Wikipedia defines Crowdfunding as:
“an approach to raising the capital required for a new project or enterprise by appealing to large numbers of ordinary people for small donations. While such an approach has long precedents in the sphere of charity, it is receiving renewed attention from entrepreneurs such as independent film makers, now that social media and online communities make it possible to reach out to a group of potentially interested supporters at very low cost.”
This page provides examples of crowdfunding initiatives plus links to articles talking about crowdfunding.
Examples: music industry
- SellaBand is a service for musicians and bands to promote their work in an effort to gain “believers” who will help to fund the production and distribution of an album. Believers must raise $50,000 in order to graduate the artists into contractual agreements. Believers can earn money back from ad revenue used in tandem with giving away the music for free online at sellaband’s site.
- Bandstocks provides a financial model for artists seeking an alternative to major labels. Funds for production and promotion are raised through “band stocks” purchased by fans in £10 units. Investors receive a copy of the album plus royalties from sales. Patrick Wolf is the most prominent artist to use the platform to date, raising £100,000 to release his album “The Bachelor” after leaving his contract with Polydor.
- ArtistShare is a service for musicians to fund their projects outside the normal recording industry. It utilises micropayments to allow the general public to directly finance, and in some cases gain access to extra material from an artist. In 2004 Maria Schneider became the first artist to win a Grammy with an album distributed exclusively over the Internet. Distributed through ArtistShare she received four nominations for her album Concert in the Garden and won Best Large Jazz Ensemble Album.
- I Am Verity raised $80,000 from 2,000 fans in 25 countries to release an album and donate to women’s charities in South Africa.
Examples: film industry
- Artemis Eternal – Upcoming sci-fi short film being produced independently by Jessica Mae Stover. The user is invited, via the web, to donate (from $1 to $100) and join “The Wingmen” (whose members hail from students to homemakers to NASA employees and filmmakers) and help to crowdfund the project.
- A Swarm of Angels is a project to utilize a swarm of subscribers (Angels) to help fund, make, contribute, and distribute a feature film using the internet and digital technologies. It aims to recruit earlier development community members with the right expertise into paid project members, film crew, and production staff.
- “The Cosmonaut” is a feature film in which members of the public are invited from to become a “producer” with a minimum investment of €2. The project is licensed under Creative Commons’ Attribution-Sharealike so anybody can edit, remix, copy and freely distribute all the film materials which the creators have committed to publish in unedited HD.
- IndieGoGo is an online social marketplace connecting filmmakers and fans to finance independent films. The platform provides filmmakers with tools for project funding, recruiting, and promotion; while enabling the audience to discover and connect directly with filmmakers and the causes they support. Since launching at the Sundance Festival in 2008 several projects have been financed through the platform.
- Tangent is a video series whose production budget is partially paid for by its viewers. Through micro-funding, Creative Commons licensing, and shared IP ownership the project aims to establish an alternative financial model for online video.
- Open Five is a Memphis-based film project raising $8,000 through crowdfunding to finance production.
Examples: other industries
- Spot.Us is non-profit pioneering community-funded journalism. Journalists pitch stories on the website which are then selected and financed through crowdfunding.
- BeerBankroll is building a community-managed brewing company where members will make many of the business decisions. Members pay a subscription of $50 per year .
- Blender Foundation is an Amsterdam-based venture that develops widely-used 3D animation software. Having started life as a commercial venture Blender raised €100,000 through a crowdfunding process and switched to an open source model.
- Cameesa is the first site breaking into ‘Crowdfunding Fashion,’ where it encourages participation in the clothing creation process. Members decide which designs to print on T-shirts by supporting them financially. Once a design is 100% funded, the members who supported the design get a special edition of the t-shirt and earn a revenue share each time that design is purchased.
- ActBlue is a US Federal Political Action Committee that enables individuals, local groups, and national organisations to fundraise for the Democratic candidates of their choice.By providing all the technical, financial, and compliance systems, ActBlue enables every progressive organization and individual to make the most of their networks, rapidly raising otherwise untapped millions for Democrats in the closest races.
- Create A Fund allows both individuals and organizations to collect money online. The site tightly integrates with services like PayPal and Facebook to ensure a cohesive donor experience from start-to-finish. Fund creators get customizable ‘Donation Pages’ where donors can keep tabs on a fund’s progress, leave comments and invite others.
- First Giving is a service that allows fundraisers to create online person-to-person fundraising pages for any US non-profit. The funds are directly transferred to the non-profit which differentiates firstgiving from other services.
- PledgeBank while not exclusively for funding has often been used to crowdfund for projects and charities.
- Fundable is a service allowing for the creation and management of fundable “group action” pages where pledges can be accepted. If a campaign does not reach its goal within a set time (14 or 25 days), then all pledges are negated and no money distributed.
- Kickstarter is a New York start-up that helps other projects raise small amounts of finance through crowdfunding.
A selection of articles discussing crowdfunding:
TIME Magazine article on crowdfunding (September 2008)
Business Week article on crowdfunding (July 2008)
Washington Post article on crowdfunding (August 2006)
NPR programme on crowdfunding in the music industry (September 2004)
Wikipedia article on crowdfunding