Why I’m Basically Done With Crowdfunding

Anyone who is reading this likely doesn’t need me to explain the epic rise of crowd funding that has happened in the last 5 years or so. An idea most people would have once laughed at, it’s now become not only a popular way for small and sometimes big projects to help get the funding they need, but also a very profitable industry for the handful of popular platforms that facilitate it. Beyond the most popular pioneer that is Kickstarter, we also now have spins on the pre-funding idea, including things like Steam Early Access, which allows you to buy into products that are within some stage of production and also Patreon, a site that allows you to fund individual creators on an ongoing basis, instead of individual projects. There has never been more ways for fans to contribute to projects they love that might not get made any other way and indeed, many think this is a golden age for independent artistic projects.

Yet, despite diving deep into this kind of funding model at its outset, I’ve decided that with the occasional exception, I’m basically done funding stuff this way. I’ll explain why but the crux of it boils down to one word: accountability.

Kickstarter doesn’t allow me to directly link to the page that shows the projects I’ve backed so here’s a PDF of it at time of writing. As you can see, I’ve put a lot of money into a lot of stuff, mostly video games but other things too. The checkmarks denote what projects have delivered and as you can see, the majority have. You might think I’ve got a pretty good track record backing successful projects and are wondering what my problem is. Well, it’s multi-part.

First, most of the projects that have not yet delivered and indeed, even most of the ones that have are extremely late. I’m not certain but I think there’s a good chance that literally nothing I’ve ever backed on Kickstarter has come out when the creators stated it would. Most projects that did ship were well over a year past due. A few undelivered ones in that list like Nekro, SpaceVenture and M.O.R.E. are over two years late, approaching three.

Second, many projects that did ship fell well short of my expectations and many others as well. Broken Age, Strike Suit Zero, Planetary Annihilation, Mercenary Kings, Video Games: The Movie, Carmageddon: Reincarnation, Starlight: Inception, Republique, TAKEDOWN: Red Sabre and the Idle Thumbs podcast all either didn’t live up to their stated promises or were just very disappointing. They’re all projects that had the funding and supposedly, the talent to do well and they all failed at it.

Last but not least, there’s the projects that have just plain died and run off with the money. I’m lucky in that compared to some, I’ve only backed a couple of these duds. Kate Mull’s Tingly Sensation ASMR documentary largely went dark a long time ago. There’s also been rumours that the lead developer of Nekro has shut down his studio before finishing the project and the Early Access version is no longer available on Steam. I didn’t lose much money on these but there have been some much larger profile flops, not to mention huge messes like the development of Broken Age or how Anita Sarkeesian’s Tropes vs. Women has still not delivered all its backer rewards, despite her still being buddy buddy with Kickstarter brass.

When it comes to Steam Early Access, one doesn’t have to look far to find the litany of disasters that have happened there, ranging from projects that either get abandoned (something even press favourite Double Fine is guilty of) to others that have spent years in the program with no end in sight to out and out scams. Like Kickstarter, there have been plenty of successes here too and I own a number of them but the problems are widespread and largely unaddressed.

In the case of Patreon, there are many great creators making great stuff on there but like many other platforms such as YouTube and Twitch, it’s biased heavily in favour of people who are already popular, as opposed to those who are new but also doing good work. It’s also been a hub for professional victims who produce nothing but faux and fake outrage and who essentially crowdfund their lives from the naive and gullible. This latter reason is why I’ve never had a Patreon account. There are people I would like to contribute to but not through a company that supports, fosters and profits off of professional victims while banning other valid projects like 8chan, which these people dislike. Their standards are unequal and unfairly applied to say the least.

Now, the first thing these services and their defenders will say is that any money you put into them is not an investment, that it’s buyer beware, don’t donate any money you aren’t prepared to lose etc etc. They’re totally right and I understood the risks when I backed every Kickstarter and bought every Early Access game. This isn’t sour grapes over money I lost on non-existent or disappointing projects, even though it is a lot of money. The reason I’ve largely decided to walk away from this model is that companies like Kickstarter, Valve and Patreon are using these excuses to profit without any responsibility and I think they’re all successful enough for that to no longer be a valid excuse.

