Project-Based Business Models for Cultural Production
"The connection between the creative producer and her audience is all the more relevant in models that aim at financing the first copy, in other words to raise money before the product actually becomes available. The most widely used approach to this is known as "crowd funding". The basic idea was first formulated in 1998 as "street performer protocol", a somewhat misleading name since it has nothing to do with the economics of street performances, which are more akin to the dynamics involved in Flattr. Anyway, the basic idea is the following: a creative producer promises to a create/release a work if, and only if, she receives a specified amount in donations in advance. People interested in the work donate money into a trusted account and if the necessary sum is reached, the money is transferred and the work produced/released. The original proposal was fairly radical insofar as it assumed that in the absence of copyright, releasing a work would mean, in effect, putting it into the public domain.
It took more than a decade for the idea to catch on, but in recent years it has been taking off. The most well-known platform in the cultural domain is kickstarter.com, while the platform sell-a-band.com more specifically for music. They enable people to post a plan, specify different ranges of donation and attach a time limit in which the proposal is valid – usually a few months. An example: in early 2011, Martin Fuchs and Peter Bichsel, two designers form Basel, Switzerland, posted a book project on kickstarter called "Written Images". They described it thus: "Created in collaboration with more than 70 media artists and developers from across the world, Written Images is the first of its kind. A 'programmed book', continuously regenerated for the digital printing process, offering each reader a unique experience."
The funding goal was $10 000. For a donation of $15 or more, you would receive a "one-in-kind" post card set of the images. Twenty-four people donated in this category. For $200 or more, you would receive a unique copy of the Written Images book. This offer was limited to 200 copies: 111 people took it up. For $350 or more, you would receive to book and have your name printed in the credits: 17 donations fell into this category. For $1500 or more, you would receive all of the above, plus a special cover version of the book. That seemed a good proposition to one person. Donations totalled $33 221, far exceeding the funding goal.
This project is typical for these newly emerging platforms in that the donations range is highly graduated and precise specification exit about what one gets in return (if the project is actually realized, which is not assured, of course). It is also typical in that it is a highly networked project able to generate its own public. In this case, this was made all the more easy by the fact that there were lots of artists involved who had been selected by a international jury of experts, in a field that is highly technology-competent: media arts.
Such projects can be successful because of the visibility of individual people created by the Internet in general and social media in particular. From the point of view of the person willing to donate (or, as it is called on kickstarter, "back a project"), it is easy to gain sufficient information about a project and the person proposing it to evaluate the claims made. She can then choose, based on the level of trust and her desire to see the project come to life, how much she is willing to risk. And there is some risk since there is no way to get the money back once it has been released to the project owner. But this risk is small, since there is a strong incentive for the person proposing the project to deliver the goods. Not only for intrinsic reasons, but because her personal reputation is on the line in a very tangible way. After all, it was the public she created (usually involving people also known from other contexts) that will be disappointed is she fails to deliver.
Again, like all the others, this one is not a general purpose model, but functions only for specific works and specific people. Not all works can easily be pitched in this way, or have an audience that can be reached by such pitches. And, of course, a good pitch doesn't make a good project. But it works well for some and can help bring projects to life that otherwise would never be realized. And it does not do so by relying on strong copyright." (http://www.eurozine.com/articles/2011-07-01-stalder-en.html)