Crowdfunded ventures are at their hearts startups, and ought to behave like it. While project leaders have the luxury of using other people’s money rather than their own, funds are exceedingly limited and contributors expect success. Since most models rely on rewards rather than repayment, users are entitled to a piece of the output. Whether an album, DVD, or book, some product was usually promised to mid-level donors in exchange for their support. Many contribution agreements may not explicitly state that a project manager is not accountable for such an exchange if final goods are never produced. crowd-based investing has been criticized as an illegal exchange of securities by certain government agencies. Many donation-based crowdfunding platforms have not yet made clear the relationship between unfinished projects and users’ rights.

There may be a significant shift in the availability of funds and willing contributors for crowdfunded projects in the near future. The number of active projects grow daily, and on top-tier platforms, many if not most are finding success long before the funding period is complete. As with any platform, the initial enthusiasm will eventually wear off, leaving once eager contributors disenchanted. Given the limited selection of projects today, many users may simply be crowdfunding enthusiasts looking to experiment with a new socioeconomic model. This group will soon be far outnumbered by users who care about individual projects and arrive primarily from outside of progressive digital circles. When that time comes, competition will be much more fierce.

We’ve already witnessed the demise and collapse of many platforms in the past year, and although some have been resurrected, we may not have seen the complete fallout of these collapses. There may be a fundamental demand imbalance on media-specific platforms as well as a failure of marketing. Is SellaBand designed to attract investors interested in music or fans of individual groups who want to essentially preorder albums? The dual role of investor/fan confuses the audience as well as making targeting much more difficult. The real difficulty in these situations may lie with understanding the user journeys of contributors on these sites once their initial enthusiasm dies out.

As crowdfunding receives more mainstream attention, the influx of new lower-quality, poorly marketed projects will drive down the success rates on platforms. Will it also drive away more capable, responsible investors? Success at this stage will require leaner operating budgets to compensate for decreased availability of funds and contributors spreading out their interest. I suspect that early 2010 will be remembered as the golden age of crowdfunding by the first entrepreneurs, as nearly every well-managed project that could spark donor-interest was saturated with funds. Once users have more to choose from, things may get darker for individual projects.

Lower funding goals and increased accountability will also likely lead to a further stratification and specialization of platforms. Films produced under union specifications, for example, have very different budgetary guidelines that may not seem reasonable when compared with a lean online retail operation to uninformed contributors. Currently, there exists a benefit to centralizing contributors on multi-purpose platforms like Kickstarter, but with a geometric rise in projects and contributors, platforms like SoKap which is dedicated solely to films will likely see a significant rise in traffic.

The most significant role not yet filled in crowdfunding is marketing. While today a simple search for crowdfunded projects yields a manageable number of results, in the coming boom, discovering a specific project by browsing may be like finding the proverbial needle in a haystack. Just as search was augmented by content-driven ads, new channels will develop to drive traffic and interest in specific projects. I expect we will witness the rise of crowdfunding-specific marketing platforms and agencies in the next year. It should be noted of course that as adding a marketing budget is antithetical to leaner budgeting, these agencies must be content with a portion of future revenues.

Contributors can be grouped on the basis of two traits: whether they give funds and whether they expect any remuneration.

The greatest challenge projects face is publicity. If potential contributors are unaware of a project, they can provide little help. Some users will never donate or invest in a project but will happily spread the word. Most of their work happens on Facebook, Reddit, Digg, and Twitter. This basic form of support often goes unappreciated. They may not directly fund a project, but this group can make or break its long term success. Finding ways to reach out to and reward this kind of help can go a long way in generating good will and hype in online communities.

Some of the most successful platforms rely on donors who contribute without sharing in profits. Project managers are able to set rewards for individual contribution tiers. Mid-level donors might get a free product, while major contributors are rewarded with their name in the credits or a visit to the set, site, or factory. These rewards are often encouraged, but not required on sites like Kickstarter. Projects working with this model tend to allow flexible donation amounts, operate on a pledge-basis, and have mid-range budgets ($1,000-10,000). This model is most effective at soliciting small contributions from a large number of individuals, often in exchange for profit.

