Kickstarter Lays Down New Rules For When a Project Fails

An anonymous reader writes "In a blog post, Kickstarter announced several updates to its terms of use for projects. From the article: "Kickstarter has iterated on its policies several times since it launched in 2009, with the most recent wave of revisions surrounding the site's transition from only posting projects cleared by the staff to clearing all projects that meet a basic set of criteria. Even still, some projects lack clear goals, encounter setbacks, or fail to deliver, like the myIDkey project that has burned through $3.5 million without yet to distributing a finished product. The most recent terms revision is timely: on Thursday, science fiction author Neal Stephenson announced that a game he Kickstarted in 2012 with $526,000 in funding was officially canceled."

Comments

All this because Clang went Clunk?

[Applehu Akbar]

More transparency will be a good policy for Kickstarter. It's developing what is essentially a new stock exchange, and in the process is finding out what kind of reporting investors will truly find useful.

Re:All this because Clang went Clunk?

[mysidia]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

It should be up to the backers and an agreement with the backers made in advance, regarding what will be required, not up to some random third party to decide what reporting will be imposed on them both.

Risk aversion

[i kan reed]

What kickstarter is afraid of, is something that can't be prevented: namely that people will need more money than they think to make something(or worse, that they happen to be scammers). Once the money is gone, no form of contract is going to get it back. And any scammer with their salt will run the money through a limited liability corporation, and pay themselves divdends/salary out of kickstarter funds. Then it can just go bankrupt.

There won't be anything to reclaim legally. So if you're going to back a kickstarter project, you have to do it in a risk-accepting mindset. Which for me, it means I only back projects that create things that I absolutely know wouldn't end up getting made otherwise. For you, that might just mean "no kickstarter ever"

Re:Risk aversion

[soft_guy]

What is so wrong with a project failing? I really don't get it. This is a site to donate money for people to do a cool project. If none of the projects are allowed to fail, it would only be really conservative projects. If you aren't willing to take that risk, don't fund a kickstarter. It is not a shopping site.

Re:Risk aversion

[gman003]

Often it's too little money for a loan.

I've backed several book printings. The content already existed. All they needed was to go through the proofing process and have enough cash to do a print run. The former, while time-consuming, is fairly low-risk. With Kickstarter's "no money taken until you meet the threshold" setup, the latter is also pretty guaranteed.

But despite it being a very low-risk proposition, banks don't really help with such a project. It's too little money - one had a minimum of $6000, and even the biggest was only $20K. Likewise, who wants to bring in VCs who will try to take over your business (if not just burn it for profit) for a small project?

Really, I think you're wrong in that you think VCs and banks are a good judge of whether a project will succeed. They really aren't, in many cases, particularly for niche fandoms. And they might also not be good for the business, since they inevitably take a large chunk of the profits for themselves. Some of the projects I've backed could easily have self-funded - but they used Kickstarter to make sure there was enough demand for it to be profitable.

I tend to treat Kickstarter as a sort of preorder system, with the caveat that I need some sort of proof that you actually know what you're doing before I will commit. Many of them have successfully done such things before. I kickstarted Exalted 3rd Edition, since the mere existence of two prior editions is a good indicator that they can make a third. I've kickstarted a few games from new creators that had fully playable prototypes (Superhot and Nothing To Hide). Those were riskier, but still a pretty acceptable risk.

I do, however, shy away from any Kickstarter project that will need additional funding - like Clang, which took all that money just to build something they could show to VCs. That's like paying an entrance fee to a casino - sure, you might still hit the jackpot but those are some pretty long odds.

Re:Good. IndieGoGo should do it too

[ArcadeMan]

Romans: I think we should stop using dirt roads and instead dig a few inches and lay flat rocks in the trench to make our roads.
People of that era: Do you have any idea how much work that would involve? How many flat rocks would be required? Are you nuts?

Early 20th century: I think we should stop using roads made from flat rocks and use asphaltum to make our roads.
People of that era: Do you have any idea how much work that would involve? And to remove the rock roads? How much asphaltum would be required? Are you nuts?

Early 21th century: I think we should replace our asphalt roads with solar roadways.
People of that era: Do you have any idea how costly that would be? This will never work! Are you nuts?

Kickstarter isn't about financial reward

[Overzeetop]

Financial reward isn't the goal of kickstarter backers. Never has been.

Contribute for fun; accept the risk

[sphealey]

People should identify Kickstarter projects out of interest, enjoyment, or just a sense of fun, and contribute no more money than they would be willing to use as kindling to start a campfire. If you contribute $25 in hopes of seeing an indie film completed - great if it does, sad if it doesn't. If you contribute $100 hoping to get a new piece of hardware, don't expect anything other than some p% chance that you will ever receive that hardware or if you do it will work as dreamed. If you don't have the money to lose, don't contribute.

One innovative and clearly risky hardware project I backed has people complaining that the base product shipped 2 months later than planned (hoped) and the premium product will be 5 months late. Um, guys: it was risky. There were commercial alternatives available at 10x the price. You knew that this was an attempt to create a mini-breakthrough, but you're griping because it was 2 months late and the associated app will need some point revisions? Get real.

sPh

Re:Good. IndieGoGo should do it too

[NotDrWho]

Mid 20th century: I think we should build flying cars and make the skies our roadways!
People of that era: That's dangerous and impractical.

Just because an idea is radical and the mainstream rejects it that doesn't make it a *good* idea. Lot's of really bad ideas have been poo-pooed by the mainstream too.