of books, music, art, film, tv shows you’d like to see. With the traditional models, the consumer demand only really shows up at the end, and I think kickstarter has sometimes served a useful purpose in getting the more mainstream “investors” in recognizing the value of the product.
And no discussion of kickstarter would be complete without bringing up the Portlandia sketch: http://www.youtube.com/watch?v=45_iqB4RO34
Mar 25, 2012 @ 14:05:56
I don’t see it as charity, but that is because I invest in people who I already know can deliver the goods – as in I don’t support Kickstarters of people I don’t know about. And I pledge at the level to get the finished endproduct. If I want to support the writer some more – like Judith Tarr and her rewrite of her current YA novel Living in Threes (having been critiqued by Sherwood Smith earlier, who teaches at Viable Paradise apart from being a successful midlist author) – then I pledge at a higher level.
Mar 25, 2012 @ 14:08:57
I think Kickstarter is an awesome service. It is taking the “vote with your money” idea and translating it into a literal application for modern life. Any group or business or artist that you personally think is worth supporting can be supported directly, not through layers of bureacracy or indirect means like going to the events they sponsor or buying their commercially produced product even if they’re only getting a small percentage of that sale. My local film society used it to fund topline screening equipment to show free movies in the park. As with the coffeeshop example above, that was a community investment a lot of us locally felt was worth supporting, even if the benefit is tangential to our lives–just something that would be cool to have as an option for Saturday night entertainment.
Regarding books and Kickstarter, I don’t see using the service to raise money pre-publication as prohibiting selling the book later to people who *didn’t* contribute. I think a lot of self-published authors use it for generating editing and cover costs, and the money is more of a pre-publication purchase than an advance or a patronage. If the author can raise, say, $500 for flat-fee services needed to finish a book to “professional” standards, and 100 people want to buy the book at $5 a month before it comes out, then the author doesn’t have to go into personal debt to release a highly professional product, the fans know the book will be a higher quality than if the author didn’t use a paid editor because they couldn’t afford to, and the fans also know that a professional quality product is more likely to attract new fans which means this author they like will be more likely to keep writing. A win all around. I would be very willing to toss the $5 or $10 I was going to spend on the book already because of liking the author’s previous work in advance to help them get the product out on the market.
I would be much more hesitant if someone wanted money to live on for a year while they WROTE the book, unless it was someone with a looong history of writing books, and writing books that I loved.
Mar 25, 2012 @ 14:23:20
One of things I like about Kickstarter is that it enables the public to give promising new talent a chance to make and distribute art – people traditional publishers, galleries, record labels, or movie studios might not sign because by their models everything has to be the next blockbuster, the next bestseller, or it’s not worth their investment to them. While I’ll back Kickstarters for well-known & established folks, I’ll consider pledging to support an interesting project from a newcomer, too, as my way of supporting the arts. As for the risk of not getting it or it not being good? I’ve bought traditionally published books that were awful, too. Plus, I never invest any money in something like Kickstarter like I can’t afford to lose.
Mar 25, 2012 @ 15:08:24
Basically you’re talking about a new system of patronage/charity. I’ve known about Kickstarter for a couple years. In some ways, yes, it’s very much like panhandling or begging. If you, as a potential consumer of goods, want to give money to an idea, an idea that may never amount to more than an interesting idea in somebody’s head – because the truth is you haven’t a clue if that person can execute – by all means, spend your money.
If a complete stranger walked up to you on the street and asked for money to open a bakery, because, you know, she is a great baker… would you hand over a grand? Or would you run the other way as fast as you could? Yet you are giving that same person the money via Kickstarter.
How would you feel, for instance, if you gave your hard earned cash to someone on Kickstarter and learned that he’d taken a great deal of the money he received and headed off to Vegas for a week? Or maybe Hawaii? Can you afford to go to Hawaii?
I do realize that Kickstarter does a certain amount of vetting, but once the money is gone, it’s gone and you, as a contributor, have zero say in how it’s spent. The process is all about trust, and maybe, just maybe, feeling a bit of ownership if a project ever does come to fruition. I get it. The concept is enticing.
I personally know people, people who have never written a thing in their entire lives, who are using Kickstarter to raise funds now for ideas – ideas for books. Why are they turning to Kickstarter? Because they’ve heard about others who made so much money they were able to quit their day jobs. It doesn’t matter that those people have not yet produced a single thing.
I’m sorry, but how ’bout this novel idea… you write a book first. Actually go through the process of writing a book. Then decide if Kickstarter might be a good resource for funds to help you find an editor and get a good cover artist – because it doesn’t take any money to upload to Amazon, Smashwords or Barnes and Noble.
