How will the Doom Kickstarter fraud scandal affect future Kickstarters?

[Fetfreak]

Was it any good?

Do you mean the Amanda Palmer's album?
I don't know, I'm not a fan of her music. My friend, who is a fan told me about her kickstarter and even there were some unpleasant occurrences, but I don't know much about it.

 

[Morrus]

But none of those uses for money are illegal in and of themselves. Businesses do pay money to incorporate. busineses do pay rent. Businesses do pay to move employees.

If part of what it takes to produce something is to work full time on it, that heavily implies that a chunk of the KS money is paying for the worker's rent, food, etc.

Nobody's arguing otherwise. But in this case, the Kickstarter was cancelled. It's not that some of the funds went to specific costs, it's that the whole thing was cancelled and nobody got anything. The creator has said he'll try to refund everyone, but it doesn't look likely.

 

[Janx]

Nobody's arguing otherwise. But in this case, the Kickstarter was cancelled. It's not that some of the funds went to specific costs, it's that the whole thing was cancelled and nobody got anything. The creator has said he'll try to refund everyone, but it doesn't look likely.

Well, on the main page of the KS, they are.

It doesn't surprise me the whole thing got canceled AND nobody got anything. The project was for a tangible good. You either manage to get that kind of thing assembled, or you don't. If you don't there's nothing but loose parts to a game and not enough to send that out. Well, technically, the dude could have emailed the rules to everybody, or some dumb thing, but I suspect he lost that right by failing to distribute. The rights effectively returned to Keith Baker & Co.

If nothing else, the point of my devil's advocacy is that KS needs to expect/require projects to be more clear on how they're going to spend the money. There's probably got to be some room for unexpected expenses, but paying to move an employee is rather pricey when you can probably get an employee where the project owner already is. So that kind of expense wouldn't be on the declared list of primary expenses, and thus you'd have breach of contract or some other lawyerly sueful offense.

Heck, the KS ought to include cost breakdowns for the things the money is supposed to be buying. If I'm going to publish a boardgame and I start a KS, I ought to have known how much the printer wanted. How much did the solid gold figures cost for the higher end rewards. If I don't know those numbers, how can I set the original goals?

The KS site itself may not require these things, but the people investing in the KS projects probably should.

Another interesting side topic: Why the heck did Keith Baker who's worked will all sorts of game companies, license his game (for free apparently) to a solo act with no track record. I'm sorry, but that's so far past the south end of Stupid Street that it's wrapped around the North Pole to clock him on the head.

Keith's blog listed a ton of places that should have been giddy to publish his game if it was so great. How does he decide to choose this guy?

 

[Janx]

The biggest concern I have is already happening. Kickstarter has changed their terms of service so that the project needs to refund backers if the project cannot deliver the rewards.

If your kickstarted project includes a reward that is an output of the project (board game, device, etc) then that converts Kickstarter into a preorder store. It shifts all risk away from the backers (no longer investors, they're just purchasers) and onto the project. Worse, you need to refund more money than you received, because you also need to refund the money that Amazon and Kickstarter took as part of their cut.

That means that projects are going to take on less risk and go for sure things. We've seen how well that works in Hollywood, right?

This is also a good point.

Any project entails risk and requires money to get it going. If I had money, I wouldn't need to borrow it.

From what I can tell, KS was originally a means for regular people to donate or participate as a venture captilalist. And that meant entailing some risk, that the project would fail and you would see nothing for your money.

That also meant that I as the guy doing to work, didn't also have to supply the money to make it happen.

By requiring the project to refund money for failed projects, this means that the project basically must NOT spend the KS money, in case the project fails.

That kind of defeats the point of going to somebody else to help fund the project.

Now some may think that what I just described is a good thing, but the side effect wouldn't just hit failed projects. It impacts how a successful project (that is one that "would" have succeeded). If my project requires $20,000 to print and ship, and I don't personally have $20,000, and I effectively can't spend the KS money until I ship the product, then I don't have the money to do the project. KS has neutralized itself out of the business of funding projects.

Instead, the only people who would be safe to use KS, are people who already have money to pay for the project themselves, but want to secure buyers (backers) before they start the project. As this Amy Palmer has apparently done with an album, despite her having the ability to record it herself without KS.

 

[Fetfreak]

I guess then some kind of contingency plan should be in order.

Let's say you need 20.000$ to print and ship and somewhere along the way you fall short.
If your digital book pledge costs 20$ and your pledge with a printed book and shipping costs 50$ and you waste 10.000$
you can still give people a digital edition with some refund.

You still won't print and a lot of people will be angry but it's still better than canceling the whole thing and facing charges.

 

[Umbran]

If nothing else, the point of my devil's advocacy is that KS needs to expect/require projects to be more clear on how they're going to spend the money. There's probably got to be some room for unexpected expenses, but paying to move an employee is rather pricey when you can probably get an employee where the project owner already is. So that kind of expense wouldn't be on the declared list of primary expenses, and thus you'd have breach of contract or some other lawyerly sueful offense.