Some people contribute with the intention of recouping their funds as a share of future profits. These investors are essentially stockholders purchasing shares in a new venture. This model is generally applied to larger investments among fewer contributors in highly capitalized projects. While this offers an alternative to traditional investment models, depending on the jurisdiction it may be tantamount to trading unregulated securities. Counsel should be sought to ensure all appropriate reporting regulations are being followed.

Each type of supporter have different motivations and goals. Those with a stake in a projects revenues are likely to behave very differently than those who only want a copy of an album. It is always worth paying close attention to the reactions, feedback, and input of the communities affiliated with a project. However project supervisors should always remain conscious of whom they are talking to. Investors have different goals than fans, and their advice always be considered, albeit in context.

The announcement of the ban on sexual content crosses a serious line. Not only does it signal a reactionary move in forcing a small subset of users’ values on the entire population, but it opens the door for more restrictions. Apple offers parental controls on all iPhones and iPod Touches to prevent this being an issue. All applications, music and movies are given a rating based on their age-appropriateness. The choice to additionally block certain applications for their content goes far beyond parental controls. Apple notably not only allowed certain nude commercial apps to remain on the store, but continues to promote some (Sports Illustrated Swimsuit Issue) on the front page of the iTunes and mobile App Stores.

The reason behind this inconsistency is clear. As the iPad launch looms, Apple wants an iPad in every home, which means making the brand as family-friendly as possible. However, removing content by major media conglomerates already approved for sale would worry many content producers at the corporate level. Apple wants the major publishers to release books and magazines for sale through iTunes on iPad. Sports Illustrated is owned by Time Warner, one of the major global media groups. Clearly the makers of iBoobs did not warrant such consideration. Apple feels it can’t afford to alienate major commercial groups but independent developers are fair game.

Nothing could be further from the truth. The iPhone platform has soared above others in the smartphone market in no small part due to the variety and quality of third party applications available on the App Store. The continued availability and production of such applications is largely limited by the good will of developers. Apple has announced one new SDK with another on the way in coming months. Developers will also need to re-up their licenses and purchase iPads for development. If they feel that Apple no longer has their best interest at hear, many may migrate to Android or other platforms. This is a delicate time for Apple as their products move forward, and their relationship with developers has always been strained on the iPhone SDK and App Store. Visible reneging on past promises and abruptly terminating the sole income stream of many small developers can only server to hasten the eventual demise of the platform.

Until very recently, organic processes shaped our exposure to and ability to obtain products. We bought books and music in stores when there were no global listings by artist or author. Titles were often out of print or had to be special ordered. Content was arcane and knowing what you were looking for was half the battle. Recommendations came from staff, not a x/5 stars or aggregate user reviews. The authors and artists you knew about were a product of who you knew, where you shopped, and how hard you looked. Librarians, neighborhood record shops, clubs, and friends on the Usenet were often the first places we turned looking for new content.

Amazon and a few thousand other online merchants later, content and products are immensely easy to find and obtain. Prices are low, variety is tremendous, and many products are leapfrogging shipping delays entirely with digital distribution. It’s great to be able to see almost any movie or download any album instantly. But instant access and commercial homogeneity has come with a high price. Everyone has a different experience each time they view a work of art. The first time you watch a film it affects you differently than the seventh, the person sitting next to you in the theatre feels differently about it than you do, but the story doesn’t end there. The process of discovery itself helps shape the impact events have on our lives. We remember the people who introduced us to our favorite works and the communities of shared experience that develop around shared love of the same authors and artists. While increased access and availability have allowed more readers, listeners, consumers, and users to experience titles that might have been banished to a small ideological or subcultural ghetto only a few years ago, the richness of our experiences of discovery has begun to diminish. There is little poetry in finding a book for the first time in the “Customers who looked at this title also bought” section of a merchant’s storefront. Alibris and Amazon Marketplace make finding an out of print or rare book that might once have taken years into a few minutes’ work.

