*Japanese Version http://www.slideshare.net/junkoy/crowdfunding-presentation-10252011-ver

1. 10.25.2011
1 person
Raising $ 100,000
Collecting $ 100
From 1,000 people
Crowd Funding

2. PROFILE
Junko YAMAMOTO
Representative Director of Arts Marketing Co., Ltd.
Senior Visiting Researcher at Keio Research Institute at SFC
Executive Director of Museum Career Development Network
* 10 years experience with (online) game industry
* Web marketing, Web producing, etc.
* After leaving the company studied Art Management at a graduate school.
* Specialized in utilization of IT and social media by art organization.
* Current activities
- Planning, creation, and production of contents and projects using web,
mobile, and social media.
- Planning and management of workshops and talk events related to art,
creative works, and business management. Etc.

3. Today’s Point
In crowd funding
There is a possibility
which does not exist in
regular fundraising / support.

4. That possibility is…
For people who have
never funded a project before
to fund the project

5. Before going into
“Crowd Funding”

6. The biggest difficulty for
a Non-profit organization
when raising fund is…
“There are more important and
urgent matters than that”

7. Fundraising up till now:
Target people who have the
potential of becoming fans
and ask for their support.
And ask for their continuing support.

8. “There are more
important and urgent
matters than that”

9. Fundraising up till now:
Select people who may become fans
Built a relationship with them on a mid
to long term.

10. What are the possibilities of
crowd funding…?

11. Having a handful of highly motivated people and a mass
of barely motivated ones used to be a recipe for
frustration.
The people who were on fire wondered why the general
population didn’t care more, and the general population
wondered why those obsessed people didn’t just shut up.
Now the highly motivated people can create a context
more easily in which the barely motivated people can be
effective without having to become activists themselves.
Clay Shirky
“Here comes everybody: the power of organizing without organizations”

12. Crowd Funding might be…
“can create a context more easily
in which the barely motivated people can be effective
without having to become activists themselves.”

13. What is
CROWD FUNDING?

14. Not to collect funds from small number of
investors and wealthy people…

15. But to collect fund from large
number of people.
(usually using the web)

16. So many ways to call them
And many ways to use them
Micro Finance
Social Lending
P2P Funding… ???

17. Let’s reorganize it first.

18. Contribution Financial
to society Product Investment

19. Around 2005
Contribution
to society Borrowers:
People of developing countries
Return:
Repay without interest
Micro Finance
Micro Lending

21. Around 2006
Financial
Product Borrowers:
People who need to
borrow fund
Return:
Repay with interest
Social Lending
P2P Lending

23. Around 2008
Investment Borrowers:
People who want to invest
Return: Varies
Crowd Funding

25. Crowd Funding
did exist from before

26. 1997
USD60,000 2004
USD50,000
2004-2009
GBP900,000

27. Platform
Now it is possible for anyone to create
a notice page and
make use of the
online payment system.

28. Investment If the project succeeds,
they will receive money in
Type return.
Purchase If the project succeeds, they
will receive goods and
Type services in return.
Donation No return.
Type

30. After 2 years of their establishment
(April 2011) KS raised funds in total of approx.
USD53,000,000
About 1.9 times
6 months after that (October 2011)
total fund raising amount was
approx. OVER USD100 million

31. After 2 years of their establishment
(April 2011) KS acquired
approx. 590,000 backers in total
About 1.7 times
6 months after that (October 2011)
total number of backers was
approx. 1,010,000

32. Number of successful projects
Over 13,000
Approx. USD20,000 raised
every week
Approx. 75,000 new supports
every month

33. How does
CROWD FUNDING work?

34. Project Owner
* Project
* Goal amount
* End date
* Return
Pledge
(or donate)
Backers

35. All or Nothing

36. Let’s look at some
project examples.

38. Projects that are likely
to succeed are…

40. Message
* We can remake iPad nano into a
world’s coolest watch.

41. Message
*We believe in the power of
community or individuals, born in the
process of making our ideas happen.
*By promising that you’ll buy this
watch, you can turn this product
into reality.

