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by zozbot234
2205 days ago
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The benefit of the Kickstarter-like crowdfunding model is that it solves the coordination problem. When you bid/pledge on a threshold-funded project, your bid is only paid if the project reaches its preset funding threshold-- if the threshold is not met, you pay nothing. Thus, it is individually rational to pledge on a project if you expect that your pledge will meaningfully contribute to the threshold being reached and you derive individual benefit from the project itself; each contributor is essentially "matching" others' pledges. The project creator herself can then strategically choose the threshold amount and the scope of her project to improve their appeal to prospective contributors. (There are a few emerging problems with this model, but they're generally related to having to trust that the project will be correctly fulfilled. These problems have nothing to do with the basics of collective fund-raising; they would also arise in the exact same way whenever an individual agent is contracting with a third-party for any sort of good or service. The fact that these are by far the most commonly-cited issues with the threshold-based crowdfunding model is itself proof that the funding aspect works quite well indeed.) |
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> if you expect that your pledge will meaningfully contribute to the threshold being reached
Kickstarter solves the coordination problem for their case (which is great), but coordination is harder or easier depending on the scale. Kickstarter here deals with a "rather simple" coordination problem: value proposition and conditions are very clear and straightforward, risks are low, there are no opposing parties / colliding interests, and thresholds are low enough that individual contributions can be quite meaningful. So even if they have an interesting business around solving that coordination problem, and they managed to reach the critical mass for it to work (which I highlight as trickier than the actual software)... as programmers would say, the solution doesn't generalize. (Even if it might be a good place to start looking).