Mar 25, 2012 @ 19:15:28
Diane Duane ran into difficulties with a crowd-funded book – though she did come through eventually.
http://boingboing.net/2011/02/02/diane-duanes-crowdfu.html
With any form of prepayment – whether it’s for an artistic project or something from EBay, you’re going to be making a judgment on the likelihood of receiving what you paid for. And in some respects you might choose to spend considerably more than actual cost of the item, because of your respect for the artist or high desire for the object.
I participated in the recent DoubleFine Adventure Game Kickstarter (they were asking for $400,000 and received over $3M) because I love adventure games and want to see a resurgence in the genre.
If someone runs a Kickstarter my way for a person who has never written a book before, who has a “great idea”…they’d have to have a really entertaining pitch.
Mar 25, 2012 @ 20:38:04
I’ve “invested” in The Letters of Note coffee table book via Unbound
http://unbound.co.uk/books
which I gather is something like Kickstarter, albeit only for books and is based in the UK. I put in $50 and given that I will get a large hardcover book for that, fairly unique and with my name in the back as one of the people who made the book happen, I thought that was a pretty good deal. I don’t feel I have any say over what goes in the book or anything else – I just wanted to help it get published and, given the price of such books here, $50 was, I thought, fairly reasonable. I thought it was a good idea for a gift too – I’m still thinking about contributing some more money and getting my mother’s name put in the back too.
Mar 25, 2012 @ 21:16:46
I’ve only invested in one Kickstarter project (which has 14 days left — http://www.kickstarter.com/projects/alexwoolfson/artifice-graphic-novel-print-drive). In the case of “Artifice,” the project was available for free first as a webcomic, and the Kickstarter allows you to fund/pre-order/get fun bonuses on the print version.
There was also a Kickstarter for “The Epic Adventures of TJ and Amal” which I very much wish I had participated in. Didn’t find out about it until it was too late. If another one happens for volume 2, though, I am so there.
The site is also great for gaming. There are so many niche genres that the big companies won’t publish because they might not appeal to a mass audience. This way, creators can create games and actually get them to the niche audience who wants them.
That said, it’s like anything else you’d put your money into. Smart to do research on both the project and the creator.
Mar 25, 2012 @ 21:38:19
Oh, note: I know Alex Woolfson, the creator of “Artifice.” But I was a fanboi way before I was a friend. :)
Mar 25, 2012 @ 22:28:51
You mentioned;
“An author expressed fears about becoming beholden to the reader in terms of the direction and production of a piece. ”
How is this different from the current publishing model in the big 6 (or 5or whatever the major publishers are numbered now)? That’s the main reason there are “fads” in genres. I’ve been vampired, werewolved and angeled to death over the past few years (and ok, I admit I like it!) but in reality when a mid list author (and sometimes even a big name author) comes up with a unique, wonderful new idea, good luck pitching it because if it isn’t what sells currently as a fad or subgenre you haven’t got a chance in hell of getting an agent to rep it. In this case your beholden to the publisher, but truthfully if I were an author I think I’d rather be beholden to the reader than the publisher (at least there would be more variety that way!)
Mar 25, 2012 @ 23:05:29
I am with Julia Rachel Barrett on this. Whatever did, indeed, happen to working hard, writing on the off work hours, and paying your dues? Writers far better than those hocking good people for money to support their “art” have raised families and held full time jobs while getting up at five in the morning to write a thousand words or less.
I once saw a musician begging for money on facebook. He called it “supporting my art.” He should have been looking for a real job. There was no reason why he couln’t work.
I also once saw a book reviewer soliciting money on social media and through e-mail. This was allegedly for support so he could continue to write his reviews and survive. Authors he once reviewed well were slammed with e-mails asking them to support him. What wasn’t mentioned was a huge scandal that questioned his integrity and his reviews not too long ago.
If people want to contribute to these things of course they should. I just hope they think twice and vet before they do it.
Mar 26, 2012 @ 02:51:31
A great article, and I must say I’m tickled to see Scheherazade’s Facade mentioned here and in such positive light. You’ve addressed a lot of the issues and possible pitfalls that can come from crowdfunding, but also illustrated its strengths.