42. Return for the backers
*$25→TikTok worth $34.95
*$50→ LunaTik worth $69.95
*$70→TikTok＋LunaTik
*$150→TikTok(KS limited version)＋LunaTik
*$500→ TikTok(KS limited version)＋LunaTik
＋iPod＋5 silver TikTok

43. How were they able to
raise so much?

44. Pre-order model
“If the order exceeds a certain amount,
we will make the product.”

45. Feeling of
“I want this!”
Rather than
“I want to support”

46. So even if it exceeds the target amount
Funds keep coming in.

47. On the other hand, types we
see for artists and art
organizations are…

48. Piggybank Model
“We want to create this,
so please support us.”

49. Even if you reach your
target amount…
It is VERY DIFFICULT to
exceed that amount
largely.

50. So is it impossible for artists
and art organizations to raise
funds to create something
they want…?

51. Not true.

52. Let’s look at some
project examples.

54. Message
* Raising question toward record
label of today.
* Strong belief towards delivering
their music directly to people who
want to listen to it.

55. Message
* “Power to the new generation”
kind-of-work
↓
Satisfaction
towards using
crowd funding

56. Return for the backers (examples)
*$10 →Digital fopy of the new song before its release
*$25 →Digital copy of the new song before its release＋
CD delivered on release date
*$100 →Invitation to a secret party＋CD＋Poster
*$150 →VIP invitation to a secret party
(can talk to the artist)＋Limited CD＋Poster
*$350 →VIP invitation to a secret party
＋Limited CD with your name in the liner notes＋Poster

58. Return for the backers (examples)
*$1 →Access to private live stream of the drawing session.
*$20 →Access to private live stream＋ original cut from the final work
*$100 →Access to private live stream＋
Original cut from the final work (signed)
*$750 →Access to private live stream＋
Original cut from the final work (signed) of your choosing

59. The key to their success is…
They are taking in the Pre-
order Model
Return to backers:
The pledge amount and
“I want this!” is well balanced.

60. Purchase rate
Unsuccessful project 63%
Successful project 84%
96.6%
Big Successful project (1)
98%
Big Successful project (2)
The projects data of those in the “Recommended” corner of “Fine Arts “category in July 2011

61. The more attractive the return is,
the more likely it’ll succeed.

62. To attract many supporters
you have to grab their hearts by
making them “WANT!”

63. Mechanism of Crowd Funding
People don’t take actions only
because they want to
“support”.

64. CROWD FUNDING
How is it different
from the regular fundraising?

65. The biggest difficulty for
a Non-profit organization
when raising fund is…
“There are more important and
urgent matters than that”

66. Regular rundraising:
Target people who have the
potential of become fans and ask
for their support.
And ask for their continuing support.

67. Regular fundraising:
Select people who may become fans
Built a relationship with them on a mid
to long term.

68. Having a handful of highly motivated people and a mass
of barely motivated ones used to be a recipe for
frustration.
The people who were on fire wondered why the general
population didn’t care more, and the general population
wondered why those obsessed people didn’t just shut up.
Now the highly motivated people can create a context
more easily in which the barely motivated people can be
effective without having to become activists themselves.
Clay Shirky
“Here comes everybody: the power of organizing without organizations”

69. Pre-Order…
Return… Purchase…
Support because I want it…?

70. Characteristics of
Crowd Funding supporters

71. Out of 1 million people who have
supported a project…
170,000
are repeaters (16%)

72. Out of 170,000
over 66,600
have supported more than 3 times (40%)

73. Example:
Neil Graham (in UK) has supported 101
times in 5 months.

74. Why do people repeat
supporting projects?

75. The key to Crowd Funding could be found
in the answer.

76. Gamification
To utilized mechanism of a
game in an application or a
website which is not a game.

77. Effective game-feel design can be found
in the purchase type
Crowd Funding website.

78. Elements of a game
* Game environment
An environment where regular rules are not valid for a limited period of time.
* Boundary
Boundary between game environment and regular life.
* Rules
Rules which are valid only in the game environment.
* Tools
Something that contains information about the game.
* Goal
A condition that decides where the game ends.
Dave Gray, Sunni Brown, James Macanufo.
“Game storming A Playbook for innovators, Rulebreakers, and Changemakers”

79. (1) Game environment
An environment where regular rules are not valid for a limited period of time.
Service of crowd funding itself

80. (2) Boundary
Boundary between game environment and regular life.
Everything is within one project page.

81. (3) Rules
Rules which are valid only in the game environment.
All or nothing rule etc.

82. (4) Tools
Something that contains information about the game.
Numbers that is updated in real time, icon of supporters etc.

83. (5) Goal
A condition that decides where the game ends.
Time limit, Target amount

84. What the project owner
experiences is
the same as that of a game.

85. Process of a game
Imagination of the world : Fix the goal
Construction of the world : Decide the
rule
Beginning of the world : Start the game
Quest of the world : Head towards the
goal
Closing of the world : End the game
Dave Gray, Sunni Brown, James Macanufo.
“Game storming A Playbook for innovators, Rulebreakers, and Changemakers”

86. The supporter buys the right

87. The supporter only buys the right first –
the project owner does now own the money yet.
The supporter follows the process of the
project together.
They become part of the project.

