TL;DR: I see all the proposed goal-based versions of the crowdmatching mechanism as requiring most projects to pass through a certain state. Namely, the state where they are getting some money, but not yet enough to produce results that (e.g.) patron X can see or feel – while at the same time getting from patron X more money than she is honestly willing to give up without having results she can see or feel.
In fact, stagnant-goal projects can remain in this state indefinitely.
It’s reasonable to assume that patrons are fine with contributing a “negligible” amount of money (as in the classic “it’s only 10 cents a month!” examples) to a cause that might take off. Likewise, thanks to Kickstarter et. al., it’s reasonable to assume people are willing to contribute significant amounts of money to a project when it’s needed to achieve significant things. But what about all the other scenarios in between?
Allow me the simplification of splitting prospective patrons into two types:
Type A
Purely altruistic. The defining characteristic being, that this patron is perfectly fine with “donating” a non-negligible amount of money into a project, from which the patron sees negligible results.
Type B
Motivated by altruism and results. These people want to see certain growth and changes in a project, and are willing to put a generous amount of their money into realizing these changes if it means achieving these results (at a minimum).
With that said, this discussion is exclusively about Type B people. But how big of a portion have I just ruled out? Not much, I’d argue. Perhaps this project is run by a statistically unlikely portion of Type As, perhaps not. Regardless, I think most crowdfunding comes from Type B people, the “everyone else”. (In practice - regardless of whether it “should” be that way.)
Hi, I’m a real patron
Personally, I am a Type B! I have participated in several crowdfunding campaigns, and none disappointed me more than this one, where the project took over $500 of my money and gave me, and all of the other backers, NOTHING in return. I got burned, and to be honest have not participated in crowdfunding campaigns ever since. To be clear, I knew I was essentially gambling, and this is a well-known risk of crowdfunding.
So here’s what I want to know
But just think, I took that risk, assuming the funding goal was the amount that was guaranteed to be “enough” money to achieve what they set out to do. (Which it was, in this case the problem was not lack of funds but a failure to ship.) Even with that guarantee, I got burned. So my question is, is it reasonable to expect people to be willing to contribute significant amounts when the output is NOT “guaranteed enough money” – or worse – “guaranteed NOT enough money”?
That’s what is happening when e.g. a percentage-based system is indefinitely pulling a significant amount of money from your account because it calculated that the project is “50% toward its goal”. I suppose the amount someone wants to give for 50% progress towards the results could conveniently be 50% of the amount they would give for actually 100% getting there… but I doubt it! For most of us, it’s far, far less.
The Discomfort Zone
But if, say, you’re comfortable giving up to 5% for no results (because you want to just sustain the project as-is, and/or that amount feels negligible for your wealth status) out of the amount you’d give to actually achieve the goal 100% (actually let’s even say the project can pull it off with 95%, because they wisely shot high in their goal) then that still leaves us with 90% of the time you are giving more than you’re comfortable with. Yikes! (And if they never get there, it’s effectively forever! Until you wise up and back out, of course.)
All the ways goals can turn out
Of course that’s assuming a perfectly linear progression. We have no idea how the graphs will look in practice. But I do know that project goals must play out in one of these ways:
Ideal 1: A goal is fully funded right away.
Ideal 2: A goal is partially funded, and will hit 100% reasonably quickly.
Stagnant 1: A goal is partially funded, and keeps gaining support, but will take unreasonably long to hit 100% (as in, not soon enough for prospective patrons to care).
Stagnant 2: A goal is partially funded, and will stay there, because support is continuously lost as much as it is gained (or goes nowhere at all)
Stagnant 3: A goal is partially funded, but keeps losing support.
Note that 4 out of the 5 possibilities involve the project being only partially funded. This isn’t proof, but I think it’s also intuitively obvious that most projects will be incompletely funded most of the time. This is especially true in systems that move on to the next goal as soon as the previous one is reached. (Not true for goals-as-separate-projects mechanisms, but they actually have the problem described in this post way worse.) Do we agree on that intuition? Let me know.
Note further that only 1 of the “partially funded” states (Ideal #2) is any good. The rest (which I call stagnant) are slowly sucking money out of Type Bs and trapping us in the “discomfort” zone. If no one leaves because of this, everything’s fine I guess but trust in the platform is still eroded. But people probably will leave, in droves, as they slowly and individually realize what’s happening. (This could result in a feedback loop of renewed support, bouncing the graph up and down indefinitely, effectively funneling a project into the “Stagnant 2” state. If this happens a lot, I suspect we are artificially inflating the number of stagnant projects as crowds try to wrestle their way out of the discomfort zone!)
Counterarguments
“Even small amounts will eventually add up!”
Yes, specifically for a project’s one-off expenses, we could just ask the patron to be more patient - since we’re talking monthly, half the goal amount (for example) could still afford us that new guitar if we simply wait twice as long! But there’s no saying for sure that patrons will want to do this.
Otherwise, this argument falls flat on goals that will pay recurring expenses, which is kinda what Snowdrift is all about. If you only make $40 a month, you’ll never be able to afford that $50/month server, no matter how long you wait.
“Projects can just supplement it with their own income!”
With this ask, projects run by multiple people need to decide how to split up the financial burden (or decide who will bear it all). Even if that’s not a problem, or if we’re just talking about a single artist, you’re moving that from “a big ask” to “a moral obligation” on the maker’s part, if they want to avoid any accountability issues from the lack-of-results problem described in this post.
