Has Kickstarter Peaked?

Nerval's Lobster writes "Kickstarter has taken off in the past year, raising big money for a wide variety of projects. Look at some of their stats: in June 2012, only seven projects raised more than a million dollars apiece; in the past nine months, another 16 projects have passed that threshold. Since the site began operations in 2009, several of the 38,000 funded projects have broken out as superstars, including the Pebble Watch and a new gaming console. With all this competition, has crowdfunding gotten, well, too crowded? Is Kickstarter peaking? As the dollar amounts have grown, so has the potential for abuse. Hidden amidst all these success stories and multi-million dollar payouts are some sadder tales. The majority of the nearly 50,000 unfunded Kickstarter projects received less than 20 precent of their funding goals, with 11 percent never even getting a single pledge."

Comments

Yet another one.....

[antifoidulus]

Has "Has X peaked?" articles peaked?

Re:Yet another one.....

[goombah99]

I just started a new Kickstarter project to create the next kickstarter. Please sign up.

Does it matter?

[gweihir]

Kickstarter itself cannot reasonably be used as source for projects to be funded. If there is a project you are potentially interested in, you have to get it from some other source. But that is fine, first and foremost, Kickstarter organizes the "business" side, having "advertising" separately is not an issue. And of course there will be a lot of projects nobody is interested in or that have unrealistic goals or are otherwise "fishy". Again, so what?

Re:Does it matter?

[Baloroth]

"Kickstarter itself cannot reasonably be used as source for projects to be funded."

except it has been, continually, and successfully. We're talking multi-million dollar projects now.

He means "as a source to learn about projects to be funded", not "as a method of aggregating funding." Hence his mention of "advertising." He is right: it's almost impossible, browsing their catalog, to find which are good projects and which aren't, given how many projects there often are (you can do it, but it's quite a lot of work). The only real filter is by already popular projects, which means that project has already gotten attention from external sources. Every project I've funded on there I've found out about through a different site.

Re:Does it matter?

[garyebickford]

My associates at Space Finance Group recently assisted National Space Society in their successful Kickstarter campaign, "Our Future in Space".
Without telling too many 'secrets', there are some fundamental ideas to keep in mind. A good campaign needs publicity, and a network of people who already know about the project and want help out, a great video and KS website page, and a killer set of rewards. There are some websites (kicktraq.com is one) that provide useful data about specific projects, and about how the whole thing works - sorry I forget the others. Basically, your project is going to depend very strongly on how many of your network are motivated to go to Kickstarter, sign up and pledge. And make sure the rewards appear to be 'worth it'. We just looked at an IndieGogo campaign where a $4 trinket was the reward for a $100 pledge. Sorry, nobody's going for that.

And, assuming you succeed, be aware that KS takes 5%, Amazon takes 8%, and your rewards (if you have good, attractive rewards) are going to cost on the order of 30%. With other miscellaneous expenses, your real return will be close to 50%. (Funny, that's approximately the 'cost of sales' in most businesses.) Plan your project accordingly. Of course, if the reward is the product, then that helps your costs.

Nothing really changed

[Anonymous Coward]

Kickstarter didn't really change anything. The success stories have been on the back of great marketing campaigns done by experienced marketeers. Hence, Elite and Ouya were able to make money, without really offering very much that couldn't have been done anyway (Braben couldn't get publisher money for Elite? Of course he could - but the Kickstarter money has fewer strings attached, and no penalty if he screws it up). Often, Kickstarters will already have funding and just need a bit more to launch - it's a pre-order system, and really does nothing to help start new ventures. And as with everything else, you need to get your head above the crowd. Not everyone can do that - by definition - so there's bound to be a majority of failures and a few stars. But the market already worked like that, so nothing has changed. Fundamentally you still need a business with a product that people want to buy, and you have to reach those people with marketing. Kickstarter doesn't help with any of that - why would it?

