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On February 17, 2022, Kickstarter updated its FAQ to address some of the questions raised since its announcement. Here's the first question as an example of what you'll find on that page:
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What is Kickstarter trying to solve with the protocol?
The first thing to know is that Kickstarter's mission remains the same: Kickstarter exists to help bring creative projects to life.
We know there's a bigger world of creative projects than are currently supported by Kickstarter and we want to tackle the longstanding challenges holding the crowdfunding model back. Over the last decade, we've identified many challenges, including:
• Backers aren't sure they'll get their rewards (backer distrust)
Data confirms what we know anecdotally. Many backers have negative experiences with crowdfunding, most often because project rewards are late, below expectations, or not fulfilled at all. This risk prevents more backers from supporting creative work.
• Many projects struggle to reach all potential backers (low project distribution)
The typical funded Kickstarter project right now receives about 25% of its funding from backers who find the project through Kickstarter discovery channels, such as our project discovery pages, recommendations, newsletters, and social media. Creators bring their own audience, and also benefit from the networks of fans and supporters already on Kickstarter. This is one of the biggest reasons creators come back to Kickstarter again and again. Even so, we know we can do more, especially for smaller creators who are launching their first project, don't have a large existing audience, or don't benefit from a big budget to promote their project.
The world of people who would enthusiastically support a project extends well beyond a creator's network and Kickstarter's existing user base. But right now it can be hard or expensive to reach potential backers beyond these groups. When a creator considers crowdfunding, they should feel confident that they can reach as many interested backers around the world who would want to support them.
These are just two of the core challenges we've seen with crowdfunding, but we know there are more (e.g. difficulty in building a compelling campaign, and struggles with pledge management and fulfillment). While we continue to work on solving these challenges ourselves, we hope that engaging with our users and empowering an ecosystem to define, prioritize, and develop solutions to these core challenges will allow many more creative projects to come to life.
Call me cynical, but that last sentence seems to boil down to "We hope to set up a system so that others can solve the problems we can't." Tied into that is the feeling that Kickstarter will adopt MLM-style payouts given these statements below the question "How could a protocol help solve challenges with the crowdfunding model?"The first thing to know is that Kickstarter's mission remains the same: Kickstarter exists to help bring creative projects to life.
We know there's a bigger world of creative projects than are currently supported by Kickstarter and we want to tackle the longstanding challenges holding the crowdfunding model back. Over the last decade, we've identified many challenges, including:
• Backers aren't sure they'll get their rewards (backer distrust)
Data confirms what we know anecdotally. Many backers have negative experiences with crowdfunding, most often because project rewards are late, below expectations, or not fulfilled at all. This risk prevents more backers from supporting creative work.
• Many projects struggle to reach all potential backers (low project distribution)
The typical funded Kickstarter project right now receives about 25% of its funding from backers who find the project through Kickstarter discovery channels, such as our project discovery pages, recommendations, newsletters, and social media. Creators bring their own audience, and also benefit from the networks of fans and supporters already on Kickstarter. This is one of the biggest reasons creators come back to Kickstarter again and again. Even so, we know we can do more, especially for smaller creators who are launching their first project, don't have a large existing audience, or don't benefit from a big budget to promote their project.
The world of people who would enthusiastically support a project extends well beyond a creator's network and Kickstarter's existing user base. But right now it can be hard or expensive to reach potential backers beyond these groups. When a creator considers crowdfunding, they should feel confident that they can reach as many interested backers around the world who would want to support them.
These are just two of the core challenges we've seen with crowdfunding, but we know there are more (e.g. difficulty in building a compelling campaign, and struggles with pledge management and fulfillment). While we continue to work on solving these challenges ourselves, we hope that engaging with our users and empowering an ecosystem to define, prioritize, and develop solutions to these core challenges will allow many more creative projects to come to life.
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What if we designed the protocol so that some small percentage of Kickstarter's fees went to people who are helping to reduce risk through expert peer review? This could help backers see whether a project is making claims that can be trusted. How might that increase backer confidence and their likelihood to come back and support more creative work?
Or, in the case of the project distribution challenge, what if a small percentage of Kickstarter's fees went to project referrers or apps that helped campaigns find new backers?
For example: A newsletter or an app could be designed on the protocol to find animation fans in a specific country. When they help animation projects reach more backers, they get a percentage of Kickstarter's fees. Any time a project launches on the protocol it could be listed on multiple platforms (some specific to relevant niches), helping it reach more backers.
