Before you continue, dear reader, please watch this Kickstarter campaign pitch video, as it is a great illustration of why people hold that sentiment.

Towards the end of the video, the project spokesperson says (in essence), ‘pre-order now, and we’ll ship the first units in November.’

That was awfully brave of them, committing to such a ship-date when under the risks and challenges section and on their road-map there were as many unknowns and as much work to be done as there was (and still remains as of this writing). I’m not saying that it was certain they would run late — even though it was very likely. But, lo and behold, they have! It’s January and stuff “still ain’t shipped”.

I’m not saying they weren’t likely to hit their funding/development and implementation goals. Statistically, the research on it so far says it’s likely projects like this will deliver- even if it’s rather embarrassingly late.

But needless to say, this group pitched their project as a product, and it’s not framed as a campaign to support their idea or creative endeavor, but as a pre-order.

Which leads us to my subtitle. Kickstarter has become — and it could be argued that it always was — a marketplace. It’s not just a platform for patronage of creativity, which was what Kickstarter tells itself it is set out to be:

Our mission is to help bring creative projects to life

— from kickstarter.com/about

Kickstarter has gone to great length to try to reinforce that mission statement — and has even become a public benefit corporation — to show their dedication and support to that mission.

But if it quacks like a duck…

As this article (which is more research from the same author of the paper above) from 2012 points out: there are 1) projects that don’t hit their funding goal, there are 2) successfully funded projects, and then there are 3) over-achievers. As of the time of that article, out of the 33 of the over-achievers, all but 1 were products rather than projects. From the article:

Of the 106 projects that received over 10 times their goal, only 33 were large projects. With the exception of a single music project, all of these 33 overachievers were in the hardware, software, games, or product design categories.

Hardware, software, games and product designs take the cake — no big winners in art, comics, crafts, dance, fashion, film & video, food, journalism, photography, publishing or theater.

So in reality, is Kickstarter’s mission statement reflective of what they’re actually doing?

…can we call them a store yet?

No I still wouldn’t call Kickstarter a store. But, I would argue that Kickstarter increasingly resembles a marketplace — and I’m sure I’m not the first person to say that. People are going onto Kickstarter to put money toward things they want to have more than creative/artistic endeavors they want to see happen or the general advancement of art and creative work at large in society. This should not surprise anyone.

But, let’s be honest: it’s less of a donor platform and more of a commercial venue.

Is it a bad thing for there to be marketplaces where people can decide to make contributions toward their wishes, with an expectation of a material result? I would say absolutely not. It seems to me to be a natural evolution of commerce and resource allocation.

Some thoughts on the history of ‘crowdfunding.’

Internet-enabled crowdfunding is a different category of financial activity than we’ve seen before, but it certainly draws from prior economic trends and vehicles, and the idea of funding an enterprise from a large group of people is nothing new — what do you think you’re paying taxes for, anyway?

Taxation is the broadest and oldest ‘crowdfunding’ mechanism with which to collect the funds to take on activities that are not easily accomplished by individuals, but which are for the good of the whole unit of people in question. In the US, everyone chips in their local property taxes to pay for the public education system, the roads, the police departments and fire departments, other civil engineering projects of public interest such as parks and recreation development, and so on.

We pay an income tax to pay for our federal benefits : that’s ‘crowdfunding’ our national defense, regulation of international affairs & advocacy of our national interests abroad, regulation of internal national resources — who can use them for private gain and at what responsibilities to the public, upholding a consistent rule-of-law, and so on.

Before it became the institutionalized process it is today, buying stock in a company (or buying company bonds) was ‘crowdfunding’ of a sort, as the scale was smaller and you were backing new ventures at a ‘main-street’ level.

Taxation is mandatory crowdfunding. You don’t get to decide whether you contribute, but you can influence what that money goes to through political process, as convoluted as that is. Stock ownership has always been a more limited endeavor because the trappings of entity ownership factor in rather than just a contribution towards a distinct material end. Buying bonds is a purely fiscally-structured endeavor. You’re getting money back for your money, not a specific good or service.

Thus, what sets modern internet-enabled crowdfunding apart from these predecessors is that it’s:

• Voluntary: not mandatory (unlike taxes)
• Universally accessible: anyone can contribute (unlike private equity)
• Conveys no ownership in the venture: contributors claim an interest only in the outcome of a specific scope (unlike stocks)
• Not a fiscal return: contributors are expecting a material outcome instead of just more money (unlike bonds)

No, Kickstarter isn’t a store. It’s not like Target, or Walmart, or even Amazon. It’s not a unified retail label selling different products from vendors.

Kickstarter is more like a marketplace at the wholesale level, or perhaps even a commodities futures exchange would be a better analogy for its market function.

At a future’s exchange, what’s being bought and sold is not the reality of oil or wheat or corn today, it’s the delivery of that product later, at a value specified today. We don’t call those kinds of contracts “pre-orders” even though in effect they’re practically the same kind of thing.

The difference isthere’s an implicit acknowledgement with commodities that the value of the the good or service may end up as more or less than estimated. So, through the behavior of the marketplace agents at the exchange, the market producers are being sent signals and told what the trend is in the value of their product — so they should adjust their production volume and costs accordingly to ensure they’re not over or under-producing for the signaled anticipated market demand.

Isn’t the level of backer contribution — and the success or failure of the number of projects in a category — somewhat similar intelligence for discretionary spending choices instead of commodity demand? Sort of a futures exchange for cultural goods?