Crowdfunding

Crowdfunding is a form of Crowdsourcing, applied to finance. Instead of seeking finance from institutional sources, the supporting community is asked to support the project in a distributed fashion.

Definition

From the Wikipedia at http://en.wikipedia.org/wiki/Crowdfunding

"Crowdfunding describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations."

Examples

Sellaband

Sellaband has the following model:

"The site basically gives you a MySpace type page to exhibit your mp3s, but instead of friends, you get ‘believers.’ These disciples of your rock scripture invest in your music at $10 increments until you’ve raised $50,000. Then, the magic happens at the studio, your faithful get a copy of your album, and the songs are posted online for free. For every download, you and your financiers, the original ‘believers,’ share in ad revenue. (More details here.)

By deferring the cost and talent of scouting to a large population of music lovers, SellaBand puts powerful marketing and production tools into the hands of those with a personal interest in the music. Potentially, this is a perfect service for bedroom musicians who think they have the next big thing but have no exposure. It’s one of several examples of crowdfunding." (http://newassignment.net/blog/keith_axline/dec2006/06/music_makes_a_ca)

More Information

More information in the Wikipedia article at http://en.wikipedia.org/wiki/Crowdfunding

The entries on P2P Banking, Crowdsourcing

See also: Open Music Business Models, Open Film Business Models