Does Online Crowdfunding Actually Reward Innovation? (strategy-business.com)

Slashdot reader Anirban Mukherjee is an assistant marketing professor at Singapore Management University who led a team analyzing every Kickstarter project ever launched in nine product-oriented categories. An anonymous reader summarizes their results: One 2013 report predicted $96 billion a year in crowdfunding by 2038 -- nearly twice as much as what's currently funded by venture capitalists. (In a foreword, AOL co-founder Steve Case touts the potential of crowdfunding for "the rise of the rest.") "Many have predicted that online crowdfunding will democratize product development," writes business journalist Matt Palmquist, "allowing small entrepreneurs who lack the contacts, resources, and experience of larger companies to overcome economic, geographic, and social barriers on their way to market." But a large-scale analysis discovered that the biggest barrier may be consumers themselves. "The study's authors found that the amount of money pledged increased when the product description emphasized either originality or utility -- but dropped when both attributes were mentioned. The findings suggest that the crowd does not yet prize true innovation."

"The authors posit that the high degree of ambiguity surrounding crowdfunding might scare consumers away from supporting groundbreaking projects. In the typical shopping context, they point out, consumer regulations protect the buyer. But in crowdfunding, consumers may never receive the product... Another study found that more than 75 percent of successfully funded Kickstarter projects are significantly delayed... 'We speculate that the higher level of uncertainty in the crowdfunding context drives backers to choose modest innovations and shy away from more extreme innovations, i.e., innovations that are high on both novelty and usefulness,' the authors write."
After reviewing 50,310 projects, the team concluded that crowdfunding "may not be the panacea for innovation."

Comments

It's tough to make predictions

[Anonymous Coward]

One 2013 report predicted $96 billion a year in crowdfunding by 2038

Trying to predict technology and economics 25 years out is sillier than trying to forecast the weather that far.
What would 1976 predictions of 2001 computer investment have looked like?

originality IS innovation

[gurps_npc]

Utility is something that happens AFTER the product is created.

A truly original product has unknown utility. We didn't know what you are going to use the internet for before we invented it.

When someone claims both utility and originality before the product is created and sold it is a key symptom of a scam artist. They are claiming that they personally created a unique, wonderful project with tons of use - and that everyone else was a moron for not thinking of it's obvious uses before them.

You can discover massive utility for a slight innovation, or you can discover a huge innovation with unknown utility. But when people talk about both, they are most likely a scam artist.

Re:Not sure what's being said here

[Anonymous Coward]

Well, the original iPhone was pretty useless. There was no app store. There was a very limited set of provided apps on it. At that time, Windows Mobile was a better option (Symbian sucked, but at least was more powerful). Hacked phones and apps made by people doing hacks to the OSX SDK at least provided some hobby potential to the original iPhone. It was when they made an official SDK and introduced the App Store that the iPhone had true potential. The 3g was probably the true turning point in not just having access to useful apps/games, but also having enough bandwidth to make it useful as a true mobile device.

Why should crowdfunding be for innovation?

[gweihir]

Crowdfunding allows the creation of goods that the have a smaller number of people interested in them and that would not exist otherwise. Nothing says that these goods need to be "innovative". If I and 10'000 others keep the creator of a web-comic financed because I like his comic, that is not innovation. That is merely funding a specific form of entertainment that appeals to a smaller number of people and that the commercial publishers with their focus on the mass-market would never have funded in any way.