Sure, as a maker maybe you can spare your own money for your passion project this month, as you have many other months. But are you willing to do that indefinitely? (Answering “no” is likely what drove you to crowdfunding in the first place!) (If definitely “yes”, then you are maker who could nearly afford to achieve your goal without crowdfunding at all - you may not benefit, but will not be harmed by alternative systems that are optimized for makers that can’t afford that.) And yes, it needs to be indefinitely, because the Type Bs who continue to give you money indefinitely, enabling your progress, are doing so under the impression that you will, you know, actually progress.
Oh, and what if you become suddenly unemployed, etc.
“They may not be able to fully afford XYZ yet, but they can use the partial amount to at least afford X!”
That’s fair! …but recursive: I say, the first “goal” should be X, then. Loop back to the top with that first subgoal as the new goal, and bam, all the arguments still apply.
XYZ can come later. In this post my usage of “goal” refers to the smallest usable amount. Where “usable” is judged by whether the patrons notice a difference. Call it a microgoal, if you must. I realize that I’m arguing for discrete amounts rather than a continuous scale of usefulness - but that’s how most expenditures work, and it’s how most patrons will think.
“But any amount is helpful!”
“That’s nice”, says Type B contributors. This argument is all about giving, but not getting. Even if a project can prove this (many can’t), you’d only convince the rare Type As. Let’s rephrase:
“But any amount is always useful to the project”
Ah, that’s even harder to prove. I realize that some projects – e.g. @wolftune as an independent artist – feel this way. You were going to buy a new guitar anyway, perhaps, but now it’s 50% off thanks to your generous fans! However, I doubt most small projects will think this way. And you’re still probably relying on the “supplemental income” factor mentioned above. And even if a project thinks this way now, they may eventually run out of ideas, and just want to get to the stated goal already without indefinitely coming up with intermediary expenses that hopefully appease the uncomfortable-zone crowd.
(There are also other ways to achieve this. For example, “pay for 50% of my next guitar” could be made into an earlier explicit goal, if you’re so sure that you’re able to pay the difference and don’t want to wait for success.)
Perhaps you find none of those problems convincing, and still believe the project will make good use of “any amount”. Here’s the catch: none of that matters! It’s how the patrons feel about the spending that matters. So even if some portion of creators are okay with half-assed funding, the crowd (the overwhelming majority of future Snowdrift users) doesn’t necessarily care. And they’re the ones paying for all this! So we need a patron-focused argument:
“But any amount is always useful in the eyes of the patron!”
No, that just isn’t true. Especially not “any amount”, and especially not “always” - yet those qualifiers are critical for making this a solid defense. Even if you think there’s some situations and/or partial amounts that are acceptable to patrons, you are admitting that there are some that aren’t, which means we still have a problem! Here are some more problems:
- It is well known that the utility of money - how much you get out of a single dollar - goes down and down dramatically as you’re tasked with spending more and more dollars at once. A million dollars is not 10 times more useful than a hundred thousand dollars. This is another reason to feel worse and worse as you are taken further into the discomfort zone – this non-negligible monthly amount gets less and less worthwhile even for the project.
- That also means that you could have funded that other project, who today happens to be $5 away from an actual goal, with the extra 5 dollars you just sank into this 20% funded project thanks to the automated system. Perhaps you log in to Snowdrift at the right time to catch this and redirect the money. Perhaps you don’t.
- Let’s say there’s a community rule, that with an explicit goal comes an explicit spending plan - a “here’s what you’ll do with the money”. Projects are accountable to that plan. Well, only if they’re fully funded, that is! If they’re partially funded, yet still expected to make use of the money, they get a free pass to ignore the plan (which they can’t afford) and instead spend the money however they like. What other choice do we have, ask them to make a separate plan for every possible intermediate amount?
- Patrons that want to contribute to upgrades to your project, not bills from your skydiving course.
- etcetera
“But the Discomfort Zone is smaller than you think!”
To be fair, there are situations where it may not exist at all – again, it only refers to times when patrons are charged more than they’re willing to give for no results, but are still getting no results. (This is of course different for every patron in practice, we’re speaking in averages.) Theoretically you could have the opposite, where the project makes good use of money while each patron still feels the amount they contribute is negligible. That would be great! But without significant mechanism changes, it currently only really applies to the very bottom of the spectrum.
In any other case, it does not matter how wide the discomfort zone is, only how long we’re stuck in it.
“But the Discomfort Zone will be over quickly!”
Not likely! This is only guaranteed for “Ideal #1” projects - that’s just one of the 5 possible states! In the 3 Stagnant states, the opposite is true. Not great odds, regardless of how many projects fall into each state in practice.
And as far as Ideal #2, that’s not necessarily true either - even for narrow discomfort zones. Something like this could happen:
There is a certain church near me, that needs to get a new organ, and they’re soliciting donations to get one, and announcing how much they have already collected. It really didn’t take them long to reach 95% of the amount needed to get the organ… but since, there the notice has sat, week after week, waiting for that last little bit to come in. Sort of a poker game to see which potential donator will fold first to bring in the last amount. Just something to think about.
– True story from a comment on QuestionCopyright.org
So, we may in fact get stuck in the discomfort zone as a result of natural human psychological
phenomena. If that story continued over many months, and happened with recurring donations instead of one-time donations, it would be a lot more tragic than a donation box collecting dust.
Also note that this is not the low-end of the zone, but the high-end, so this could be A LOT OF MONEY for no results - many times more than the equivalent amount of time stuck in the low end.
