14 July 2012

Kickstarter: Part 2 - Overview of Crowdfuding

This is the second part in an ongoing series about crowdfunding. Overview and Index.

It has come to my attention that crowdfunding (commonly referred to as Kickstarter, or kickstarting) and how it works may be something of a mystery to many within the gaming community. My first post on this offered an abbreviated examination of crowdfunding, but it operated under some assumptions that may not have been warranted. This is my attempt to shed some light on what is the newest way to get independent projects and those from prominent studios published.

Crowdfunding is, in essence, a method to gather support for a project before potentially making a huge mistake. The history of gaming is littered with these huge mistakes and lost fortunes and the Kickstarter model mitigates a great deal of that risk. It works as method to gauge interest, spread the word and gather funds for the project if there is the fanbase and interest before the point of no return in pursuit of a dream.

There are currently two sites that I am most familiar with to launch these crowdfunding campaigns through: Kickstarter and IndieGoGo; RocketHub and Fundit have been used in the past, but I don't know of many projects there (if there are any others that host gaming projects, please let me know). When a campaign is posted it will have a project description, funding goal, funding date and list of rewards with corresponding pledge levels. IndieGoGo will additionally have the campaign type: Fixed or Flexible Funding, more on that in a bit. There are also tabs for updates, a list of backers (funders on IndieGoGo), comments, and IndieGoGo also includes a gallery.

The project description is largely self-explanatory, but projects can, and will, live or die by what is in here. Descriptions that are too brief or strange are not doing anyone any favors. The risk for this is all on the backers, and few want to put money out for a project that is hard to understand and/or has unclear goals. Feedback from backers in the comments can often lead to improvements in the description and it certainly benefits the backers to do this; they won't get the product if the funding is not met.

The Funding Goal is how much must be pledged for the project to go through, and the funding date is when funds will be collected. For Kickstarter anyone can pledge through their Amazon account (you do not have to live in America to pledge to a Kickstarter campaign). For IndieGoGo you can pledge either with your credit card or PayPal account. Kickstarter and the Fixed Funding campaigns on IndieGoGo will not collect any funds if the funding goal is not met by the funding date. Flexible Funding campaigns on IndieGoGo will disburse all pledged funds to the project on the funding date regardless if the goal has been met. The former protects the backer against a failure to meet funds, though the latter is typically a project that the creator will cover the rest of the costs to ensure the project goes forward.

The rewards are why you are there in the first place; it is where you get the goods. Maybe you don't want anything other than to know that the project is going to exist at all, or perhaps you want to receive the backer only updates (for science!). Regardless, the list of rewards will detail what you can get for a given pledge value. These can range from a PDF of the finished product, softcover or hardcover book, signed copy, t-shirts and other swag, thanks, being immortalized in the game, or even a visit from the writer them self. Not all rewards are cumulative with rewards offered at lower pledge ammounts, so be certain to read the project and reward descriptions carefully. Also not all rewards are written clearly.

Once you have backed the project (on Kickstarter), that button will turn into a "Manage Pledge" button and allow you to adjust the amount you have pledged and the reward you want access to. If you adjust your pledge down, the system will not let you select a reward above your pledge level. Though if you adjust your pledge up, it won't automatically let you know that your pledge exceeds your reward; you're going to have to adjust that on your own. If you have any questions, I would be certain to contact the project manager; they want you to be happy because they want your money.

Most, but not all, campaigns will offer stretch goals once the funding goal has been met. These are incentives to continue to raise money from additional backers as that will allow them to reduce their per unit costs and put less towards overhead, meaning that they can offer more to you. This feeds into the backers providing the advertisement for the project because when more people join in everyone benefits. The stretch goals may be swag (dice, prints), supplements, adventures, or even donations to charities or other crowdfunding campaigns. It is worth mentioning that just because you have pledged to a campaign does not mean that you will be eligible for all of the stretch goals. Sometimes they will only be for those that have pledged to the larger rewards. The physical book reward is a common place for these to start, but targetting the higher rewards is not uncommon. I look at this as an incentive to move those that are getting the PDF or just a book (no extra stuff) to pledge more, so not just bringing in more backers, but increasing the value of each backer.

International backers will often have problems with physical rewards and extra expenses for shipping. Most crowdfunding projects have to request an additional ~$15 for international shipping simply because it costs that much. This is not an issue of greed on the part of the campaign, those are the grim costs of shipping overseas and anything less will result in a net loss per shipment. Additionally all of the physical rewards for international backers will have to ship in one package. That can mean significant delays in the arrival of rewards. For these reasons I see that PDF options are very popular with international backers just because of how much simpler they make things.

As well, only projects in the USA (or with a very trusting/worthy partner there) can utilize Kickstarter, which is by far the more popular of the two services. At least one project has been able to use Kickstarter and have operations in both Europe and the USA, which makes it unsurprisingly popular. Well, that and it sounds like a pretty awesome project.

Another thing to be aware of is that it may take a some time for the actual rewards to materialize; patience will often be a virtue. Of the 20+ projects that I have backed, only three have delivered the physical books. PDFs generally have a much faster turnaround and many projects will provide beta copies for their backers during development or after . I view this as a form of patronage and I want to nurture growth in the hobby, which means that I am not in a hurry for product. Not everyone takes that view and I won't criticize that; for some it is a transaction like a pre-order: you pay money and product is delivered.

This seems to lead to the tendency to only back projects that are already funded. Typically a project that meets its funding goal seems to continue gathering steam and those that stall early never gain momentum. Whether this is due to the appeal of the project, efforts on the backers to drum up support, or that everyone likes a winner, I cannot offer a definitive answer, only an anecdotal one based on numerous conversations - some people don't want to back a project that they think will fail, which is often a self-fulfilling prophecy.

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