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Crowd-Funding Gets Creative: The Kickstarters of 2014

Kickstarter and Indiegogo together bring in more than half a billion dollars annually for creators, but a new wave of crowd-funding sites are hoping to correct for some of their flaws.
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(Photo: Kickstarter)

(Photo: Kickstarter)

The Internet has broken down a lot of barriers in the world of what we have euphemistically deemed “content creation.” With websites, newsletters, and social media profiles, anyone can publish and promote anything, from blogs to books and feature films. In a perfect world, this means that the usual barriers to entry blockading creative people from reaching a public audience have fallen. But in the wide-open world of digital publishing, we’ve also all become a lot more accustomed to getting our media for free.

Such is the dilemma: Getting everything for free from creators who are only rewarded with exposure is unsustainable, but having to pay for everything we consume means we won’t get to see it all. Consumers are currently spoiled for choice, but content creators who want to make a living from their work have to decide on the best way to monetize their art.

Enter crowd-funding, which is remaking how money flows between artists and their fans. By gathering small amounts from many sources and aggregating it into more meaningful sums that are donated to single causes, crowd-funding sites are directly supporting creators who had previously relied on advertising or traditional publishing for income. And the crowd-funding economy is only just getting started. One report estimates that by 2025, crowd-funding will hit $93 billion annually.

"The reality of free entertainment is that the majority of fans will never buy anything. They don't see the value in it, or they don't want books or any of the physical stuff you sell."

Kickstarter, which handled $480 million in donations last year, and Indiegogo, which processed around $100 million, are currently the biggest names in crowd-funding. The two sites have raised money for major projects, like $10 million for the Pebble smart-watch and $12 million for a Linux-based smartphone.

But as big as they are, the sites have their flaws. By focusing on complicated reward structures, they often force creators into focusing more on mailing packages than working on their projects. They also have little accountability for creators to deliver on their promises, since donations don’t amount to outright purchases. This has lead to projects like the Galileo motion camera and the i+ iPhone case, which funders are calling scams after receiving nothing but excuses for their money.

Jack Conte, a California-based musician, set out to fix these problems with Patreon, a crowd-funding platform launched last May. Conte is one-half of the band Pomplamoose as well as the proprietor of a popular YouTube channel where he posts in-studio music videos. His videos were regularly getting 100,000 views, but YouTube’s advertising system was only generating $50 or $100 each. “I felt like there was a community around my videos,” he says. “I just felt that couldn’t be true, how can my video only be worth $50 on the Internet? The system was broken.”

With Patreon, Conte is “trying to encourage people to pay for people, not to pay for stuff,” he says. By giving a small amount of money—$1 to $30 on average—each month or every time a creator publishes a story or video or comic, patrons create a sustainable revenue stream, not just a one-off infusion of cash. The site still runs on a reward-based system, but it’s more about access to an artistic process than products—those who donate more get to see extra sketches or read blog posts, getting an inside view into what makes their favorite artists tick.

Since Patreon only charges patrons when new content is published or on a subscription basis, there’s less risk of dissatisfaction, and more stability for creators. The platform, which just received $2.1 million in investment funding, is now handling $150,000 in reoccurring payments (a figure that combines monthly and per-item amounts). The webcomic Saturday Morning Breakfast Cereal, for example, receives around $7,500 a month, while Matty Brice gets $713 for every article of video-game criticism she posts.

Meredith Gran, the author of the popular webcomic Octopus Pie, joined Patreon after comic artists and friends like Jon Rosenberg and Erika Moen started campaigns. “The reality of free entertainment is that the majority of fans will never buy anything,” she says. “They don't see the value in it, or they don't want books or any of the physical stuff you sell. Patreon is nice because it has an answer to that. Here's a way to spend very little money, and we've broken down why this is good for you and the creator.”

Gran has raised around $1,000 in monthly support for her comic. She says most of that will go toward health insurance and monthly bills. With Patreon, as opposed to Kickstarter, “first and foremost is the cost of living, not the cost of production,” Gran says. But patronage also requires upkeep and fulfillment. “I think the challenge is going to be keeping people around past the first couple of months, and consistently offering rewards for new people to jump on,” she says.

Crowd-funding’s greatest power is to connect a committed creator to a committed audience, forming a more direct pathway for revenue than advertising or sponsorship by cutting out the middleman (save the crowd-funding sites themselves, which take a cut of donations). Often, the more niche the audience, the easier it is to drive bigger donations. Beacon Reader, a crowd-funding platform for journalists, offers a way for writers covering topics that might not reach a million pageviews a month to earn money outside of advertising.

Beacon offers the “infrastructure to be supported by your audience,” explains founder Dan Fletcher, previously the managing editor at Facebook. Journalists launch a particular project on Beacon and campaign their audiences for $5 monthly subscriptions. The $5 gives subscribers access to every journalist publishing on the site. Seventy percent of the fees go to the journalist the reader subscribed too, and the remainder, minus Beacon’s cut, is distributed among the top-voted publishers on the site.

While Beacon isn’t yet raising Patreon-level amounts (most projects are under $1,000), the journalists are often getting paid far more than they would from advertising, with less labor than a Kickstarter or Indiegogo campaign. As a de-facto subscription service, the site is monetizing the value of niche writing far better than an independent blog might. But again, Fletcher cautions that the platform won’t necessarily make up an entire livelihood. “You should be selling the stories that you can in other places,” he says. “Beacon should be a home for stuff you’re really passionate about or is really wonky. They’re the most engaged readers, most willing to go down the rabbit hole.”

As the audiences of these sites grow to the size of Kickstarter and Indiegogo, they will drive their own momentum, attracting more creators and supporters alike. Crowd-funding is one bright spot in the Internet’s race to push the price of content down—by bringing independent artists and their audiences closer together, it becomes easier to support creation with more than a click. As Patreon founder Jack Conte suggests: “If you like their stuff and want them to make more, if you’re invested in their career as an artist, then pay them to do it.”