Brands became equally important during the evolution of acquisition experience. If the process of obtaining a suitcase was no longer inherently fulfilling, then the product itself needed to represent something larger. Brand development emerged as a multi-billion dollar field offering to help corporations build individual mythologies around which consumers could craft personal identities. Brands offered everything from histories to color schemes as replacement for a truely social or organic shopping experience. Logos and insignia, once banished to inside labels and pocket liners left their original confines and gained additional prominence in design motifs. Companies defined and espoused core values in hopes that consumers would identify with semi-fictional histories and ideologies, and thus purchase more. But as social media helped increase transparency and accountability, these values seldom stood up to the light of day or provided a fulfilling alternative to real social experience.

Crowdfunding offers a new way forward in the post-brand economy. While the past decade focused on and ever contracting field of conglomerates, crowdfunded ventures can start from the ground up allowing consumers to identify constructively with smaller individuals, companies, and product lines. One great weakness of brands was the inability of consumers to construct viable social and commercial identities within the limited sphere of available options. Crowdfunded ventures can scale with popularity creating lean operations while avoiding debt. Instead of ‘buying the label’, customers can become investors and contributors, helping artists, designers, and entrepreneurs fulfill their dreams. The diversity of content has thus far appealed particularly to elements of hipster culture, which emerged to counter increasingly brand-driven consumer behavior. The subculture has been accused of ‘fetishizing individuality’ with a focus on thrift stores, body modifications, and handmade items. Crowdfunding offers a symbiotic compromise between these paths. Individuality can be maintained in a value-added environment, instead of going to extremes which stretch the limits of logistical viability, smaller contributions can be made often at the level of material-cost prices that go directly to the producers. Troublesome questions about labor or environmental exploitation (issues that arose in an effort to combat falling margins) can be avoided with a tremendous increase in local production and operational transparency. Moreover, contributors have direct access to project leaders and input into the design, marketing, and future of product lines. Some platforms even offer a share of future revenues. In any case, a financial stake in the future of beloved company, artist, or product creates a bi-directional, sustainable, organic relationship between both parties. The resulting community can with a little effort be sustained indefinitely or transformed to provide support for future ventures.

Crowdfunding presents a new future for Western commerce, culture, and commercial psychology. Elements which have played significant roles in our recent history are being revolutionized by emerging technologies and the individuals supporting both sides of their development.

HBO has been particularly reticent to make their product available online even through DRM and streaming services. Amazon recently announced a partnership with HBO making some original content available for purchase and rent through Amazon Video on Demand. This announcement was limited to early seasons and off-the air shows, with some programs omitted entirely. Season six of Entourage for example aired from July to October 2009 but does not have a DVD release date listed as of this writing. Someone hoping to view this show must either subscribe to both cable and a premium plan, wait nine months to a year for home video release, or obtain a copy illegally via bit torrent.

Premium networks face the same dilemma as other broadcasters: whether to make content available directly for sale or rental a la carte or remain restricted to traditional broadcast distribution and offer a long delay before release. Executives seem to believe that offering content individually cannibalizes subscriptions and advertising revenue and limits growth of programs with smaller viewership traditionally broadcast immediately before and after flagship shows. This argument fails to recognize the tremendous sea change in viewing mentalities and methodologies in the past five years. Viewers have already changed to a piece-meal structure and demand access to content in a timely manner. Moreover, protecting content behind a clubhouse style pay wall requiring an all-or-nothing buy-in drives away new and existing viewers who may not be interested in every show the network airs.

