May 25, 2011 § 6 Comments
One afternoon we asked ourselves a question: “How many followers do you need to receive one dollar from your crowd?”
To measure the amount of social network support we turned to Kickstarter as it is the most popular and, in many ways transparent. We took 60 successful music initiatives listed on Kickstarter. Selection fell under the criteria of being affiliated with music and having collected more than $5.000. We then made a spreadsheet with data from Kickstarter, Facebook and Twitter. We looked at the amount of:
– Followers the bands/projects have;
– Facebook likes there are on their Kickstarter pages;
– Comments about their projects there are on Kickstarter;
– Updates by the project owners/ musicians. (see the spreadsheet here);
From averaging our Excel spreadsheet numbers, we found that:
– About three Facebook likes on your project’s Kickstarter profile gets you one backer;
– Every Facebook like is worth around $34 dollars of investment;
– Every social media follower brings you about $96;
The numbers above are averages. The deviations (how far are all the numbers from the average) are huge. So unless you plan to set up a hundred different Kickstarter projects at once, you will probably not get the same results. Lies, damn lies, and statistics!
The numbers generate more questions than they give answers. For example: If people like your profile page, do they attract more backers? Or do the backers like the page and then simply attract more likes from their own social networks? Are your social media followers directly involved with backing your project or do they just help spread the word about your project and contribute to your funding in this indirect manner?
So, as you see, the data does not draw a picture, instead, much like Jackson Pollock, it splashes a bunch of paint on the canvas and leaves you baffled in search for meaning.
To fully answer these questions, we analyze: in what way does the project include its followers; quality of the project proposal (usually the video); degree of originality; novelty and so on. These are hard (if not impossible to measure objectively).
We have talked about our finding with Mark Hillen (pictured), an expert in Retail, Social Etrepreneurship and Crowd-backed initiatives. “Crowdfunding is a relatively new phenomenon and there is little hard-data on it”, says Mark. “I expect, that in a few years from now, when researchers and universities start investigating crowdfunding, we will see a lot of interesting results. Similar thing happened in marketing. Today, marketing is an established science, and retailers know exactly how their promotions will affect the sales of a particular item.”
“We do not yet have the same data for crowdfunding,” continues Mark, “eventually, we will know what type of videos, what type of engagement, what type of projects have better success chances for crowdfunding. As for now, much is based on intuition and gut-feeling.” Mark advises crowdfunders to define the potential supporters based on the cause of the Crowdfunding campaign, understand their emotion that can trigger support, know what they want and like and tune the efforts and incentives. And make a clear call to action!
We do not want to give up our search for answers. We are sure that there is a connection between a project’s engagement with social media and its crowdfunding success (or failure), we just do not yet know what it is. Surely, the crowdfunding community is eager to learn about it as well. That is why we we are sharing our spreadsheet with our readers. Feel free to share your thoughts, ideas and findings with us and anyone interested in the topic!
May 18, 2011 § 1 Comment
Today, Dutch daily NRC Handelsblad posted an article on Africa Unsinged. I’ve translated it for you. For my Dutch readers, see the original below.
Africa – land of music
A new face of Africa – that’s what entrepreneur Pim Betist is working on. He is using music to accomplish his goal. Betist, founder of music platform Africa Unsigned, believes that African countries are suffering from their image.
“We want to show the other side of Africa, not the one that asks for aid, rather we are focusing on African musicians”, says Betist. “We see it not only from an idealist point of view but from an entrepreneurial one as well. We are convinced that the New African Sound, which we are hearing in Africa today, offers many possibilities.”