With Scheherazade, we’re talking about a book that’s essentially been done and ready for two years. (Minus last minute edits, revised stories, updated bios – that sort of thing). I’m looking at this as pre-selling a book, getting pre-orders for a product which already exists in every way that counts. You make your pledge, you get a book (or books). Which is why whenever I get those rare pledges that don’t even have a reward attached, I’m pleasantly surprised and a little baffled. They’re pledging because they want us to succeed, but don’t want to share in the end product? Hey, it’s their money. I appreciate the support, the authors appreciate the support, and so on. But what makes me happier are the people doing this because they want to read this thing I’ve spent so much time and energy putting together and agonizing over. And I understand full well what sort of social contract exists between me and the patrons/pledgers/donators. If I don’t deliver, I might as well move to Siberia and take up rock fishing. :)
I’ve pledged to a few Kickstarter projects myself, but they were with authors I trusted – C.E. Murphy promised her fans a novella if she made her goal, and the response was so overwhelming that all contributors ended up with several short stories and the equivalent of a full-length novel. A good investment for all involved! I’ve seen a few projects I wouldn’t touch with a ten foot pole, where some author with no track record at all was asking for ludicrous amounts of money for a project that didn’t even exist yet. It all comes down to common sense. (Or whether you want to help fund the world’s first pizza museum and restaurant…)
Kickstarter is like any other investment venture: you put in your money, and you take your chance. Go in well-informed and you;’ll likely be happy with the result. Throw your money at any old thing and you might be disappointed. The important thing is that it’s a viable solution to existing problems. No publisher willing to back Scheherazade’s Facade had the money to do so, no publisher with the money was willing to risk it on something so esoteric. It took going outside the normal system, appealing to the fans and potential audience , to not just solve the problem but aim a lot higher than originally intended.
Sorry for the lengthy digression. I’ve had a lot of time to think over this, and it fascinates me on all levels.
Mar 26, 2012 @ 03:37:41
@Lily LeFevre:
This is exactly the way the authors I support use Kickstarter – the finished product will eventually be available to buy for everyone, we just support it first – and get it somewhat cheaper if we’re lucky.
Critical Linking: March 26, 2012 | BOOK RIOT
Mar 26, 2012 @ 05:01:40
[...] can’t tell if the trend of supporting writers on Kickstarter is a lifeboat for authors or a death rattle. /* Read [...]
Mar 26, 2012 @ 07:54:45
Judith Tarr is asking for a reasonable amount to pay for editing and a cover– I think she has received more than she has asked for and has now promised some bonus short stories to contributors. This doesn’t really strike me as being close to pan handling.
Kickstarter allows for more to be contributed than originally proposed but people who post projects cannot reduce the amount just to get the money pledged if the goal is not reached. It guarantees a certain amount of interest in a project.
I looked down through current fiction projects and recognized one name. Had it been for editing of the book I would have kicked in. I read the Kindle version which started out good but had me rolling my eyes by the fifth chapter. Good ideas, dull execution.
Mar 26, 2012 @ 08:27:30
@Michael J Jones – I don’t see a kickstarter donation as an investment for the most part. To me its largely a charitable donation (too bad I can’t write it off). An investment, to me, is when you have some expectation of a return. In many cases, the lower amounts results in nothing more than an intangible. Let’s say I backed a project and my money represented 1% of the backers. The project goes on to make $100,000 in profit. An investment would suggest that some of amount of the profit would be returned to me, the investor. As an entity receiving the money, what duty does she or he owe to the investor? Certain types of investment dealings create a fiduciary duty between the investor and the beneficiary. I think Kickstarter raises some interesting legal and ethical questions.
Mar 26, 2012 @ 13:48:09
To Jane and @Michael J Jones – I agree, Jane. Kickstarter does not entail any fiduciary duty on the part of the beneficiary to the investor. If I give money to a project I am giving the money without expectation of any return exactly the same as if I give the money to a homeless man who has come up with a cute catch-phrase on a sign. I don’t see any legal difference.
Let’s get down to brass tacks. I’ve owned and operated a restaurant and a catering company. I’d love to open a bakery. However, I think those of us who’ve worked in the food industry will agree that the vast majority of restaurants, bakeries, etc. fail within three years. The start-up costs pale in comparison to the day to day financial reality of running a restaurant. So say that instead of putting together a business plan and approaching a bank for a small business loan and line of credit, or putting together a team of investors (who expect a return on their investment) I ask for my start up costs via Kickstarter. What happens when I need more money within six months to keep the restaurant afloat? Do I come back to Kickstarter and beg for more money? What about six months after that?
I want a horse. Seriously, I want a horse. Anybody want to give me some money so I can have my own horse? What if I can’t afford the monthly expenses? Will you pay the monthly fees for board and food and training?
Yeah, I’m a cynic. People have made money via Kickstarter. Some projects have succeeded, many more will not get off the ground. This is not investing. This is giving away your hard-earned money. Yes, by all means, feel free to do so, but don’t pretend that this is some investment that will provide returns. It’s interesting. It’s unique. It’s a catch-phrase. That’s all it is.
Question… Is the money received considered taxable income by the IRS?
Mar 26, 2012 @ 16:09:07
The difference between a charitable donation and Kickstarter is that when you pledge to support a project on Kickstarter you DO expect to get something in return — you expect to get whatever reward is listed at that pledge level. If the Kickstarter says pledge $20 and get a signed copy of the book, you expect to get a signed copy of the book if the Kickstarter makes its goal. If you donate $20 to a charity, though, you don’t expect to get anything in return except the knowledge that you’re helping people (and, yeah, a tax deduction).
