Crowdfunding has become a global phenomenon and has emerged as a practical, alternative financing vehicle for companies and individuals to realise their product or project (CMF, 2012). The reward or donation model — defined by a specific exchange of products or services (a ‘reward’) for contribution of an agreed financial amount — has become particularly popular, as exemplified by crowdfunding platforms such as Kickstarter. This model does not offer equity or financial return on contribution, and therefore doesn’t turn the public into potential capitalists. What it does do is see the productive wealth — what I term ‘contributed capital’ — be supplied not by a capitalist elite but by the ‘contributor’.
In short, we can say that crowdfunding has created an economy where consumers contribute the productive wealth which enables the company and/or a specific product or service to be realised — an economy that I have termed ‘post-capitalism’.
I believe that this new type of economy brings specific challenges for companies wanting to engage in it. In researching the potential effects of ‘contributed capital’ I undertook some primary research, selecting one crowdfunding platform (Kickstarter) and three specific projects from this platform as case studies (Pebble, OUYA, Dreadball), questioning not the companies but the contributors to projects themselves. My aim was to discover, within the ‘post-capitalist’ economy, how people discover projects they contribute to, what their motivations might be for contribution, how people understand the meaning and value in contributing, and therefore whether this alters their relationship with and expectations of a company and the brand.
The full thesis looks in-depth at relevant academic literature, shows the research findings in full and analyses, discusses and makes conclusions based on these findings. Below is an abridged version of the thesis conclusion giving an overview of the research findings.
Post-capitalism is an economic model which retains key attributes of the predominant capitalist economy, such as a profit motive and private ownership, but that introduces new characteristics.
It will not replace the capitalist system of private financing but will exist alongside it, and in so doing can impact the monopoly power of capitalism. Post-capitalism is an economic model in which the productive wealth, the essential capital, is supplied by contributors and not private investors or shareholders. Although profit is an objective and companies are privately owned, the financial means of production is not privately owned, it has been socialised.
The socialisation of the supply of productive wealth is the defining feature of the post-capitalist economy.
where things happen to you (consumption)
where you make things happen (contribution)
My primary research and subsequent findings from questioning contributors to the selected projects and crowdfunding platform indicate that there are important factors to consider regarding how and why people contribute, what this contribution means to contributors themselves, and also to their relationship with the company and brand.
The first significant finding is that there is a perceived ‘ownership’ of the project by contributors created by the enabling quality of contributed capital. Contributors are very aware that without their contribution of financial capital prior to production the project would not exist.
The post-capitalist ‘value-chain’ of Market > Contribution > Production shows how the contributor ‘adds-value’ to the project and contributors’ awareness of this sees a desire for them, and the importance of their contribution, to be valued by the company.
The research findings also indicate that contributors, although wanting to receive the product or ‘reward’, see a value in developing an ongoing involvement with a project through a shared purpose. The purpose of the project is what contributors align themselves with and then share their support for with their personal network. It can also create the basis for a relationship, encourage contribution and help to create a community post-contribution. In the capitalist economy people partly define themselves, or are defined, by what they consume (Lury, 1996). In the post-capitalist economy people will define themselves by what they contribute to, and therefore what they enable to be produced. ‘In the 20th century we were identified by what we owned; in the 21st century we will also be defined by how we share and what we give away’ (Leadbetter, 2009: 26).
Another significant finding in the research was the importance of networks and the ‘network society’. The findings indicate that predominantly contributors do not discover projects through company ‘marketing’ channels but through non-company sources, following which most people subsequently share this contribution with their personal network. It is this sharing of support for the project with their personal network which is a primary example of how contribution is not only financial but is also social. The brand is being co-created through personal networks in the ‘network society’ (Castells, 2000).
The research findings also indicate the importance of authenticity of purpose and transparency of actions. Contributors want to be involved, demanding a degree of transparency throughout the process, but also want to know that the company is authentic about its goals and purpose. What Meyer and Kirby (2012) describe as a power of technology I suggest is equally as relevant for crowdfunding, where its ability to ‘empower the members of society ends up aligning the desires of the society with the incentives of the businesses.’ (Meyer and Kirby, 2012: 213). From this research we can see that one of the biggest benefits of crowdfunding is not the ability to raise funds from a crowd, but to discover that there is a crowd wanting to participate at all (Johnson, 2013). We could say that the emphasis should be placed on the crowd rather than the funding in crowdfunding.
When considering the capitalist, industrial economy we might talk of a ‘market’ for products, a market of alike competitors. However, this research suggests that in the post-capitalist economy the market of alike competitors and products may be of less importance. As indicated by the number of people first discovering projects on Kickstarter to which they then contribute, the ‘market’ seems to include all other projects looking for contribution. When considering the post-capitalist ‘value-chain’ brands cannot act as a bridge between production and consumption. As Prahalad and Ramaswamy (2004) discuss regarding co-creation, ‘the experience is the brand. The brand is co-created and evolves with experiences’ (Prahalad and Ramaswamy, 2004: 13). In post-capitalism the ‘experience’ includes, and so the brand is co-created by, how the project is discovered, contributed to, shared and supported.
In the industrial age the defining element was the machine, producing things for consumption. In the digital age the defining element is the Internet, a system for social sharing.
Post-capitalism primarily exists within the ‘networked society’ and at its core crowdfunding, and the post-capitalist economy, is enabling. Financially enabling the realisation of a project and socially enabling the development of a shared purpose, meaning and identity.
At one level the ‘mechanical’ exchange of money can ‘individualize’ people (Gelder, 2005: 6) but the motivations for contribution go beyond the transactional exchange of contribution of financial capital for agreed ‘reward’. The fact that their contribution of essential capital enables the production of the project means that contributors consider themselves an essential part of the project and the brand, and that the company is indebted to them. The post-capitalist model of exchange is simultaneously economic and social (see full dissertation for post-capitalist model of exchange diagram).
Originally published at brandinprocess.com.