Saying it's "peaked" is missing the point. It assumes that Kickstarter was meant to be something it never could have been anyway. Once you ignore the hyperbole of what Kickstarter thinks it is, and look at what it actually is, there's no case to answer. It's a website serving a purpose, and that purpose hasn't gone away, but nor is it greater than what it really is

Re:Nothing really changed

[Vintermann]

The claim that nothing has happened with kickstarter that wouldn't have happened otherwise is nice and untestable, as we can't run history backwards and try what would have happened without it. It's still silly and obviously false.

What Kickstarter provides is a mechanism for overcoming a collective action problem. You might be willing to pay $15 to make a Veronica Mars movie, but you're not going to pay $15 for a Veronica Mars movie that's made on a $15 budget. Kickstarter lets you conditionally commit to something, the condition being that the product can be realized to an acceptable quality (as measured in budget. Not the perfect measure, but it's the one you've got). This is a service which has been able to large scale investors before, but not to end users/consumers/what you want to call us.

Project starters on the other side, get a low-risk way to gauge interest in the product. A conditional preordering scheme is not the same, because they can't reserve the purchase amount. Companies that have conditional preordering schemes have had big issues with people committing to buy, then changing their mind when the product actually got produced. (The board game company GMT has had this problem. It has led to some flamewar/meltdowns on BGG.)

This is a real, tangible difference which can be predicted to make a difference in market outcomes.

This is also why the "flexible funding" schemes of sites like IndieGoGo is such a scam. They really do offer nothing new. It's just fundraising on a website. Crowdfunding without the threshold pledge mechanism is not deserving of the name.

Re:Nothing really changed

[dintech]

I am one of the backers for the Elite Kickstarter. I think the 'strings attached' bit is probably quite important for an elderly game like Elite. Lets say hypothetically that worst case, someone like EA was the publisher. Everything would be micro-transaction, autolog bullshit with an annoying soundtrack you can't turn off and a 'hey radical' southern-california commentator giving you a mind-meltingly droll tutorial on how to be the hottest, slickest new pilot in the galaxy with pats on the head every 5 minutes. It would need to be themed on a music festival, surf exhibition, frat party or some other 'down-with-the-kids' irrelevance. Of course there has to be a leader board from which some 16 year old ass-hat leaves an audio-message for everyone declaring his teabag is the biggest.

You would have to deal with the fallout from some EA Exec demanding that every time you destroyed another ship, crashed in to one or came with a few metres of one, you get a 3 second cut scene that pauses the action because "it's more 'Michael Bay' that way". When you finally dock after many, many, wooshing, spinning, exploding menu options, you get the pretty much compulsory option of using real money to get rid of your wanted status or whatever, which is probably the only way to progress since like an Ikea store, there seems to be no way to circumvent what you don't want. Every couple of AU that you travel you'll get.... an achievement! Awesome! You will be able to buy 50 achievements with your real money and then sell them for new ships or some other weird artificial game mechanic, all while enduring commercials from "out trusted partners". This certainty was all but avoided because of Kickstarter. I rest my case.

Re:Nothing really changed

[Hatta]

Braben couldn't get publisher money for Elite? Of course he could - but the Kickstarter money has fewer strings attached

Braben is an artist. This gets him artistic freedom, which is exactly what game development has been lacking over the past decade. Same with Brian Fargo. You think he hasn't tried to get a turn based RPG made this century? I'm sure he has, but hasn't been able to for business reasons. Kickstarter made that possible.

Ad

[Vintermann]

This blog reads like a huge ad for the dozen various companies that have popped up to try to leech off would-be Kickstarter project starters. Some people are obviously taking the lesson about selling mining equipment to gold diggers to heart.

Lack of Publicity

[StoneyMahoney]

Pointing the finger at under-achieving projects as evidence of some kind of peak is silly - under-publicity is more likely to be the cause there, especially for projects that get nothing at all. I seem to recall iTunes have a similar problem for a lot of it's artists, I can't find a link for it but a huge % of tracks on iTunes were reported at one time as having 0 purchases. IIRC it was something like a third. Looks like people are prematurely worrying this is a bubble, which is understandable considering the economic damage we've suffered over the past 15-20 years thanks to bubbles.