Through crowdfunding, Betist studiously selects artists to support in their music career. Betist once founded a similar concept called Sellaband. Africa Unsigned makes use of quality control. “Our talent scouts have travelled through the whole of Africa in search of talent. They went not only to the more popular Western Africa, but Eastern and Southern parts as well. They came back with hundreds of demos. The demos were then judged and selected by our music panel including Damon Albarn, the singer of Gorillaz. Through this selection we singled out 20 artists, who are now featured on our platform and are able to draw in supporters.” In return, supporters get rewards or incentives, for example information, CDs or private concerts. The more artists bring in, the more Africa Unsiged can do to help the artist. We offer our services for market conform compensation. We can produce CDs, promote, organize tours and so on. In a dialogue we find out what the artist needs, one singer wants to do a tour in Europe so that is what we are crowdfunding for her now.” Apart from Africa, Betist is also searching for African artists in England. This week, Africa Unsigned officially launched in the U.K. Guests got to see special performances by promising talents. “There have been few investments in music from Africa, this is what we want to change.”
What the New African Sound entails, Betist can’t really say. It isn’t genre bound. It can be indigenous or traditional music, but could also be rap or rock, or the Janis Joplin-like voice of Rina Mushonga from Zimbabwe.
May 6, 2011 § Leave a comment
Yesterday Sprout.nl published the Dutch version of my open letter to Wall Street Journal about making a clear distinction between crowdfunding and P2P lending. The letter was a reaction to AFM and DNB, Dutch equivalents of SEC and Central Bank, who published an article warning about the risks of crowdfunding. The content of my letter was simple: DNB and AFM don’t understand the concept of crowdfunding and should do proper research before they create panic amongst potential crowdfunding supporters.
May 2, 2011 § 2 Comments
Today I sent an open letter to The Wall Street Journal. Early April the WSJ published an article on crowdfunding in the USA and SEC’s discussion on relaxing regulation to foster crowdfunding initiatives online. Purpose of the letter is defining crowdfunding. See the content of the letter below, or click here to see my signed version:
This is an open letter in reply to J. Eagelsham and J. Holzer’s article, dated 09/4/11, on SEC booting up for the internet age. The authors discuss SEC efforts to adjust regulation to better suit crowdfunding realities prevalent today on the internet.
There is a good chance that you and some of your readers have a clear definition of the concept of crowdfunding. But one thing that baffles me now is the number of enterprises, efforts and platforms that affiliate themselves with crowdfunding, but in reality have little to do with it. All those that are not actually in the crowdfunding business but make the world think otherwise, jeopardize the concept and put an unnecessary risk to the integrity of crowdfunding. So it is now timelier than ever to position crowdfunding under a single room in aims of protecting it from unnecessary risk.
Fundamentally, crowdfunding involves the transfer of funds from party B to party A, so that A can achieve a desired goal from which both parties as well as an unrelated party C will benefit.
For example, if you are an artist (B) and you post your project onto one crowdfunding platform, you will record a CD with money you collect. The ones that backed you (A) will receive, say, a copy of a CD, or tickets to your concert. Not only your backers, but also your listeners and new fans (C) will benefit from listening to your music. These listeners/fans were not involved with your crowdfunding project in any way. However, they are the quinta essentia, the element that makes crowdfunding what it is. Because ultimately a new crowd should grow and benefit from the crowdfunding process.
From now on we should consider everything that involves peer-to-peer financial support, but does not involve the key party C – peer-to-peer lending. You see, if someone posts a project asking for money to fix his garden, promising in return to pay back the money with interest, only he and the lender will enjoy the benefits of the project. As long as thousands of garden fans can enjoy that same garden the transaction should not be categorized as crowdfunding.
I firmly believe it is very important to draw a thick line between the two concepts. Peer-to-peer lending is picking up pace and chances are we’ll hear of some big successes and failures P2P lending soon. If P2P lending platforms continue to associate themselves with crowdfunding, we will all have to share each other’s risks. One can be cautious without being a fatalist and I am cautious about P2P lending as it still has a long way to go until acceptable transparency and security for all parties involved. To put it bluntly, if a grandma gets robbed of her yearly pension because she invested into someone’s porch renovation I do not want crowdfunding to be involved.