And it’s no more an investment than buying something at a store. If I pre-order a book at Barnes & Noble, I don’t expect to get a percentage of the profits that B&N earns from then on. I expect to get a copy of the book when (and if) it’s released. And, really, that’s much more what Kickstarter is like — pre-ordering.
FWIW, I expect to use Kickstarter as an author sometime, but it’ll be after the book is written, so I can raise funds to cover standard publication costs like editing and cover art. I don’t see this as being much different from a publisher running a sale on existing titles to come up with money to pay for editing, artwork, and printing for a new book. Or, even closer, a publisher getting pre-orders for a book to come up with the money to print it. (The big 6 might not do the latter, but smaller pubs do.)
As for doing a Kickstarter to buy a pony, I think that’s why Kickstarter has to approve projects before they can go live, to weed out things like that.
And, yes, I would expect that money raised via Kickstarter would be considered taxable income by the IRS, same as if you sold the book, game, movie, CD, artwork, etc., directly.
In the end, if you aren’t comfortable pledging to a Kickstarter project, don’t do it. But then I’d also say don’t pre-order anything from any companies, either, because there’s nothing to stop even a Big 6 publisher from going belly up and leaving you with nothing to show for the money you paid for your pre-order.
The fact is, thanks to crowdfunding there are books getting published, movies being made, music being released, technology being developed that wouldn’t happen otherwise because the traditional avenues don’t consider them a big enough money maker to pursue. To me, giving creators another way to get stuff out there is a good thing.
Mar 26, 2012 @ 16:46:33
So “invest” was probably not the most accurate term I could have used. I apologize and agree that it’s not like investing in a company where you might make more money as a result. Kickstarter works best when there’s a tangible result for your pledge: a book, or a CD, or a movie, or a collective farm, or a new restaurant, or so forth. One would hope that in the case of restaurants or anything else which is set up to last over time, as opposed to being a one-shot arrangement, they have the know-how and luck to make it work. I don’t see Kickstarter letting anyone come back to do a second fundraiser if the business starts failing six months later.
For what it’s worth: Scheherazade’s Facade hit its goal today. That means that everyone who chose to back us will get their reward. For the vast majority, that means they get their book. Product delivered for money received. For those who didn’t choose the book options, I guess they get warm fuzzy feelings, and a bookmark if they want it. Just to indulge my curiosity and dreams, I announced that if we hit a high enough secondary goal, there will be a second anthology at a later date. But I’m very clear on the fact that it’s still in the extremely early planning stages. I’m also trying to suss out the logistics of how to make it work, so no one who pledged to the first book feels left out if they decide they’d want a second as well, and so people interested in the second can get involved without necessarily picking up something they don’t want and…. Yeah. We’ll see what happens. I don’t want to take anyone’s money unless I’m giving them something of value in exchange. :)
Mar 26, 2012 @ 19:58:58
@ JRB “Yeah, I’m a cynic.”
Me, too. I also know what hard work is like, how hard it is to write and work full time, and I’ve done it without asking anyone for a free handout. It takes years. Mary Higgins Clark worked full time commuting to NY, as a widow if I remember correctly, and raised a family while writing in her spare hours.
Mar 26, 2012 @ 20:12:53
I have given money to two filmmakers via Kickstarter and IndieGogo, which is a similar service.
I met the director of A Reasonable Doubt (http://www.indiegogo.com/ARD) when I happened to sit next to him at Sundance Film festival a couple of years ago, and had to ask him about his filmmaker badge (he had another short, Close, in the festival). Two years ago at Sundance was the first I had ever heard of Kickstarter, but it was all the buzz there.
Unlike a book project, Tahir, the director, has several levels of contribution and you can get a DVD on up to being named an executive producer of the film. I have to admit, the vanity of being able to be called a producer on something is quite appealing!
For both projects, they either posted a storyboard or an intro video explaining the project. I’m not sure you could give away as much for a book proposal.
I like feeling like I’m helping a struggling artist be able to do more work. And, I hope that these two film makers will send their films to our town’s little film festival.
I don’t view it as an money investment where I will expect a monetary return. It’s a feel good return for me.
How did contributing make me feel? It made me feel, at least in a small way, part of the creative process.
Mar 28, 2012 @ 12:43:48
Just to clarify, none of my backers “responded negatively” to my decision to serialize the book for free because… that was the plan all along, and was explained right there in the Kickstarter proposal. It’s the fourth reader-funded serial I’ve done that way (though the first where I used Kickstarter — in others I just solicited donations.) The advantage of getting the e-book with a donation was being able to read the whole thing right away, instead of gradually over the course of six months.