You do the work to bring more backers to Kickstarter projects, and you will be paid — the more you do, the more you earn! I'm extrapolating here, but it sounds like Kickstarter wants to embed the type of things that already take place into a more organized system that will somehow function automatically in a better way to be explained later. I mean, we already have plenty of peer review on projects in the form of people posting on social media that creator X didn't do Y on their previous project and creator Z has a habit of doing questionable things. We already have project referrers, including me, who trumpet KS projects because they sound interesting. (I'll note that I have not been paid by Kickstarter or any KS project creator for any project that I've covered. I have no idea whether BGG receives credit or payment when a reader clicks a link and backs a KS project.)Or, in the case of the project distribution challenge, what if a small percentage of Kickstarter's fees went to project referrers or apps that helped campaigns find new backers?
For example: A newsletter or an app could be designed on the protocol to find animation fans in a specific country. When they help animation projects reach more backers, they get a percentage of Kickstarter's fees. Any time a project launches on the protocol it could be listed on multiple platforms (some specific to relevant niches), helping it reach more backers.
On February 18, 2022, The Beat published an interview with Kickstarter COO Sean Leow that does not clarify the situation. Here's a quote from Leow that builds on what I've quoted above from the FAQ:
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A protocol would allow us to standardize how people would contribute to Kickstarter, whether that's a third-party service that's helping you promote your project better, or somebody helping you manage your pledges. There'll be a clear and transparent way for people to know what the rules of the game are. Because it's not just controlled by Kickstarter. It's not just us making decisions about how part of our fee could go to one of these services that helps advance a project, but it's written into the rules of the protocol. Say if you help a project reach say 50 more backers in a certain locale, because you've built up a newsletter a community, you can feel confident that you will be rewarded. The rules are written into something that is not just controlled by Kickstarter, but it's controlled by everybody who participates in the system.
So you're outsourcing the advertising of KS campaigns to those who want to publicize them for a fee. Again, we have that now, don't we? You can hire a company to promote your KS campaign, and others often promote campaigns just because they want to.Leow talks about potentially outsourcing the handling of funds ("There is definitely a world where, with a protocol, we aren’t processing the payments") and campaign data can be published through a blockchain so the creator can use it (but I would imagine this is possible now without a blockchain, yes?) and how Kickstarter hopes to win back project creators who have left due to Kickstarter's blockchain plans: "It's up to us to win back her trust and the trust of people that have left the platform and show them that we're going to continue to invest in our current platform as it is now, where there are lots of things that we need to fix. That is the majority of our effort at Kickstarter."
The main problem I hear from game publishers about Kickstarter is that the moderation tools do not work, which means that someone can back a project for $1, then post negative and unhelpful comments non-stop with no way for a publisher to eject that person. I've heard this comment from publishers for years.
From the way Leow talks — "I'll admit that I'm not the technical expert on this" — it doesn't sound like changes, whatever they might be, are coming to Kickstarter anytime soon. Here's another excerpt:
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THE BEAT: A big problem in the NFT space is the issue of reversibility. If there is a fraudulent transaction, because there's no central governance, because it's distributed system, there's no arbiter for you to complain to. No mechanism to reverse a charge.
If problems like this cannot be solved, and the advisory committee recommends you don't continue, would Kickstarter abandon blockchain? Or is the advisory committee more focused on how to use blockchain in the most efficient way, rather than if it should be adopted?
LEOW: Maybe somewhere in-between? The net benefit to our users and our mission needs to be clear, otherwise we would not adopt this. There's a long period of exploration that we need to get to before we can prove that out and feel confident.
And that's what the Advisory Council is for — to challenge and to say these are really serious issues that need to be solved. And we need to come up with the right answers for those. I don't think that we're expecting to have the advisory council vote one way or another, they're part of helping us solve the problems that we laid out in the FAQ. I don't know if reversibility was in there. But we have a long list of problems that we think are our risks and challenges with this approach. And it's on us to work through those in the coming months and years to feel like we're going to get to that net benefit for the system.
"Somewhere in-between?" Is that even possible? Again, I feel like I'm ten years old when I hear stuff like this because I'm not even sure what is being proposed — but I'm not sure those at Kickstarter understand either.
If problems like this cannot be solved, and the advisory committee recommends you don't continue, would Kickstarter abandon blockchain? Or is the advisory committee more focused on how to use blockchain in the most efficient way, rather than if it should be adopted?
LEOW: Maybe somewhere in-between? The net benefit to our users and our mission needs to be clear, otherwise we would not adopt this. There's a long period of exploration that we need to get to before we can prove that out and feel confident.
And that's what the Advisory Council is for — to challenge and to say these are really serious issues that need to be solved. And we need to come up with the right answers for those. I don't think that we're expecting to have the advisory council vote one way or another, they're part of helping us solve the problems that we laid out in the FAQ. I don't know if reversibility was in there. But we have a long list of problems that we think are our risks and challenges with this approach. And it's on us to work through those in the coming months and years to feel like we're going to get to that net benefit for the system.
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