Kickstarter and Patreon have made a big deal about how they’re modern tech startups that were able to get big with a minimum of external investment and debt. They’re lean and managed to get and stay profitable very fast. Indeed, to the business community, these are shining success stories. As for Valve, well c’mon, it’s Valve, they’ve been rolling in dough for years.

My issue is that they have rather ingeniously structured their business models around being financially successful off projects that both succeed and fail, regardless of the outcome to customers. Kickstarter, Patreon and Steam don’t produce anything, they’re merely middlemen who provide the tools to get funding from consumers to creators and in Valve’s case, to distribute as well. The former 2 take 5% of all pledges and donations, with Valve taking 30% of all sales made on Steam. The problem is that they get this up front and they have no incentive to provide anything beyond that.

If a Kickstarter project funds and the creators either under deliver or don’t deliver at all, Kickstarter’s stated policy is to wash their hands of the matter and leave it to backers to try to seek restitution. Their FAQ is laden with answers that dodge responsibility while also stating outright that they do keep their fees regardless. In the case of Steam, there are refunds but only for a limited time, far too limited for a project which may take a long time before running into trouble. Even when they directly help facilitate a project that fails or ends up being a scam, these companies simply trot out the “Caveat Emptor” excuse when customers lose their money, yet they themselves never do. Whether you get what the creator promised you or not, the companies always get to keep their piece. In the case of Patreon, at least it’s easy to stop contributing to someone but again, there’s no accountability for money they already received from you and didn’t use as promised.

It’s this fundamental lack of accountability on the part of these companies that has made me decide that crowdfunding in its current form is heavily biased against consumers and backers. These are all very profitable businesses who facilitate far more successful projects than failed ones. There is no reason they cannot have insurance or escrow funds that can help consumers get back at least part of their contributions in the event of a project either failing or especially, if it turns out to be a scam. At the very least, they should not be allowed to keep the proceeds from failed projects and if they can’t return them to backers, they should either be donated to charity or put towards some other cause that is not lining the pockets of shareholders. I cannot think of another legitimate business where it’s considered acceptable to profit off of failure. Projects can fail for myriad reasons, some perfectly valid, others not at all. Regardless of who was primarily at fault for the failure, if you profited in some way off the project, you should have some amount of culpability.

I’m not saying I’ve sworn off all crowdfunding forever. If there is a project I truly believe in and that comes from a creator with a proven track record, I may still back it if it’s necessary to make it happen. However, when I look at many of the projects I’ve backed, the truth is that most of them would have hit their target with or without me. I could have let others take the risk and if the end result was good quality, just bought it on release. Of course, if everyone thought that way, then this whole model would fall apart and nothing would get crowdfunded. The crowdfunding bubble certainly hasn’t burst yet but compared to its heyday, it’s certainly not the guaranteed path to funding it was once seeming to be. Too many people soured the milk for everyone else.

In theory, the object of any business is to serve consumers first and by doing so, that’s how they make profit. The crowdfunding industry has devilishly found a way to get their profit, regardless of whether or not they serve the best interest of consumers. That’s a terrible, unfair, devious way to run a business and it’s not one I want to participate in. Buyer Beware isn’t good enough any more. This industry is making piles of money for simply being in the middle and if they’re going to, they need to take their share of the responsibility when creators mess up. Maybe they’ll have to vet projects more closely. Maybe they’ll have to reduce the number of projects they let run at a given time. Or maybe, they’ll just have to factor in losses from the occasional failed project as a cost of doing business. Truth be told, I don’t think those losses would be enough to offset their successes but if so, I think that speaks more to the long-term soundness of their business model.

I don’t want to see crowdfunding go away. For all the drama and mishaps that have come from it, we’ve also gotten a ton of great, creative content that we likely would never have seen otherwise. I’m grateful to have all of that and want to see more of it get made. This is a fantastic way to fund something that involves your fans and which couldn’t have been done before. However, it requires accountability from all parties involved. Without it, the democratized nature of the idea gets tainted and soured. Until this industry accepts that its part of the process goes beyond just providing a web site, processing payments and distributing bits, I’m stepping out and I don’t think I’m alone in that sentiment. Don’t let this get ruined so early on, there’s too much good that can come from it.

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