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Kickstarting Capitalism: Is Crowd-Sourcing the Future?

June 6, 2013


by J. Andrew Zalucky

A couple months ago, I was pumped to see one of my favorite bands, Protest the Hero successfully crowd-fund the production of their new album. Anyone who would like to see the details can check out the Indiegogo page and can check out the video too:

How well did this operation go exactly? Never mind the bands original goal- as it turns out, Protest the Hero was able to make over $341,000 purely from fan contributions. In exchange for these donations, the band offered some pretty sweet deals for the fans: signed limited edition vinyl, invitations to an album listening party, even a pizza party with the band!

I find this whole phenomenon interesting for a number of reasons. One being that, well…Protest the Hero is awesome, but more broadly speaking, it shows just how much the internet has altered the way business can be done. What is “crowd-funding” you ask? Basically it entails “the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations”. In other words, it allows for the direct relationship between producers and consumers, a pure, untainted relationship between patron and client- thus removing the strings otherwise held by the gigantic capital organization. I can still remember the anger and frustration I felt when one of my favorite music stores was shut down, not through an orderly bankruptcy proceeding, but suddenly by its capital firm. This led to the seizure of the store’s entire inventory, without so much as a warning to consumers. In this sense, crowd-funding also keeps the accountability between the patron and client as well, making it so a business can succeed or fail on its own merits, rather than because it failed to make payments to whatever firm invested in it in the first place.

Over the last few years, this new phenomenon has landscape has altered the landscape considerably, as was reported in The Atlantic last year:

We are beginning to see the rise of that mutualistic ethos once again. Many of these efforts directly mirror the late 1800s mutual support model — but this time with the internet helping bring what had once been local models to national scale.

These are not cute, little, boutique shops, either.

Through Kickstarter, regular people raised nearly $100 million to boost more than 27,000 music, film, art and design projects just last year alone. Etsy empowered the sale of more than $400 million in handmade and vintage items last year. And more than two million Americans are employed by the nation’s 30,000 co-ops, according to the National Cooperative Business Association.

With any luck, this innovative force in modern capitalism could become the dominant model for new ideas across all sectors of the economy, especially journalism. It has actually been a tool used by independent journalists for a long time, as Glenn Greenwald notes in his recent article, Reader-funded journalism:

Ever since I began political writing, I’ve relied on annual reader donations to enable me to do the journalism I want to do: first when I wrote at my own Blogspot page and then at Salon. Far and away, that has been the primary factor enabling me to remain independent – to be unconstrained in what I can say and do – because it means I’m ultimately accountable to my readers, who don’t have an agenda other than demanding that I write what I actually think, that the work I produce be unconstrained by institutional orthodoxies and without fear of negative reaction from anyone. It is also reader support that has directly funded much of the work I do, from being able to have research assistants and other needed resources to avoiding having to do the kind of inconsequential work that distracts from that which I think is most necessary and valuable.

It is an indispensable factor in my independence. It enables me to work far more effectively by having the resources I need and to spend my time only on the work which I actually believe can have an impact. It keeps my readers invested in the work I do and keeps me accountable to them.

In a way, this method of crowd-funding may become what allows unique, non-mainstream voices in journalism, film, music, and other forms of communication to survive. Just as in the 1980’s when the rise of independent record labels created a way for underground acts to build an audience and make a name for themselves, to the point where many went on to become legends in their own right (see year: 1991)- this new model might be the answer to what Billy Corgan addresses in the video below. Pay particular attention to what he says around 2:55 and onward:

I also hope congress won’t target these new forces for the hyper-regulation seen in so many other areas. Though in an ironic way, perhaps it is that over-regulation of the wider economy that has pushed new ideas and entrepreneurship into this “new economy’. Aside from legislation on improper payments, economic sanctions, and consumer protections, this is an area where we should allow creativity to flow freely without too much incursion by the public sector. It would be a horrible disgrace to see such a sea of vibrant and unique ideas be squandered or go to waste.

In a world of increased homogenization and of mainstream culture, the decentralizing forces behind crowd-funding operations might be our only hope.

Anyway, here is Protest the Hero again, thanking their fans with another awesome video:

(Not to get too deep into the philosophical narrative here, but in case you’re wondering what “mutualism” is, check it out here)

2 Comments leave one →
  1. PJK permalink
    July 14, 2013 11:15 am

    Forbes is even board, but with something closer to “capitalist methods”:

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