[jtheory]

There's no other way it can work, really.

If you're a creator, and collect a lot of money to make something (with some level of risk), there's a chance you'll spend the money trying but still fail -- this is a very real prospect especially if you're trying something technical that hasn't been done before.

Then what? They can't give the money back; they don't have it anymore. Forcing them into bankruptcy would basically kill Kickstarter.

So their only option is pretty much what they did -- with the course-correction added about a year ago that now they emphasize the fact that projects may fail.