These trade practices promote piracy and drive away subscribers. With lower revenues from both subscriptions and DVD sales, fewer resources remain to attract and retain the best creative talent, leaving network and studio revenues in a state of entropic decline. Moreover, the more users are driven to pirate their favorite programs, the more networks become the bad guy and expectations of free content become entrenched. If a fan has to download a show illegally fearing civil and criminal retribution from the copyright holders, the likelihood of buying the dvd when it is released months to years later evaporates rapidly. Moreover, as more viewers move to digital platforms, their behaviors become increasingly ill-suited towards returning to a cable subscription service.

Networks are already on borrowed time. Legal threats and action have failed to change viewing behaviors or deter downloads on a massive scale. An increasingly irate and dedicated group of fans continue to develop a sophisticated infrastructure for sharing content undetectably. The most important and overlooked element of which is that they are fans. Viewers who download files illegally are not seeking destruction or monetary gain, just the chance to watch shows they already love. When viewers become your enemy, your days of producing content are numbered.

Networks have the change to harness digital distribution and generate not only increased revenues, but reduced logistical and advertising costs. The viral strategies marketers struggle with daily are already in place and effective in communities that download directly. Moreover, instead of relying on focus groups and Nielsen ratings, the success of individual series and episodes can be evaluated instantly on the day of release. By monitoring sales data and referral tracking in conjunction with social networks, tremendously valuable information is available to help refine and shape the production of a series to maximize profits and viewership. By offering content quickly at reasonable prices, content producers have one final chance to reconnect with their primary constituents and secure a prosperous symbiotic future.

It looks like the big event will be Funding Your Projects from the Crowd in Hilton A/B on Monday, March 15 at 9:00 AM. More info on the official SxSW schedule.

Tweetup:
7:00pm Sunday March 14
Four Seasons Lounge
98 San Jacinto Boulevard

Hope to see you all there!

My tentative schedule is below:
http://my.sxsw.com/user/schedule/danielsiders

Let me know by comment, RSVP on Facebook, or Twitter if you plan on attending, or just show up anyways. Venue recommendations are a plus.

Smith may be the ideal figure to bring crowdfunded films into the mainstream. No stranger to alternative funding, his low-budget, self-financed film Clerks helped revitalize the independent film movement in the early 90’s and his relationship with studios has always been strained. Despite close ties with executives at Miramax and a rabid fan base, financing has not always come easily. Mostly considered cult-classics, many of Smith’s projects have only recouped their production budgets through DVD sales after a lackluster theatrical take. With over 1.5 million followers on twitter and a weekly podcast drawing over 300,000 average downloads, Smith may have the largest active following of any individual to undertake a crowdfunded cinematic project.

The donation-based model currently under consideration arose when one of his Twitter followers suggested placing a PayPal button on his website. Smith says contributors would not be entitled to a share of profits generated by the film in theaters or on video. He also mentioned the possibility of his production company, View Askew, matching all donated funds as well as auctioning off props from previous films to help defer production costs. Despite an outpouring of fan support, he said many legal and financial questions remained “that have required hundreds of hours and thousands of dollars in legal fees to investigate even the possibility of the fan-financed idea’s merit”.

The sale of Miramax only months ago sent waves through the independent film community. Even those with several commercial successes under their belts, like Smith, fear for the future. He has proposed that the profits from a fan-financed film would go towards creating a “People’s Studio”, a marketplace where “any interested/frustrated/desperate party” could upload a script, whichever got the most votes would be financed. Could this become the blueprint for crowdsourcing programming decisions at a television network?

While he expressed exasperation with how the matter had been treated by online news outlets (“KEVIN SMITH BEGS FOR MONEY ON THE INTERNET”), he also described his reaction to the unsolicited donation inquiries as “touched, moved, [and] intrigued”. Even for a director whose films have featured “giant poop monsters”, the idea of crowdfunding apparently comes with concerns of lower professional status. While several films have raised significant funds online to cover production costs, Smith might be the highest profile filmmaker to consider crowdfunds for a major endeavor. If he pulls a repeat performance from the 90’s, he could singlehandedly turn crowdfunding into a popular alternative for a new generation of commercial filmmakers.

