Crowdfunding: sharing is multiplying

Whilst we try to get a grip on the idea of crowdsourcing, in the meantime new types of contributive marketing arise.
A next step in the development of brands participating in social matters might be crowdfunding; sharing an investment and the revenue of online marketing activities.

And hey, why not? It's not that unasual to do funding for a good cause; politicians do it, charity fundraisers do it, and now creative entrepreneurs do it.
The best known name in crowdfunding is Sellaband. The social website for investing in upcoming musical talent. More recent there was the student website GreenNote, where any private person can provide a loan to talented students.
The next thing I'm asking you to take part in my mortgage in return of a share of EJ...

Yet this movement is unstoppable I think. I'm positive we have only just carefully starting scratching the surface of the potential of crowdfunding. It might even be the driver of a whole new economy, or at least parts of it. For there's many ways of configuring economic and social motives and convert them into crowdfunded (or even branded) marketing.

Examples of crowdfunding

I've seen many more or less succesful crowdfunding initiatives. For instance, a startup called CatwalkGenius helped young fashion designers getting in business. But there's initiatives of more editorial nature too: the British documentary maker Franny Armstrong raised more than £ 450,000 to enable her to work fulltime at The Age of Stupid. People that invested 35 dollar obtained a credit at the website of the film. And the more gutsy filmfan that was ready to donate £ 12.500,- will get a percentage of the profit -if there is one-.



Where does crowdfunding come from?

The term crowdfunding is derived from crowdsourcing, or: 'the outsourcing of activities that are usually are preformed in business.
A good example of crowdsourcing is Cameesa, derived from the Spanish ‘camisa’ (shirt). Cameesa offers everyone the opportunity to upload his design enabling the 'crowd' to decide which design to invest in. Parts of the revenue flowds back to both designer and investor. The concept is basically a copy of the very succesful French Threadless which is said to have collected 17 million dollar in 2006. Threadless let visitors on the website decide which T-shirt design was printed. A massive success. But how?

It's the users that make Threadless big. They design the t-shirts, put them online, let others vote and decide which ones are to be printed and produced. Then they new owners make pictures of themselves wearing the freshly purchased Threadless-shirts. They also decide if a shirt that's sold out gets back into production or not. Only the really populair ones get another print. Another aspect of the success is the engagement of this concept: since you are the one that actually participated in the product you will always endorse it.
That last aspect is arguably the most powerful driver behind crowdfunding.

Sellaband

Sellaband is obviously the best known example of crowdfunding. SellaBand connects music fans with upcoming artists without a recording contract. Via Sellaband the traditional music business is bypassed. It's now the ‘groupies’ that fulfill this role. Musicians have their own profiles with cv and songs, and the moment they have sold 5000 ‘shares’(10 dollar each) it's time to get ready for the recording session at the studio. Does that make Sellaband succesful?

The artist has at least some extra assets in participating: fans will be true ambassadors. ‘People genuinly consider themselves part of the team’ says Mark Maclaine, bass player of the Britsh band Second Person. Second Person collected 50.000 dollar in 6 months from 741 investors. Their video had been aired since then at VH1 UK en MTV UK.