Questioning how Snowdrift.coop itself should be funded

#1

I was thinking about Snowdrift.coop from the point of view of a project seeking funding, and it occurred to me that the dependability of Snowdrift.coop’s own funding should probably be a big concern. In other words, as someone running a project, I would not want to invest a lot of effort and reputation in asking people to support my project via Snowdrift.coop if I didn’t feel confident that Snowdrift.coop itself had the ability to function reliably on a consistent ongoing basis.

This led me to question the idea that Snowdrift.coop should be funded exclusively through crowdmatching, on the same basis as other projects, and should not take any portion of donations to other projects. Imagining myself as a representative of a project interested in seeking funding on Snowdrift.coop, I can imagine that I might much prefer to have Snowdrift.coop take a small portion of donations to projects such as mine, if that enabled Snowdrift.coop to function as a reliable platform I can depend on.

This of course would still be in the context of being a nonprofit. Snowdrift.coop would not be taking a cut in order for anyone to get rich, but only to ensure that Snowdrift.coop could actually function reliably.

It could be used as a backup to crowdmatching. As Snowdrift.coop’s crowdmatching funding grew, the cut could be reduced and eventually eliminated.

Related thoughts:

  • Snowdrift.coop is not like a typical project of the sort that would be invited to seek funding on Snowdrift.coop, where once public goods have been created the work is done until new or modified public goods are created. It requires consistent ongoing time and attention to keep Snowdrift.coop functioning. As soon as we have even one real project on board, this will become a critical issue if we still depend entirely on volunteers.

  • The potential crowd of people willing to pledge to Snowdrift.coop may be a lot smaller than the potential crowds of people willing to pledge to projects that are primarily about creating public goods, and not about running a platform. To be excited about pledging to Snowdrift.coop you have to really understand the funding issue for public goods and care about it. To be excited about pledging to LibreOffice, just as an example, you just have to use and appreciate LibreOffice and feel good about doing your part to sustain it.

Summary:

I’m thinking that it may be too risky to just hope that once we have a couple of popular projects on board, enough people will also pledge to Snowdrift.coop to enable reliable ongoing functioning, and soon enough. We may really need to consider a plan that makes it a bit more certain that, to the extent crowdmatching is successful for projects that come on board, Snowdrift.coop will have adequate funding to sustain and build on that success.

4 Likes
#2

Itch.io has a slider in which projects can opt in to a sliding scale of the percentage of income a game developer wants to allocate to the platform.

Alternatively, it may be interesting to say “my project depends on projects X, Y, and Z” please allocate the following percentages to those projects. This doesn’t work as well with the crowdmatching formula, though (unless the formula can support partial donors?).

2 Likes
#3

@tswast thank you - very interesting and relevant! I want to post the blog post introducing that idea here too: https://itch.io/updates/introducing-open-revenue-sharing

1 Like
#4

What about this way of looking at the problem: Any project willing to be the first to be using Snowdrift is aware of the risk that comes with it and won’t "depend on it right away. Also no project needs to fully rely on us alone.

So while I completely acknowledge the problem exists and needs to be adressed, I think it isn’t that crucial now.

If our experience shows that people do “ignore” snowdrift as a platform and “only” appreciate other projects using it we need to act.

Personally I think we should wait and see if that happens. because if we act on that fear right away we start to distance ourselves from the “we take no fees” mantra more or less. Which may be a necessary! But I’d first act on it if we see it is.

Right now I’d like to give the crowd the chance to prove it actually cares about snowdrift enough to make us sit tight in the high horse of “we take no fees”.

Maybe I’m too optimistic? :blush:

3 Likes
#5

It’s interesting, @msiep’s post got me thinking about this and nodding my head abit, but @mray’s really vibes as well… Definitely going to mull over this a bit but leaning towards optimism!

#6

I don’t think optimism vs pessimism is the right frame here. I’m very optimistic that pretty much everyone who pledges to any project via Snowdrift.coop will be someone with overall good intentions and who cares about the kinds of issues Snowdrift.coop was created to address. However, that’s not the key point here.

The point is that for Snowdrift.coop to make a difference it has to get off the ground and quickly become sustainable. People who come to Snowdrift.coop to support Project X that they care about will mostly be busy, distracted people like we all are, and Snowdrift.coop will be something new and unfamiliar to them.

I’m very optimistic that they will in principle want Snowdrift.coop to get the support it needs to continue functioning. However, there is a big cognitive and motivational distance between that and actually pledging to Snowdrift.coop.

If we allow projects to support Snowdrift.coop with whatever portion of their donations they choose (from 0% up), as itch.io does (see their blog post I linked to above) - as well as allowing anyone to pledge to Snowdrift.coop directly - I think that will meet everyone’s needs much better. People who learn about Snowdrift.coop and think it is really important and want to support it directly will still be able to do so. People who mainly just want to support Project X will be able to do that while automatically helping to sustain Snowdrift.coop to whatever extent Project X has decided Project X feels good about. And Project X will be have some power to help ensure Snowdrift.coop succeeds and continues to exist, rather than just having to hope that a big enough crowd of dedicated Snowdrift.coop fans forms to make that possible. Over time, to the extent that such a crowd does arise, and Snowdrift.coop really doesn’t need more funding than that crowd provides, it would be perfectly possible to reduce the default or suggested project contribution to Snowdrift.coop, even down to 0%.