Read his full statement at his blog.

Find financial reports from Smith’s past films at The Numbers.

Internet users and communities are not unaccustomed to malicious and predatory funding requests. Email and twitter inboxes fill each morning with offers of gold and oil wealth from abroad. Mortgage, banking, and financial service passwords must be guarded with extreme care. Different techniques help protect users from unsolicited demands than social fraud. Internet scams typically rely on a faceless pitch and high-traffic, low-conversion models. The rise of crowdfunding platforms offers confidence artists a new venue in which to hone their skills. Some crowdfunded films work with target budgets of up to a million dollars (a common limit on some platforms), but any sum of money will inevitably attract thieves.

Everyone’s a thief

Crowdfunding culture relies on a model of trust. Investors believe their contributions will go directly, efficiently, and exclusively towards supporting the development of their chosen project. However, most platforms don’t offer any methods to confirm whether this is the case. Some platforms with a narrow focus and preset funding goals maintain more in-house control, essentially resorting to a company store model. Artists can produce their album, but at a set budget and with pre-approved vendors. While this diminishes the likelihood of outright artist fraud, the platform itself enters an ethical grey area: make your album on our terms or leave without cash or recording to show for it. The same platforms often rely on in-house sales and distribution to protect their own share of profits.

Hidden fees and back room deals bring attention to the larger issue of questionable accounting practices. In the world of crowdfunding, what constitutes a legitimate expense? Even supporters of the same project likely have different ideas as to what qualifies. What about a traditionally financed film whose funding fell through? Should the producers be able to repay past debts once production is complete? If they’re clear about their situation in the request documents, it’s probably fine on most platforms. Contributors choose what projects to support on their own terms. For some contributors on smaller projects, even $5 or $10 can be a lot of money. There is an unspoken assumption on some more bohemian platforms that artists and producers will live on subsistence income for the duration of the project. Often participants are unpaid or compensated only through profit-sharing, especially on less expensive projects. It would be unwise to assume that all projects supported by crowdfunds are operating on the same financial playing field. However, as the communities supporting crowdfunding grow, it is not inconceivable that a feature film might have a budget in excess of $10,000,000. In these cases, certain ‘above-the-line’ talent may be working at enormous rates.

The examples in these cases demonstrate the need for full disclosure at the inception of every project. Crowdfunding engenders transparency and close connections between creators and supporters, properly utilized communication can help unify and energize everyone involved and help avoid misunderstandings. This is particularly significant on platforms which do not operate on pledge-based donations. Transparency and accountability are even more important when cash changes hands immediately. But even if the project’s producers seem honest, ideologically compatible, and fiscally responsible, there’s plenty of opportunity for trouble. Exchanging @-replies on Twitter, becoming Facebook friends, blogging and vlogging are never adequate substitutes for real due diligence.

Big Brother

Technology offers several alternatives for ensuring project funds are handled with the fiduciary care they require. On the more restrictive platforms, the site administrators could monitor funds acting as trustees for the duration of the project by granting or denying disbursements as they saw fit. the more specialized a site, the better staff would know a legitimate from an illegitimate request. Those familiar with music production for example would presumably have a better handle on reasonable recording fees. Moreover, this model places a barrier between your money and the people you donated to. In general, if you don’t trust the recipient enough to give without restrictions, it might be best not to give to that person or organization.

Systems which support a wider range of projects may find this type of hierarchical oversight to be neither practical nor desirable. Instead, they can leverage the underlying technology of crowdfunding: crowdsourcing. During the Parliamentary expenses scandal of 2009 several UK newspapers sorted through tens of thousands of pages of expense claims documents quickly by crowdsourcing the work. Budget documents were made available online with a basic annotation system. Anyone could view a page, then summarize and flag any suspicious charges. Readers were motivated by the prospect of identifying unnecessary expenditures of what was after all their own money. Remember, taxation is both the oldest and best known form of crowdfunding. By disclosing up-to-date financial documents and budgetary projections, producers could achieve a greater degree of transparency and let contributors know their money is going to good use. Sometimes a contributor or investor might even be able to offer an opportunity for cost savings. “Why didn’t you mention you needed a boat to film on in Seattle this weekend? I work at a marina!”