Re:Lack of Publicity

[bobbaddeley]

Definitely this.

We have a kickstarter campaign going right now, and we've posted some of our behind-the-scenes stats: http://portablescores.com/behind-the-scenes-of-a-kickstarter-project/

Our video has less than 2000 views; of course we're failing. We've done everything we can to get publicity, but we're doing something wrong, or we're just not lucky. Kickstarter failures are more a testament to one's ability to tell a story and get publicity, not necessarily to the product.

Slightly shamed plug (I would be remiss if I didn't post): http://www.kickstarter.com/projects/bobbaddeley/digitally-connected-portable-scoreboard

Betteridge's law of headlines

[Xugumad]

No.

Seriously though, probably not. It's experiencing a dip after it's initial surge of interest. It's not a roller coaster, or a rocket, it's a company. It will have ups and downs. Demand will fluctuate over time. It can experience market saturation (those of us who have now kickstarter-ed so many projects that we need to wait for some to finish before we pay for more).

Also; what's this nonsense about 50,000 projects and not getting near their total, as if that's a bad thing. It's not a magic money tree; most of those projects probably didn't interest people, so they failed at the first hurdle. That's not a tale of woe, that's someone being saved from spending months/years of their life developing a product that wasn't going to sell.

Sounds about right

[TheRaven64]

Most projects are bad ideas or don't appeal widely enough to be worth funding. The point of Kickstarter is to cut out the middle man between people who want a product or service and people willing to provide it. It isn't meant to fund things that there is no market for, it is meant to directly connect the funding for things with the existence of a market.

Kickstarter has peakerd for me.

[tuppe666]

I mainly pick up games on kickstarter...and initially games were pretty cheap about $5, the companies got seed money during development, and maybe I get a game...all of a sudden those games have shot up in price to $20, its gone from funding development to payment upfront...I haven't funded a game in a while.

Isn't that the point of crowdfunding?

[InsaneLampshade]

Not every project can be successfully funded.

If "the crowd" don't like your project then it's not going to be successfully funded. The site isn't an automatic "setup project receive money". The harsh reality is that most ideas don't receive funding, this is true whether the source of funds is a crowd of people or one very rich person.

a) your idea isn't very good
b) your idea isn't very well presented
c) nobody sees your idea

Blaming any of the above on the platform you use to get funded is silly.

Re:Isn't that the point of crowdfunding?

[Seumas]

The primary problem Kickstarter is having right now is that they let just about anything in, so it's flooded with crap. They don't even adhere to their own rules (like, no "fund my life" projects and no charities -- but just recently there was one to fund someone sending their kid to camp for a week). The other is a lack of vetting. When your entire business plan is "get a cut of funding given to successful projects", you need to make sure people feel safe and some degree of trust in backing things via your site. If you let in a flood of scams (and there have been a number) or things that are clearly poorly thought out from the get-go, you are damaging the entire crowd-funding concept. It may cost more money, time, and other resources -- but they need to start vetting people and projects. That you are who you say you are. That your project even makes sense, etc.

The recent four or five "build the death star" and "defend the galaxy from the death star by helping fund the rebel forces X-Wing project" joke shit doesn't help, either.

I don't know, Yogi

[paiute]

You mean that Kickstarter is so popular nobody goes there anymore?

Re:When will we get it from an ethical bank?

[garyebickford]

non-profit banking associations thaf obviously won't even think about playing on stock exchanges

Here in the US, they are called Credit Unions. Most CUs are ethical. They work by lending their own members' deposits to members. Some/most (all?) are managed in part by members, at least in the sense of having an annual meeting where whoever shows up can vote. Generally CUs must be tied to a particular group - employees at a business, residents of a certain area, etc.

I use CUs for all my business where possible.