Freddie deBoer is agitated that an established video game company is using Kickstarter to fund a sequel to a successful game:
Let’s be 100% clear about what this is. This isn’t fans helping the little guy out. This isn’t charity. It’s not the townsfolk banding together to save the local community theater. It’s a for-profit company that just had a very successful product placing the financial risk of their next product on the people they’re going to be selling the product to. Once upon a time, in ye olden days, corporations that wanted a chance to make profits also had to accept the risk of a failed product. Now, hey, just crowdfund; place the risk burden on the very consumers that you want to wring profits out of in the first place! What could go wrong?
Here's a much more supportive description of the deal from Kotaku:
In preparation for the Kickstarter campaign, which they’ll launch on August 26, they’re crowdsourcing ideas for rewards. So if you want to go bug them for (the chance to buy) a nice hoodie or a strategy guide, you can go to their forums and get it done.
It seems to me that this is, conceptually, less a straightforward Kickstarter campaign than a slightly more complicated pre-ordering scheme. People pre-order video games all the time and businesses such as Gamestop offer any number of special deals (in-game characters or guns or levels or whatever) to win their business. This seems like more of that, just in a different venue. And, honestly, I'd feel more comfortable pitching into a Kickstarter from a successful company that I know will follow through with the offered product and bonus goodies than a random one offered by oh, say, this guy:
A comic artist in Chicago who raised over $50,000 on Kickstarter to publish and ship hardback books has decided to torch the product for which donors paid.
Though John Campbell says he was able to send a good number of them, he posted a rambling 4,500-word note on Kickstarter in late February that claims he ran out of money. Campbell's note is accompanied by a video that shows a flaming heap of paper, presumably the remains of over 100 copies of the book that is based on his online comic series, called "Pictures for Sad Children."
Freddie's larger point is about the failure of capitalism to punish providers of capital for failure, and I think there's something there. But it seems to me a better solution than scrapping Kickstarter altogether for these higher profile projects would be to give people a chance to invest directly in projects and then reap the rewards if they're successful. The guys at Broken Lizard wanted to do just that with Super Troopers 2 but were stymied by our regulatory system. Here's Jay Chandrasekhar writing about their crowdfunding effort:
At our meeting, I vented to Slava about my perception of crowdfunding. I told him I wished people could invest in the movie and then own an equity piece of the backend. He said, "I totally agree." That’s when we hit it off. He said that there is legislation in Washington, as we speak, that if signed, will make equity-based crowdfunding a reality. Think about that. In the very near future, when the major studios won’t finance anything but superhero origin stories, I’ll be able to come to the fans for investment, not donation. If the film makes money, they’ll all get paid back plus a profit. How cool will that be? We’re talking about the true democratization of film funding. So, instead of someone grousing about Hollywood ("Who the hell green-lit that piece of shit?"), they’ll be able to choose which films are financed, themselves. In fact, two days ago in Washington D.C., a crucial step was taken toward this type of financing becoming a reality when the SEC issued rules on Regulation A+. But until Regulation A + is finalized, the current system of crowdfunding, which allows fans to voluntarily donate and receive rewards in exchange, is still very cool.
Given the vagaries of Hollywood accounting—as late as 2009, LucasFilm was claiming Return of the Jedi, which grossed more than a quarter-billion domestically in 1983 on a budget of just over $30 million, has yet to turn a profit—I'm not terribly confident that crowdfunding will become a profit center for mom and pop investors anytime soon. But it's an interesting idea, one that gets closer to the ideals of capitalism.