Enter the banks

Finally, in an age of increasingly interconnected financial systems, the least sophisticated element is also the oldest. US banking, particularly online, lags nearly a decade behind its counterparts abroad. If a major bank were to embrace the possibilities of crowdfunding when designing their newest systems, it could be a game changer. Innovation and growth at crowdfunding startups remains restricted by payment processing models ill-suited to their needs. None of the major providers has offered a solution custom tailored to the next generation of digital transactions. A financial institution with the right offerings could provide even greater transparency and interactivity in the budget and auditing stages of a project while developing new contribution models revolutionizing the core processes of crowdfunding. The history of banking runs parallel to commercial innovation. As the Medici and Rothschild  families helped create massive dynastic wealth revolutionizing the transfer of capital between individuals, states, and the arts, surely a new generation of innovators will rise to the challenge of creating an institutional framework for crowdsourced finance.

Best practices

Open and honest behavior on both sides of the donation page are the best policy. Clearly presenting the project objectives and a line-item budget to supporters helps everyone conceptualize what s/he is signing up for before commitments are made so no one feels taken advantage of six months down the line.

As more companies, artists, and developers consider crowdfunding their next venture, it’s not always the allure of easy cash drawing them in. Crowdfunding offers a variety of advantages over and differences from traditional financing methods. For many content producers, it’s a dream come true: capital to create outside media bureaucracies and hegemony. But even when crowdfunding isn’t the easiest or quickest way, it might be the best.

Your supporters are your greatest asset

The process of raising crowdfunds parallels the PR campaigns you’ll run later. When you embrace crowdfunding, your project begins its life with a small army of supporters who each have a vested interest in its future. Even if they aren’t able to receive a share of profits, supporters contributed because they wanted to see your project fulfilled. If you already have a publicist, great. If not that’s fine too. Most small projects can’t afford sophisticated PR or advertising to compete with blockbusters, commercial software, or major fashion houses. Properly leveraging the extended network of your supporters makes that a smaller problem. You’ve taken the initiative to solicit donations and investments from strangers via the web. Now take it a step further. No one ever accused a crowdfunding entrepreneur of being afraid of a little DIY. The same tools that help you get funding can help you convert your one-time supporters into lifelong customers, consumers, followers, and friends.

Marketing and PR firms spend more time and money each year trying to reach target demographics and potential supporters for their clients. Organic supporters are the hardest to find and most valued. A customer who buys your product because it’s cheaper, closer, or backed by more advertising can easily be lost later. Someone who bought in before the project started because they love the idea will stick around longer. Moreover, people travel in packs, and their relationships crystalize digitally in the form of social networks. It’s always getting easier to share a new song, product, or clip from a new movie online. What’s more–if you employ digital distribution, purchasing your game, single, or novel is just a click away.

Most social platforms offer built in support for users to share their favorite books, movies, and media. Reach out to your users through your Facebook and Twitter pages and take advantage of their news feeds. Most crowdfunding platforms encourage regular status updates on their sites, many of which push to email. Facebook friends and Twitter followers are great, but sometimes you need to cross the digital divide. Try creating a street team to promote your event or product in different locales.Supporters will want to know if you’re screening at a theater, book-signing, or playing at a venue near them. Offer extra incentives like a supporters only dinner, free t-shirt, or poster if they RSVP to your event.

