I have been hearing a term floated about, Crowdfunding, which similar to Crowdsourcing is a way of using social media to finance projects.
I was intrigued, but really didn't know much about it. So I decided to do a bit of research. When I first started looking into Crowdfunding, I thought I was looking at investment opportunities, sites for investors to put a little juice behind great ideas. Social media would be perfect, let someone float an idea, get it rolling and let the community at large contribute a few dollars with a chance of some return. Nope, I was mostly wrong!
Most Crowdfunding sites could more accurately be described as crowd-donating sites. The contributors don't "get a piece of the action." Instead there are "perks," or other benefits that are offered as incentive to participate. This can be as simple as a free download of a software app, perhaps a special addition of whatever widget is being produced, or an on-screen credit in a video, all the way to a walk-on role on a film or even dinner with the stars.
There are now dozens of Crowdfunding sites that both investors and developers can go to, creating a marketplace for cash, ideas and dreams.
IndieGoGo (www. indiegogo.com/) has raised millions of dollars for everything from film projects so social missions like reuniting a family. Each fund raising project (campaign) has a landing page containing (usually) a video sample, or explanation or plea, and a written description of the project. How much money has been raised is also prominently displayed as well as the time left, total targeted funds, and any perks that are being offered to those proving funding.
The perks seem to be a fairly big deal. They are like the gifts you receive for donating to public television: "For a contribution of $25 we will send you this beautiful logo'ed book bag."
RocketHub (www. rockethub.com/) and KickStarter (www.kickstarter. com/) are other sites that follow the same concept. Each of these sites provides somewhere around 90 per cent of the pledged funds to the project, with the site taking around four-to-six per cent for themselves and the remainder going to transaction services such as PayPal.
There is a way to make some money however!
Appbackr (www.appbackr. com/) follows an entirely different model. A chance to make a little money on the side has this site growing in popularity.
App developers go to Appbackr to raise money. They offer their app up for wholesale pricing. Investors find an app the believe in, purchase a number of copies wholesale (virtually of course) and then once those copies sell on one of the app stores, the investor gets paid off.
This is a very creative approach. It helps solve two of the biggest problems in app development, money and publicity. Each person who backs an app has a vested interest in that app doing well, and rising above the morass of hundreds of thousands of apps on the app stores.
So the investor will do whatever they can to shed some light on the app, Tweeting it, posting it on Facebook and Linked-In and generally chatting it up hoping it gains popularity.
The whole concept of Crowdfunding is compelling, at the very least it is fascinating to browse through the offered projects, and maybe you will find something that floats your boat, even if you don't make enough money to buy one!
Steve Dotto is host of Dotto Tech, Wednesdays at 6 p.m. on AM 650. Visit him online at www.dottotech.com or at www. facebook.com/dottotech.