That'd probably make for a contract with KS that is either unenforceable, or too burdensome for the folks who actually need kickstarter to use. And remember - if you sue someone for money they no longer have, you don't get much return. Ultimately, KS is a funding source, not an accounting firm or project management tool. Try to make it what it isn't, and it will fail to do the original job.

The KS site itself may not require these things, but the people investing in the KS projects probably should.

This is more like it - for Kickstarter to function, the buyer must beware. Projects fail. You may be spitting money into the aether. Realize that, accept that as the risk you take when you donate (not buy, not invest, but donate to a cause). If you are going to be upset to lose the money, you need to only choose those projects that give transparency that gives you confidence. Of course, most of the spending plan you suggest they give will be sanskrit to the common donator. Any KS that does this will become a site for wrangling and arguing over whether their plan is solid. And, giving the plan means diddly unless they also open their books to you so you may go over their accounting....

We do need to remember something - creating games and running a business are two different skills. Being a good designer does not mean you have a head for and skills in business. How many game-design types are actually keeping separate accounting books for their work, much less doing it so well that it'd stand up to an audit? How many buyers are so savvy that they could actually do the audit?

If you go into it thinking, "this is an investment, and I need to guard it," Kickstarter is going to disappoint and anger you. If you go into it thinking, "I have some spare cash I can risk, and maybe this will go well enough to give these people a leg up, and if not no great loss," then you're pretty safe.

 

[MatthewJHanson]

I've been expecting a Kickstarter backlash pretty much since the start. I'm still sure it's coming. However, I don't think this will be the cause of the backlash, nor even particularly accelerate it - it's just one more bit of pressure against the dam.

I don't think there will ever be a mass community wide backlash. There will backlash on the individual level. Erik Chevalier will probably never get a project supported again. Some people might swear off Kickstarter, but they'll be replaced by more people who discover it for the first time.

I'm also not too worried about more established companies "crowding out" the little guy. For one thing I think that big names will attract more people to Kicstarter, where they'll get involved with other projects. More importantly I just don't see it happening. Of course having a big name helps a project raise more money, but I see start ups successfully raise their funds all the time.

 

[Hand of Evil]

The issues I see is that the KickStarter was not to fund a Company, it was to fund a game and issues in getting that game to market should have been reflected in the project status, this would allow people to back out. This project was funded, account charged and then cancelled, with no refunds made.

Projects should have milestones as well as rewards, these are accountabilities that the project is not being mis-managed. Does this prevent people from lying, no but it would be nice to see casting of minis complete, here is a pic.

Do I think it will impact KickStarters, yes. You just don't want too many Nigerian scams -

 

[Mark CMG]

Kickstarter isn't just one model, it's a funding method that supports many models, including pre-order. Utilizing it in one way doesn't prevent others from utilizing it in another. A known person using it in one way doesn't prevent an unknown person from using it in the same way or in a different way. One could actually argue that the more people that use KS at all, the more potential backers become accustomed to using it and the wider the potential reach. I remember when I started CMG over 12 years ago trying to explain to most of my potential customers about Paypal, which is now fairly ubiquitous. This goes even further when known persons utilize KS. As has been said by many before, KS is a tool and the ways in which one can use a tool are up to the user, not someone off to the side commenting on the way they think tools should be used. That's akin to the one-true-way-ism arguments that surface from time to time in RPG circles, so you'd think we'd be able to recognize and reject such hogwash.

I don't know if you guys know who Amanda Palmer is

https://www.youtube.com/watch?v=xMj_P_6H69g

 

[Janx]

I guess then some kind of contingency plan should be in order.

Let's say you need 20.000$ to print and ship and somewhere along the way you fall short.
If your digital book pledge costs 20$ and your pledge with a printed book and shipping costs 50$ and you waste 10.000$
you can still give people a digital edition with some refund.

You still won't print and a lot of people will be angry but it's still better than canceling the whole thing and facing charges.

Every business plan should have an exit strategy. it doesn't have to be dramatic, the one you give here is certainly better than nothing, as it reflects giving the matter some thought and trying to get some value out of the wreckage.

I don't think any KS project is going to be super detailed in its accounting. But the KS project in the OT is an example of how NOT to budget and finance a project.

If you got to a bank for a $20K loan, they expect a business plan. Because people who are organized, tend to succeed. People who can't put together a business plan probably can't put a project together either, because it's pretty much the same skill.

KS is really 10,000 banks loaning $2 a piece*. Some of the same principles should apply, though the standards may be a bit lower.

*I don't really like the loan analogy, but even banks expect to lose money. KS, a loan or a venture captialist is making an investment. The pay off being interest, or earnings, or a final product and some extra fluff. There's no guarrantee of success, but there are indicators of who can pull it off, and some behaviors that help one succeed.