3 Likes
#7

I think I see what you have in mind. You want to reduce the complexity that comes with actively deciding to support two projects, instead of just one. I guess your assumption would be right that in most cases we would be offering a shortcut that many or most people would appreciate.

We’d lose the “we take no fees” angle though. Which in any case is a bummer. Also lets not forget there still needs to be the extra effort to get across how that shortcut exactly works. Transparency and all…

@msiep what do you think about a solution that keeps pledging totally separated but still approaches early adopters: We have the option to get in touch with them (email or on site notifications) to essentially “nag” them very very subtle. Like two weeks after the first pledge we notify: “Hey, unlike other funding platforms we don’t take any money from the projects. If you think what we do is worth your support: consider pledging our own project as well!”

My expectation would be, that – given we make pledging as easy as we plan it to be – this would be a single, quick, honest, and transparent way to get more support.

1 Like
#8

True, but it’s not just that. It’s also that I think the threshold for pledging to the platform itself is much higher than the threshold for being happy to have a small percentage of one’s donation to another project go to support the platform. You have to really be a fan of the platform itself, vs. just using the platform to support whatever project(s) you are already a fan of. If Snowdrift.coop can only become able to function reliably after attracting a crowd of many thousands of people who are sufficiently excited about the platform itself that they are willing to donate several dollars a month, that seems like a problem to me.

A more general related point is that I think it would be good to do some realistic planning of how much funding Snowdrift.coop will actually need to function reliably, without any critical functions depending on unpaid volunteers. Then the next question would be how to ensure that this minimum viable funding gets established soon enough. With the current plan of being funded only by a crowd of people pledging directly to Snowdrift.coop, how big would that crowd have to become to achieve that minimum viable funding? And is it plausible that the crowd could get that big while in the meantime Snowdrift.coop is attempting to function without adequate resources being available.

1 Like
#9

I think part of the attraction of “we take no fees” is actually covered by “we’re a nonprofit coop, so any fees we do take are only going to keep the platform running, and we have no incentive to take fees higher than necessary for that”.

We could certainly still have, and express, the goal of not having to ask for any fees - contingent on having a large enough crowd of Snowdrift.coop patrons that no fees are needed to sustain the platform.

However, I still think it’s important to consider that Snowdrift.coop is not simply a creator and maintainer of public goods, and so isn’t actually an exact match for the type of project Snowdrift.coop aims to fund. The costs of running Snowdrift.coop that are not attributable to the creation and maintenance of public goods are perhaps actually more suitably funded by some sort of small contribution from everyone using the platform, rather than just larger contributions from a group of dedicated Snowdrift.coop fans?

1 Like
#10

I need to find the time for a longer post, but for now I will address this point by saying that we can easily say “we require no fees*” “* but we do make it easy for projects to transparently give us a percentage of their funding”

1 Like
#11

I see the sensible points behind your opinions. We can still claim to be superior in our financial structure in any case. One thing still would be an open question to me, given that we try to get a “fixed” or “implicit” share of donations one way or the other:

Wouldn’t we put a cap on what could potentially be something that grows larger than our relatively arbitrary standard share? Because in one way or the other we would have to aim for a certain size of the chunk we are after. We would be robbing ourselves of getting larger amounts that we might not be “asking” for otherwise. We can’t get love-bombed for our own project anymore and depend on other projects success. Which – especially in the beginning – will be really ambitious.
Of course we could do both: take a share AND be our own project, but then again that makes supporting us a bit convoluted. I like the idea of people physically feeling how we take a step back and give them control. How their support is always a choice on their side and not a mechanism.

Also to some degree I must admit the “practice what you preach” hits home with me on that issue, too. It is weird to set up such infrastructure and then not make use of it ourselves. If Kickstarter or Patreon couldn’t kickstart themselves because of VC involvement, what is our excuse to not crowdmatch ourselves? :wink:

To be clear, I’m not opposed to what you all suggest – It is just that I would prefer to try doing the cheeky, simple and sexy thing and see if it works :smile:

1 Like
#12

That is indeed an important problem we need to keep in mind either way.

Maybe that is true, but in order to raise a substantial amount of money through implicit fees we would have to be hosting multiple really successful projects. Alternatively our slice would have to be really big. I think we can’t escape that we as a platform need to be something that people explicitly support. Established funding platforms and their respective projects are available, and if we gain traction it isn’t because we are more streamlined, work easier, faster and are better known – I suspect we just have to underline our main selling points and build upon them. At least until we are a more experienced project.

Maybe you are too optimistic here :smile: if people don’t even notice what snowdrift is, and how it is different – they just care about supporting project X and go along with us – I think we would be in an exceptionally good position already.