Beyond digital

Perhaps the most significant and least discussed advantage of having several hundred fans is their buying power. It’s easier to book a venue, distribute a film, publish a book, or sell software when customers have already lined up. Their presence demonstrates broader interest to partners and affiliates, and can help you fill seats when you need bodies at a show. Most importantly, depending on the model and platform you’ve selected, they may not have bought your product yet. In many cases supporters are entitles to a gratis copy of the album, book, or film, however some platforms do not offer all users, especially those in lower contribution tiers, copies of the work. Even if all contributors are guaranteed a copy, be sure to promote the option to pre-order for their friends and family, possibly with an investor discount. At the very least, working in high volume on your first production run lowers unit costs and increases margins for the future.

If you’re crowdfunding, you probably already have a handle on digital media. Traditional print and television outlets shouldn’t be neglected either. Your online supporters help here too, albeit passively. Large follower lists make life easier for reporters looking for a quick story. Your hometown local paper or tv station might run a story on the sudden and unexpected success of that crazy idea you’ve had since high school no one believed in. If you’re touring or screening in a new town, you can drum up interest with a human interest. Readers of traditional media are more likely to be impressed by “10,000 views on YouTube” type claims than digital elites.

Whether digital or physical, almost all forms of media sales are tracked extensively. Try to structure your releases and coordinate supporter purchases to take full advantage of top-10, 40, and 100 lists. If your application is released free to users, make sure they all download on launch day. A few days on iTunes, Amazon, or Billboard top-selling lists can generate geometrically more sales and help with rankings for years to come.

Contributors’ journey  shouldn’t end after clicking ‘donate’

Engaging contributors throughout the creative process and after completion must remain a primary focus. These people are more than just essential to your future success. You owe them. You had a dream, they made it happen. Now it’s time to pay up.

Supporters might also help you land your next job. Demonstrate an impressive online following and the label, studio, or VC that turned you down last time might just take a second look. But if crowdfunding worked once, why not give it another go. You’ve already generated a list of not only your first project’s supporters, but everyone who discovered it after funding was complete. People who came to you shows, read your book, downloaded your game, or came to your shop will all want in on the fun. Certainly not every customer will contribute, but converting them should be your next goal.

When the crowd isn’t enough

Traditional investors have hidden advantages as well. Many a startup has accepted investments from high-profile firms when they could have gotten by without it. Being labeled a Y-Combinator, or Sequoia startup means a lot to some people. If you know early on that you’ll need another round of financing or a distribution deal, maybe a traditional model is a better fit. Even if it’s just a check to you, future investors may be swayed by your past supporters, which isn’t to say $8,000 or $10,000 raised online isn’t impressive, just consider your audience. Being in the cool kids’ club looks different to different people.

Not everyone will have the same view of crowdfunding. As it enters the public consciousness undoubtably some will be of the opinion that crowdfunding enables projects that were denied financing for a reason, that big media and big banking knows better. Public perception might take a while to come around, but while some might not regard YouTube as cinéma vérité, that hasn’t hurt its traffic. Projects financed by people who need to see them succeed will always be closer to those people’s hearts. Crowdfunding offers creatives a way to connect with people who care as much about their work as they do. Those connections run deeper than dollars and cents, and will only grow stronger if encouraged.

1. Free Press Crowdfunding platforms promote high profile, interesting projects on their sites as well as through email and social media daily to generate interest and traffic from supporters and other creatives. Most platforms have a ‘project of the day’ announcement on their front pages, twitter, and facebook accounts. If you can get the attention of the staff, they’ll often do some of the work for you. Early free press helps you reach a critical mass of supporters and investors who can help spread the word about your project and ensure you reach your funding goals quickly.

Hint: Be different. Crowdfunding sites have more new projects every day. Find a way to catch the attention of staff and supporters by standing out from the crowd.

2. Running Lean No lawyers, no paperwork (well, at least a lot less). Crowdfunded projects are usually a labor of love. Producers often work for subsistence wages and on very limited budgets for the chance to work on their dreams. Knowing that funding arrived in $5 or $10 increments can help keep a lean spending mindset. It’s real, not Monopoly™ money, and it was difficult to come by. You need to be careful what you spend, or you might not get funded again when the time comes. Working within tighter constraints forces creativity and the utilization of available resources. It’s easier to behave like a scrappy insurgency when you are one already.

