Information Technology Reference
In-Depth Information
10.2
Crowdfunding
Several examples of crowdfunding happened long before the appearance of the
internet. Among them, we can cite the composers Mozart and Beethoven funding
their concerts through advance subscriptions or the Statue of Liberty, which was
funded by small donations from the American and French people (Hemer
2011
).
The campaign made by Joseph Pulitzer in 1885 (Davies
2013
) is a successful
crowdfunding example that occurred in a time where the internet did not exist.
Seeing that city policymakers did not reach an agreement to fund the pedestal for
the Statue of Liberty, in March 16, 1885, Pulitzer published a text in his own Journal,
the
New York World
. He made a direct appeal to American patriotism and the
working-class solidarity, encouraging people to respond to the gift made by
the French working people. The effectiveness of the campaign was motivated by the
emotive text but also by the reward method designed by Pulitzer. He created a sec-
tion on his journal where he published the names of the donors and the quantity of
money given by each one of them. By this action, Pulitzer generated transparency
and rewarded the supporters, transmitting credibility, trust and engagement, three
issues we consider central in the communication taking place in crowdfunding
online platforms.
One hundred twenty-nine years after the campaign made by Pulitzer, the data
provided by
Statista
website says that the number of crowdfunding platforms world-
wide was 342 in 2012 and that the volume of funds obtained by crowdfunding plat-
forms was around one and a half billion US dollars, in 2013.
Depending on the relationship established between creators and donators, we can
distinguish four types of crowdfunding (Young
2012
; De Buysere et al.
2012
):
donation-based crowdfunding, reward-based crowdfunding, debt-based crowdfund-
ing and equity-based crowdfunding.
Donation-based crowdfunding is based on collecting funds from groups of peo-
ple for specifi c projects or goals, and it does not require giving rewards to the
pledgers .
Reward-based crowdfunding is the usual crowdfunding exerted by platforms
such as Kickstarter or Indiegogo. The campaigns encourage people to donate so that
a specifi c project can be done in exchange of rewards linked to the project itself. For
example, fi lmmakers usually offer DVDs of their fi lms, artists offer copies of their
artwork, etc.
Debt-based crowdfunding, also named peer-to-peer lending (P2P) or social lend-
ing, is defi ned as a fi nancial transaction between individuals, or 'peers', without a
fi nancial intermediary implicated.
Finally, equity-based crowdfunding offers the crowd the possibility to buy a
piece of a business. They can invest in the company and receive shares in it.
Bellow, we identify the most important reasons that move creators and support-
ers to participate in crowdfunding actions.
