Crowdfailing: The Downside of "Successful" Crowdfunding

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Brooklyn Bridge Kickstarter

For every Veronica Mars Kickstarter success story, there are crowdfunding projects that just didn’t work out—and I’m not just talking about projects that don’t hit their funding goals. In fact, some of the most dispiriting stories may be when a successfully-funded project unravels.

While I’m still backing projects on Kickstarter and I love supporting people who dream big, I admit that the cracks are starting to show. Early this year there was a story of the first time a Kickstarter backer sued a project creator for failing to deliver a project. (The lawsuit in question was actually filed in 2012, and the project creator later filed bankruptcy.) One of last year’s big stories was about The Doom That Came to Atlantic City—a board game that looked like it would never get made, until Cryptozoic gave it a happy ending by stepping in to produce it themselves. But there are many more projects that don’t get that sort of Hollywood ending … and thousands of backers who are still waiting for things to be delivered.

Most of the complaints I’ve seen are about board games simply because that’s where I spend most of my time, but I know that videogames have also been notorious for being extremely late, over budget, or incomplete. Despite the fact that many big-budget videogames are still in development limbo, hopeful gamers continue to back videogame projects as well.

The latest story, from earlier this month, is about the first US consumer-protection lawsuit against a Kickstarter project creator, filed by the Washington Attorney General. The project in question is the Asylum Playing Card project, which raised $25k in October 2012 and has yet to deliver. At least 31 of the 810 backers are from Washington State, and the Attorney General is using the lawsuit to send a message that they will hold project creators accountable. But will it work? In this case, it seems apparent that there is actual fraud involved, but in many cases it’s hard to tell if it’s just a combination of poor planning and unlucky circumstances.

Case in point: I read an article on Medium that tells the story from the project creator’s perspective, “The Economics of a Kickstarter Project.” Artist Cameron Moll ran a project for a letterpress type poster of the Brooklyn Bridge, and raised nearly $65k on an initial goal of $10k. Seems like a pretty sweet deal, right? So how much did Moll pocket after all was said and done? Less than $5,000. Sure, $5,000 is nothing to sneeze at, but it’s not much compensation for 5 months of work—and that’s just from the time the funding ended, not including any work that went into building the campaign itself.

Moll’s story doesn’t end too badly: although it took longer than planned to deliver all the posters (partly due to a typo that nobody caught until it was too late), it seems that his backers are happy and he’s fulfilled his promises. He ended up making a little bit of money, though far less than he expected (and certainly less than most people would assume by looking at his final funding amount).

Will I continue to back crowdfunding campaigns? Yes, because I still like the idea at the heart of Kickstarter, even if sometimes the business of crowdfunding has grown well beyond that. And I may even launch another crowdfunding campaign myself someday—with a lot more planning.

But for anyone considering a crowdfunding campaign of their own, all of these stories are a sobering reminder that crowdfunding isn’t always (or even often) an easy path to fortune.

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