It may be easy for some in the business world to dismiss, but there’s something (quite a bit, actually) to be said about interconnectedness and how it’s driving our new economy. For a case in point, let’s review public media’s collaboration with crowdfunding.
For a typical startup, one of the most challenging problems is raising money. For Planet Money (a co-production of the radio show, This American Life, and NPR) raising cash to make a T-shirt that tells the story of its own creation didn’t require any hand-wringing or sleepless nights. Instead, the show’s producers turned to their roots – the public – for a funding solution.
Enter Kickstarter, a crowdfunding platform that simply refers to itself as “a new way to fund creative projects.” According to their website, since the company opened its virtual doors in 2009, more than 41,000 creative projects were funded, and over $611 million was pledged by more than four million people. Kickstarter has clearly tapped into the collective mind and wallet of the public, echoing the popularity of NPR’s programming with listeners nationwide.
Although it was undoubtedly viewed by some as risky, Planet Money’s decision to use a web-based crowdfunding platform, not venture capital financing, for their T-shirt project turned out well, very well. After only 24 hours on Kickstarter, it far exceeded its initial campaign goal of $50,000, and the project’s final figures are nothing short of stellar: 20,242 backers and $590,807 pledged.
So, what will become of the additional funds that Planet Money raised from its Kickstarter campaign? According to Alex Blumberg, associate editor at Planet Money, the success of the T-shirt project will be shared with NPR’s member stations, which number more than 900, in the form of a reporting boot camp.
While the crowdfunding industry, defined as “the cyberpractice of pooling individuals’ money for a cause,” is relatively new, the concept behind it is not, having been in existence for centuries. It is entirely possible that before the end of this calendar year, web-based crowdfunding may top the charts with its growth and success rate.
Yet, not everyone is convinced that its future is quite so bright. In a guest post where he outlines the issues with crowdfunding on Forbes.com, securities lawyer Brian Korn argues that “Crowdfunding will not be able to deliver the grassroots fundraising ease for which so many seem to be hoping.” He goes on to detail what he refers to as crowdfunding’s “fundamental disconnect” between its promise and how it will ultimately be impacted by the SEC in his post, concluding “the risks, burdens and limitations of crowdfunding render it almost completely useless.”
Whether or not Mr. Korn’s assessment of crowdfunding is correct remains to be seen. With additional crowdfunding platforms similar to Kickstarter such as Rock The Post and Indiegogo funding a wide range of projects daily, it’s clear that crowdfunding isn’t going to go by the wayside anytime soon. As social media continues to drive what best-selling author Seth Godin refers to as our “connection economy,” successful alliances, like that between Planet Money and Kickstarter, will likely multiply.