Hint: Reduce, Reuse, Think like a start-up.

3. Evangelists Your supporters contribute far more than capital. The social resource gained in this small army of motivated promoters is priceless. A contributor can also convert their friends and contacts online into future supporters. Once your fundraising goal has been met you will also have acquired a group of fans who will follow your project through to completion, sharing their excitement with others along the way. Viral marketing starts on day one.

Hint: Take advantage of the blogs, email, and video updates offered on sites like Kickstarter to keep supporters in the loop. Even the most motivated supporters are more likely to retweet or share a post than write one on their own.

4. Instant Focus Group A network of digitally connected supporters can provide nearly instant feedback on new ideas for your project. Character concept art, demo tracks, sample chapters, and business plans all benefit from crowdsourced feedback. The result is a free focus group composed only of hard-core supporters. Float an idea by your investors to get feedback. Someone who’s already given you their money will gladly give you a piece of their mind.

Hint: Start early. Include polls on your project page that lets users give feedback before contributing. Who knows, you might learn something new.

5. Update Your Business Plan Investors need to know your business plan and deliverables before they contribute. Both revenue sharing and donation-based projects both require full disclosure of the project timeline and products. Investors want to know if you’ve though things through. Through crowdfunding, you can take advantage of a crowdfunded business plan.

Hint: Get feedback on potential markets an cost savings.

6. Own Your Intellectual Property Creative professionals rarely retain the rights to their own intellectual property. Copyrights, trademarks, and patents are often held by employers or clients. However in most crowdfunded projects you retain full rights to your work. Crowdfunding gives you the option to prototype a new design before approaching VCs, studios, labels, or publishers. There might be a few dozen other people who would support your dream of bringing robotic snowshoes to life and can help cover development costs.

Hint: Be careful not to promise too much. Be clear what the project outcome will be and whether supporters are entitled to any future profits.

7. Early Money Crowdfunding is not always an end unto itself. Donation-based projects routinely fund recording time for an album, help support an author write full-time, and pay for development costs that supporters don’t intent to recoup. You’re then free to sign with a label, publisher, or sell the patent afterwards.

Hint: Don’t take supporters for granted. People contribute to projects because they care, not to make you rich. Offer tiered rewards for donation projects. $20 gets a dvd $1,000 a visit to the set or a prop to take home.

8. You Won’t Produce Vaporware Soliciting and spending other people’s money makes you accountable. Now that they’ve paid, they’re expecting something in return. You set a budget and got funded, now go do what you promised. Sometimes other people depending on you can give that extra push to make you come through with a finished product.

Hint: Status updates are your friends. They keep supporters engaged and help you chart your progress. Extra credit, use video: look your supporters in the eye for that extra touch.

9. Freedom From Control This might be what brought you to crowdfunding in the first place. No board of directors, no corporate overlords, no venture capitalists. Just people who love your project and are happy to help. In most crowdfunding systems the artist/developer/entrepreneur maintains complete control over their product and company. Even in systems with profit or revenue sharing, there are no board meetings. You don’t need to convince anyone else before making the decision that is best for you and your project.

Hint: Ask anyways. Even if you’re not obligated, your supporters love you and your work. Find a way to get them involved in at least advising you on big decisions. They might have ideas or approaches you haven’t thought of yet.

10. Your Next Next Project All the reasons above apply doubly the next time around. You already have an army of supporters, evangelists, focus group data, business plan ideas, process suggestions, and a content archive. All these resources make the next project even easier from day one. Spurred on by your past success and newfound crowdfunding street-cred, supporters from your last project can help you find even more investors and capital for an even better release this time.

Hint: Keep in touch with supporters between projects on Twitter and Facebook. Once they subscribe, it’s easy to announce your next project!