1 Like
#13

@mray has really articulated my thoughts here, everything from the open-mindedness (we’ll consider the ideas and be open to changing as needed) to the points that we shouldn’t give up on no-fee before it has a chance.

I think there’s a population of people who will be more enthusiastic about Snowdrift.coop than about any individual project. They almost feel it more of a burden to deal with choosing which projects deserve their support. What they want is for our overall mission to succeed (a FLO future etc). I don’t know how big that population is, but still.

The nag ideas are fine, and once we have co-op governance in place, everyone can participate on accepting fees rather than feel that it was imposed by the founding team. Also, the perk of being a platform patron is membership in the co-op.

On the idea that we’re not a regular public goods project: that’s partly true. But it’s also true that many public goods require maintenance. If our costs scale with increased usage of the platform, that’s less public-good. But if the majority of our costs are the same whether we have 50k patrons and 30 projects or 500k patrons and 30k projects, then we are effectively a public good.

The definition of public goods isn’t related to whether there’s ongoing maintenance costs. It’s whether it’s non-rivalrous and non-exclusive. So, if we don’t require a fee for patrons or projects to join and each new project or patron incurs relatively little new cost, then we’re pretty much a public good; at least enough to fit the same economic situation that crowdmatching addresses.

#14

Just for reference, this is no easy task!

Drip was a project designed for continuous funding for creators of all sorts. in 2016 they announced they were shutting down, and a month later they ended up joining Kickstarter. Drip still exists as an invite only with a 100+ projects to support but plans were announced for a platform to be succeeded by a project that would be a partnership between Kickstarter and XOXOfest (the most succesful Kickstarter-funded event, apparently). Last month, they announced they halted development of the project. :grimacing:

Ultimately, we couldn’t find a way to make the business viable. We explored a number of different options—voluntary subscriptions from users, premium features, increased fees—but the resources required to support a high number of lower-volume creators always outpaced our revenue.

The good news is they only tried to make it work for 7 months before calling it quits. While surely they had a decent amount of resources, I’m sure they were also attempting to make a profit from the project, and of course hosting a lot of smaller projects that don’t bring in as much revenue is more difficult. So focusing on larger projects and scaling from there seems like a more sustainable development schedule for Snowdrift.coop! Either way, it’s clear this is not a situation in which immediate success can be assumed so I hope everyone keeps up the good work!

#15

Perhaps, but it’s more important to not give up on crowdmatching itself before it has a chance. My concern is that being too attached to the no-fee idea could prevent crowdmatching from getting off the ground.

@Salt I think this is a topic it would be worth getting feedback on from Kodi and other potential projects. My biggest concern is that they will perceive too much risk in encouraging their fan base to support them via Snowdrift.coop at a stage where Snowdrift.coop itself doesn’t yet have a reliable source of funding and depends entirely for its functioning on the availability and goodwill of volunteers.

1 Like
#16

Indeed, let’s not be too attached. I think we should avoid making no-fee seem a key selling point. I’d rather emphasize the non-profit aspect and the values that we have that go in the no-fee direction (such as caring about economic transparency overall).

I think we need to keep emphasizing larger grant donations until at least we are fully, fully launched.

Perhaps the position we want is like this: We want an abundance mentality and have hopes of crowdmatching working for the platform itself too. Aside from launch-sponsor donations, we plan to start without any extra fees. We hope to not need them. And we will make any such decisions as a co-op community. So, fees aren’t some unilateral thing we just impose universally. This is part of having a different sort of relationship with the community than the non-co-op, for-profits have.

2 Likes
#17

Here’s an article I found interesting and thought provoking in relation to this discussion, from Nathan Schneider:

#18

While related, I don’t see how that’s applicable to Snowdrift.coop. That startup model is based on having initial investors who expect some return. Whereas with Snowdrift.coop, I didn’t take an investment share of a potentially-profitable business. The question is how it could even be sustained ever. And I will never get any direct return on the massive time, energy, and money I’ve put in.

Nathan’s article is about businesses that have equity and which have enough potential to sell to new investors. He’s saying they should embrace co-op investors (the community) rather than only IPOs or sell-out to existing for-profit companies.

#19

I didn’t mean to imply direct applicability to Snowdrift.coop as in “hey, we should seek investors!”. I just found it thought-provoking in relation to this discussion about funding in the process of getting started. What interested me about it was the idea that something could be initially funded by investors who want a return, but then become community-owned, potentially by a community whose interest in owning it has nothing to do with profit. They just want it to exist and serve the community, and collectively are wiling to pay/donate enough to satisfy the original investors. Of course the investors would need to be sufficiently convinced that there was a community out there that would buy it from them for that purpose, at a high enough price.

2 Likes
#20

Sure. In a sense, it’s a form of ransom (mentioned at https://wiki.snowdrift.coop/market-research/other-crowdfunding#ransom and https://wiki.snowdrift.coop/market-research/history/software#ransom-systems). Though Nathan is talking more about businesses than about FLO works (and that distinction or the fuzziness of where Snowdrift.coop stands in that distinction) may be one reason you thought of this topic in conjunction with his article.