Interesting (if a little one-sided) discussion with @KBAndersen on new model of crowdfunding compared to old model of NPR pledge drives.
Relative to NPR/PBS-style pledge drives, Crowdfunding has very specific mechanisms. Here are the three big ones in my view:
- A crafted pitch targeted at a well defined set of people who want some product or service to exist — typically focused. Can be broad or focused though. Focused often works well since people respond well to specifics. But can be broad. A specific $ target for the campaign; pledges only convert into $ when the target is reached via total pledges. This is a big change; addresses the free rider problem of public radio pledge drives etc.With crowdfunding, everyone knows # of funders who have to sign up for funding to happen.
- As a crowdfunding donor, you know your $ only goes in if enough other people contribute–you won’t be dupe funding free riders.Which makes people more likely to pledge–much more fair. You’re not out anything if too many free riders relative to pledges.
- Therefore, incentive for people who pledge to also recruit friends and others with same interest to pledge. “The more of us who contribute, the more likely the project is to happen. And nobody’s out anything if it doesn’t.”
Finally, all of this is run on Internet/smartphones, with total visibility, easy connection to social networks, etc. It’s like direct democracy for making economic things happen. One click = one vote = one dollar. Feels fair throughout.
Two possibilities of crowdfunding:
(1) Specified # of people show up to fund, and all happy, feels fair. Or…
(2) Specified # of people fail to show up, in which case nobody feels like a sucker, dupe.
Resulting product/service can still be available to all. Crowdfunders made it happen.
A big interesting question is, what would world look like today if crowdfunding had existed (with Internet/smartphones) for 100 years. So much of today’s non-crowdfunded economic activity is based on guesswork and investment before the fact.
Only real precedent for crowdfunding: What authors used to do–place classified ad for book in newspaper; only write if people order. 3D printing is ideal match to crowdfunding: crowdfund design for new product, and then do 3D printed production run for exact # units.
Renaissance of American manufacturing on horizon. New funding, marketing, production, and distribution models at once. Crowdfunded campaign may specify exclusive access to funders as option. But assume for news/journalism donors will want open access by all. Thought experiment is what if 1 billion people had crowdfunding app on phones, checked every day. Think that’s where it’s going. (@Crowdtilt 🙂
[If you are not following @pmarca on twitter, you are missing out. A brilliant, curious, opinionated mind.]