REWARD-BASED CROWDFUNDING FOR CREATIVE PROJECTS BY Aiste Juozaponyte 1548985 GRADUATION ASSIGNMENT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF BACHELOR OF COMMUNICATION- SYSTEMS OF THE INSTITUTE OF COMMUNICATION AT THE UTRECHT UNIVERSITY OF APPLIED SCIENCES UTRECHT, 2012 06 04 Management summary Crowdfunding is an emerging phenomenon that is taking the idea of investment into a new and never before seen level. Organizations and individuals find themselves achiev- ing successful results by relying on widely dispersed individuals rather than professional investors. The main aim of this thesis centers on potentials for non-professional creative individuals to use reward-based crowdfunding. The theoretical framework defines crowdfunding practice and gives an overview of how it emerged from another nascent term - crowdsourcing. Reward-based crowdfunding, as the focus of this study, is explained in greater detail by observing one of the most popular platforms for creative projects called Kickstarter. In addition, this chapter highlights that the crowd is playing a leading role in crowdfunding initiatives. Participating individuals are part of a community where conver- gence and collaboration take place. Furthermore, theory suggests that reward-based crowdfunding is not solely focused on economic aspects, as social attributes are shaping the scope of activities and goals. Conducted qualitative research confirms that several potentials are current for non- professional creative individuals to use reward-based crowdfunding model as researched on Kickstarter. Not only can they raise funding, but also gain significant public attention for their projects presented on Kickstarter. An appealing and transparent communication approach should be implemented, such as defining goals using S.M.A.R.T. model, in order to achieve successful results. Moreover, non-professional creative individuals are observed to satisfy their personal needs by presenting their projects to a wide audience of people. Therefore, they are advised to use video presentations and learn from others in the community in order to achieve desired results. Detailed results and recommenda- tions are presented further in the thesis. 2 Table of Contents 1 INTRODUCTION ............................................................................................. 7 1.1 PROBLEM DEFINITION .................................................................................. 7 1.2 JUSTIFICATION ............................................................................................ 8 1.3 ADVISORY AND RESEARCH QUESTION .......................................................... 9 1.4 OPERATIONALIZATION ................................................................................. 9 1.5 RESTRICTIONS .......................................................................................... 10 1.6 PURPOSE AND RATIONALE ......................................................................... 10 1.7 GENERAL STRUCTURE OF THESIS ............................................................... 11 2 METHODOLOGY .......................................................................................... 12 2.1 DESK RESEARCH ....................................................................................... 12 2.2 CASE STUDY ............................................................................................. 12 2.2.1 What is Newsgrape? .......................................................................... 12 2.2.2 Reasons for a case study .................................................................. 13 2.2.3 Why Newsgrape? .............................................................................. 13 2.2.4 Collection of data ............................................................................... 14 2.3 IN-DEPTH SEMI-STRUCTURED ONE-TO-ONE INTERVIEWS ............................. 14 2.3.1 Reasons for interviews ...................................................................... 15 2.3.2 Type of interviews .............................................................................. 15 2.3.3 Interviewees ....................................................................................... 15 3 THEORETICAL FRAMEWORK .................................................................... 17 3.1 CROWDFUNDING ....................................................................................... 17 3.2 REWARD-BASED CROWDFUNDING .............................................................. 20 3.3 KICKSTARTER ........................................................................................... 22 3.4 CROWDSOURCING ..................................................................................... 24 3.4.1 Examples of crowdsourcing ............................................................... 26 3.5 CROWD WISDOM ....................................................................................... 26 3.6 CREATIVE TASKS WITHIN CROWDFUNDING .................................................. 29 3.7 CONVERGENCE ......................................................................................... 29 3.8 COMMUNITY AND MASS COLLABORATION .................................................... 30 3.9 SELF-ACTUALIZATION ................................................................................ 31 3.10 CROWDFUNDING EXPLAINED BY THEORY OF GRUNIG ................................ 32 4 RESEARCH RESULTS AND ANALYSIS .................................................... 35 4.1 EXTRINSIC AND INTRINSIC MOTIVATIONS .................................................... 35 4.1.1 Seek for funding ................................................................................. 36 4.1.2 Seek and generate public attention ................................................... 36 4.1.3 Personal needs .................................................................................. 36 4.2 RELATIONSHIP .......................................................................................... 38 4.2.1 Belonging to community .................................................................... 38 4.2.2 Unbiased collaboration ...................................................................... 38 4.3 SUCCESS .................................................................................................. 39 4.3.1 Part of the process with rewards ....................................................... 39 4.3.2 Power of word of mouth ..................................................................... 39 4.3.3 Realistic funding goal ......................................................................... 40 4.3.4 Transparency ..................................................................................... 40 4.4 DRAWBACKS ............................................................................................. 40 4.4.1 Lack of preparation ............................................................................ 41 3 4.4.2 Funding goal is soaring ...................................................................... 41 5 CONCLUSIONS AND RECOMMENDATIONS ............................................ 42 5.1 CONCLUSIONS .......................................................................................... 42 5.2 RECOMMENDATIONS ................................................................................. 43 5.2.1 Bring people together ........................................................................ 43 5.2.2 Set realistic goals ............................................................................... 43 5.2.3 Combine transparency and storytelling ............................................. 44 5.2.4 Combine media .................................................................................. 45 5.2.5 Be unique ........................................................................................... 45 5.2.6 Conclusion ......................................................................................... 46 6 REFERENCES .............................................................................................. 47 APPENDIX A: KICKSTARTER GUIDELINES ................................................... 50 APPENDIX B: KICKSTARTER STATISTICS .................................................... 52 APPENDIX C – NEWSGRAPE CASE STUDY ................................................... 56 APPENDIX E – INDIVIDUAL INTERVIEWS ....................................................... 62 4 List of figures Figure 1 Structure of thesis ............................................................................................... 11 Figure 2 Newsgrape logo .................................................................................................. 13 Figure 3 Google Insights for Search ................................................................................. 18 Figure 4 Regional interests in crowdfunding ..................................................................... 18 Figure 5 Main components of reward-based crowdfunding .............................................. 21 Figure 6 Kickstarter logo. .................................................................................................. 22 Figure 7 Kickstarter statistics. ........................................................................................... 23 Figure 8. Crowdsourcing explained by Schenk & Guittard ............................................... 25 Figure 9 Pebble project on Kickstarter. ............................................................................