Crowd Sourcing and Risk Reduction

By now I’m sure that everyone has heard of Kickstarter and all the wonderful inventions and games and potato salad that it is responsible for. It’s really quite a cool idea, allowing people who would otherwise go without funding to generate unique creative content outside of the existing system (whether that system is video game studios or movie studios or whatever); giving rise to unique new things such as the “Cooler cooler” or the Oculus Rift (which raised about 2 and a half million dollars from Kickstarter, then sold to Facebook for about 2.3 billion dollars (not a typo, that’s billion with a “B”)).

Now, removing the barrier between the content creators (or artists, if you will) and the consumers is nice, but there is real potential for the crowdsourcing model that isn’t just about giving content creators the freedom to work on what they want to.

One of the longest running and most popular Anime series in Japan is “Detective Conan” (sometimes called “Case Closed” in the US). As far as stories go, it’s fairly simple, every episode there’s some sort of crime (almost always a murder), and its up to teenage detective Jimmy Kudo, (who was of course transformed into a boy detective named Conan Edogawa; don’t ask, its anime) to solve it, with the help of his karate trained not-quite girlfriend Rachel and her bumbling private detective father Richard. While solving these crimes, Conan inches ever closer to uncovering the series spanning mystery about the evil organization which turned him into a kid. So far there have been over 750 episodes and 19 feature films, to put that in perspective thats about 200 more than the Simpsons, which I think debuted during the Reagan administration. Or to look at it another way: lets assume that there’s been about 1 murder per episode (some episodes have none, some have 2, some have one over two episodes), so 750 murders total. The characters don’t seem to age so we can assume the series takes place over two years, three at most. According to this there are 442 murders a year. That means that, in this fictional universe, virtually every murder in Japan is solved by the same boy detective.

Of the 750ish episodes, only about 130 have been translated into English, which for me is a very disappointing, Funimation (one of the largest distributors of anime in America) has determined either that it won’t make money or won’t make enough money or that it’s too big of a risk. Of course I won’t second guess them, I have no idea how many potential customers there are, and although I would pay more for more content, I don’t know if enough other people would do the same.  So if we want to watch Conan Edigawa solve more murders, we’ve got to learn Japanese.

One of the ways to look at Kickstarter is a shift of risk from the producers to the consumers. Instead of putting up a lot of money to create something and hoping that there are enough customers to make the money back, they get pre-commitment from customers. Instead, its the customers who are taking the risk (there’s no guarantee that the producer will even finish the product let alone that the product will be a good one).

But its not just a shift of risk, there is a reduction in the total amount of risk. Looking at Detective Conan, if Funimation were to do a kickstarter to translate the next 100 episodes, there would be no risk. The consumers know the product they’re getting (they already have 100 episodes to view before deciding whether to pledge), Funimation knows how much it will cost to localize the product (they’re in the business of localization, and while there may be some overruns, that can’t be that many), all they have to do is set the correct target to raise funds and the only thing that can go wrong is not hitting the target in which case they don’t proceed and neither the consumer or the producer is any worse off than they are right now. (This also has the added benefit of absolutely killing piracy because no matter how good you are at hacking, you can’t pirate a DVD that hasn’t been made yet).

I don’t know why this doesn’t happen more, having existing companies use Kickstarter as a way to raise money, but more as a way to sell a high-fixed cost low marginal cost product in a risk-free way. I’ve got a few ideas:

1: It goes against the ethos of the site; people got very mad at Zach Braff for raising money at Kickstarter (which I think points out idiotic people can be)

2: You’re kind of not supposed to make a profit on it; that is there’s the assumption that any money raised in Kickstarter will be put back into the product (again, people are looking at Kickstarter as a replacement for raising capital, not as a replacement for selling something)

3: Kickstarters may be largely funded by big donations; people putting down $100 or $200 or more; which is unlikely to happen if the two above criteria are met.

I don’t know why this doesn’t happen more, (perhaps its only a matter of time), but I’m hoping that it will soon.

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