My post on what should happen when crowdfunded projects fail to deliver — short answer: Nothing — has received a couple of interesting responses, including this one from Fund All Be All, who wrote:
Whoa whoa whoa, why should we be encouraging people to just give up if they can’t deliver?…
I’m going to have to respond as myself here. I track crowdfunding on LinkedIn, Quora, Tumblr, and other sources and the conversation is turning from crowdfunding is awesome to buyer beware. If you back 5 projects and 4 of them fail and you have no recourse than you’re going to become someone that will tell people that crowdfunding doesn’t work. If ebay or craiglist were flooded with spammers within the first years of becoming popular maybe they wouldn’t be around today.
Speaking of ebay, if you were to ban someone from Kickstarter due to fraud they might have already raised enough money to never need to scam the public again. Do you remember the hype over http://www.kickstarter.com/projects/blakebevin/power-laces ? She’s in a different country with $25k. Her website is down and her Facebook doesn’t have much to do with the tech at all.
SO, your bottom line is right. That is how it should work but the mainstream public can’t wrap their head around that concept because of the hype around crowdfunding. The public is expecting pre orders and products so when it doesn’t happen they will think that crowdfunding is a scam.
I think this sentiment is all over the comments in posts about OUYA:
I’ve been thinking about the culture we’re building around crowdfunding since http://www.fastcompany.com/1843007/kickstarter-crowdfunding-platform-or-reality-show came out and then http://blogs.reuters.com/felix-salmon/2012/07/19/is-kickstarter-selling-dreams/ responded.
(I know I just threw up a lot of links but there’s no way I can paraphrase these links well. My intuition is being set off but I can’t articulate those feelings well :/)
“When faced with the reality of these products, disappointment is inevitable—not just because they’re too little too late (if at all) but for even weirder reasons. We don’t really want the stuff. We’re paying for the sensation of a hypothetical idea, not the experience of a realized product. For the pleasure of desiring it. For the experience of watching it succeed beyond expectations or to fail dramatically. Kickstarter is just another form of entertainment. It’s QVC for the Net set. And just like QVC, the products are usually less appealing than the excitement of learning about them for the first time and getting in early on the sale.” - Do we really want to devolve into QVC?
“The question is: how sustainable is this model? It’s common in capitalist societies for local merchants to be able to charge higher prices, largely because they’re more convenient. Has Kickstarter invented a new form of online commerce, where merchants who are close to you on the social graph, rather than in terms of physical geography, can thereby charge a premium for products which would never fly in the open market? (I don’t get many catalogues in the mail offering goods which don’t yet exist, and which might not ever arrive.) Or has Kickstarter merely perfected the art of sprinkling social fairy dust on what are fundamentally commercial transactions, and eventually, as other merchants do the same thing and the public gets wise, the effectiveness of the fairy dust will diminish?” - The whole bubble busting thing right here.
Going off subject here I do like http://seizethecrowd.com and plan to sign myself up even if my work doesn’t want to list themselves on there :D.