Like many people, Aaron Dunn has a dream. Mr. Dunn wants to see all of the world's great classical music available free of charge, unencumbered by copyrights, for anyone to do with as they wish.
But when Musopen, Dunn's nonprofit organization, was ready to move on from collecting public domain music and begin commissioning new recordings of the great works, the group ran up against a serious cash crunch. Hiring a world-class orchestra is not cheap.
Musopen set a goal of raising $11,000, enough by their calculations to record the complete symphonies of Beethoven, Brahms, Sibelius, and Tchaikovsky. Dunn first tried raising money through his group's website.
"I began to have ideas that required funds and so started adding donation buttons to the site," writes Dunn in an e-mail. "I also experimented with a bid system [that] ended up not working out well."
The next step for an artistic project such as Musopen might have been to seek a grant or corporate backing, but instead the group turned to Kickstarter, one example of how the Web is turning traditional financing on its head. In just a month, Musopen had surpassed its goal of $11,000, and pulled in nearly $70,000 from online patrons.
At its heart, Kickstarter's model is simple. Groups begin by working out a budget and creating a video that explains their project. Kickstarter publishes the proposals online free of charge. Donors may pledge as little or as much as they want, but credit cards will only be charged if the project reaches the full amount of its requested budget. By using this all-or-nothing method, Kickstarter wants to reduce the danger that a project will go underfinanced and therefore fail.
"A lot of transparency and creativity is required," Dunn says. "Unlike a donate button on a Web page somewhere, it's very clear what is expected if people donate on a Kickstarter project. If someone doesn't deliver, it's also very clear who will be upset and [that] these problems will be raised in a very public forum."
Kickstarter cofounder Perry Chen says that the model connects patrons to projects that they never knew existed. Still, the website works best when entrepreneurs start off with a little momentum from existing friends and fans. By providing early support, they can help a Kickstarter project stand out from the crowd and give the venture some credibility.
"In the end," Mr. Chen says, "these are the people who are going to keep you honest. You know you have to come through, or at least try your best."
One year in, Kickstarter has already raised between $15 million and $20 million for projects, according to Chen. The recipients range from the prosaic (start-up costs to product a camera mount for iPhones) to the semiabsurd (funding a life-sized "Mouse Trap" game on a tour across the United States).
As an encouragement to donate, many Kickstarter projects offer incentives – think of them as the equivalent of the coffee mug you get for donating to public television.
For example, a $25 donation might get your name in the credits of an independent film, while $200 would get you a private dinner with the director. Or in the case of a more tangible item, such as the iPhone camera mount (which raised $137,000 after asking for just $10,000), a $25 donation would earn you the final product once it's ready, while $50 would get both the finished unit and a working prototype immediately.
In some cases, it can become hard to tell the difference between a Kickstarter proposal and a product being offered for sale. A recent Kickstarter project advertised a collection of custom computer icons. Give a little money to support the designer, the website said, and the icons would be yours to keep. Each "donation," in effect, was merely the purchase price for a copy of the icons. (Chen says that as long as projects are focused on creative efforts, Kickstarter will refrain from dictating how people should use the site.)
On the other hand, sometimes what seems like a simple – almost retail – posting on Kickstarter can actually be the launchpad for a budding business.
In the case of the iPhone tripod mount, because the start-up cost for commercial-grade molding dies is very expensive, the project founders used Kickstarter to ensure that there would be enough demand to warrant the effort. Also, by using the pledge model, they essentially got a loan to raise the initial capital investment without having to go through a bank.
Prominent "angel investor" Ron Conway, who was an early player in such Internet successes as Google, Twitter, and Facebook, believes that Kickstarter represents a viable way for new companies to find the start-up funding.
"Kickstarter is another very creative way for companies to get funded," he says. "And in my opinion, the more companies that get funded, the more innovation there is out there and, hence, technology advances and the USA continues to create jobs in technology. I think it could become a category that's a meaningful way for companies to raise money."
In the meanwhile, Musopen's Dunn is happy and a little shocked by the success that Kickstarter brought to his project. He believes that the intimate relationship that Kickstarter forms between donors and projects has value beyond the money raised.
"I tried to extract value from the project beyond just the funds given, requesting volunteers and other support," he says. "I would like to see more emphasis on how people can support beyond funds. Most projects don't get the exposure Musopen did for ours, but 1,000 people donating means 1,000 or more people learning about a project, which for some is enough to be valuable for the exposure."
And if you have an orchestra available, he's hiring.