88. And also…

89. A Design to
captivate the supporters

90. (1) Visibility of the progress
(2) Arouse positive feeling
(3) Encourage social activity
(4) Build engagement
Amy Jo Kim. "Smart Gamification: Social Game Design for a Connected World".

91. (1) Visibility of the progress
Goal and achievement, Deadline, Progress of supports, etc.

92. (2) Arouse positive feeling
Using PR videos, etc.

93. (3) Encourage social activity
Support, Share in social media, Click “Like” button, etc.

94. (4) Build engagement
Promise returns, report on project updates, Comments, etc.

95. What does this
“gamification”
bring to people?

96. “Epic Win”
Jane McGonigal
（Game developer, Researcher）

97. Epic Win
An excellent result…
which you didn’t think it was possible until you reached it.
which shocks you of your possibilities when you reach it.

98. Epic Win
Epic win
creates a story by adding value to
what you are doing and who you are.
So…
People feel deep satisfaction achieving a
difficult task.
↓
Reason why people play games.

99. Nobody wants to change how they live just
because it's good for the world, or because we're
supposed to.
But if you immerse them in an epic adventure and
tell them, "We've run out of oil”.
This is an amazing story and adventure for you to
go on.
Challenge yourself to see how you would survive.
Jane McGonigal
（Game developer, Researcher）

100. YEAH !!

101. So my point is…

102. For example, Neil Graham (in UK)
who backed a project
101 times in 5 months…

103. Why do they repeat
supporting a project?

104. As a thesis…

105. Crowd funding service
They offer a “place” where people can
create a fund raising game easily.

106. Repeaters (supporters)
They are enjoying a game called
fund raising by “purchasing”
and end up “supporting” them as well.

107. Purchase Rate Repeater Rate
Unsuccessful Project 63% 38%
Successful Project 84% 51%
Big Successful Project (1) 96.6%
79.6%
Big Successful Project (2) 98%
The projects data of those in the “Recommended” corner of “Fine Arts “category in July 2011

108. Differences from the
regular fund raising scheme.

109. Introduction
Regular fundraising
You know what the problem is.
Some set the target amount, but mostly they want to collect as
much as they can.
Many do not set a deadline.
You cannot see who else is supporting it.
Crowd Funding
You know what the aim is.
You know the target amount and its progress as of now.
You know the deadline.
You can see who many are already supporting/not supporting it.

110. Ways to support
Regular fundraising
Donation of money
From the moment you make a donation, the money is delivered to
the fundraisers.
Crowd Funding
Mostly purchase of a return.
Until it reaches its target, it is just a promise to purchase and the money
has not been delivered to the fundraisers yet.

111. Progress
Regular fundraising
Basically, you do not know the progress in real time. You let the
fundraisers handle it.
Crowd Funding
You know the progress in real time – if/when they have reached the
target or not (if your support is effective or not)

112. Result
Regular fundraising
You basically wait for the result from the fundraisers.
There are no targets so you have no sense of accomplishment
When you see that large amount has been raised, you think “Thank
god!” (relief). But the sense of large or small is subjective.
Crowd Funding
When you access the web, you know when and how much it has
accomplished in real time.
When it is accomplished, you think “Yeah!” (excitement).

113. Conclusion

114. The possibilities of
Crowd Funding are…

115. *Plenty of game-feel to it.
*More and more people are enjoying that.

116. Enjoy the game by
“purchasing”,
and “also” support it.
Compared to regular fundraising,
it’s a different state of mind
and a new type of consumption.

117. So it is possible to turn people
who were never interested in
“supporting” into supporters without
having to become “activists” themselves.

118. And anyone can be
a project owner
if you have an internet.

119. Of course regular fund raising scheme is
very important as well.

120. Regular fundraising scheme
One-on-one relationship building
Crowd funding as an another option
Do not think of it
as the same way as
regular fundraising.

121. (1) Visibility of the progress
Goal and achievement, Deadline, Progress of supports, etc.
(2) Arouse positive feeling
Using PR videos, etc.
(3) Encourage social activity
Support, Share in social media, Click “Like” button, etc.
(4) Build engagement
Promise returns, report on project updates, Comments, etc.

122. MAKE USE OF THEM!

123. Thank you for listening!
twitter : @artsmarketingjp