Taking another look at Kickstarter: Are there alternatives?

Hi All,

On June 20, 2010, a friend of mine and I successfully Kickstarted Inevitable (http://www.kickstarter.com/projects/dystopianholdings/inevitable-dystopi...) and used that cash to produce a small (500 units) print run of it. Shortly thereafter, the folks at Clever Mojo did a fantastic job with Alien Frontiers and boardgame projects on Kickstarter exploded.

Our Kickstarter experience was (largely) positive, and I believe that Inevitable could not have been made without it. In light of that, it may seem odd that the next time I self-publish a board game, I don't think I'm going to use Kickstarter. Let's take a look at why:

What does Kickstarter really bring to the mix?

* Publicity and Exposure?:
-- When we did Inevitable, Kickstarter hadn't quite burst out as a known thing yet. It was a lot easier to get on the front page, and we did (we were pretty much the only board game on the site, and the project was colorful and quirky). Consequently, we *did* benefit from being a featured project for a time. Nowadays, it's a *lot* harder to get a coveted front-page slot on Kickstarter. And really, what got us the most hits and funding was getting featured on io9.com. (That was a $2,500+ day.)
-- Assertion: Kickstarter doesn't give you much publicity or exposure nowadays. Kickstarter does provide a convenient toolset to push updates out to your backers and would-be backers, but I address that below. Even so, you'll work just as hard pushing your project on community and industry forums, social networking sites, news outlets, and to reviewers if you were using some other "rally support" setup.

Publicity and Exposure Advantage?: Nominal

* Tools?:
-- Kickstarter provides a blog, of sorts: There are lots of ways to create blogs.
-- Kickstarter provides a delayed payment / "pledge" system: They're just using Amazon Web Payments to do this. You can do this yourself with AWS too.
-- Kickstarter provides a trusted third party to manage that pledge system so you don't take a stranger's money and run: Okay. That's a valid point. However, if you're an established entity with a sterling reputation (and perhaps a successful Kickstarter campaign or two to use as character "references"), you should be able to assuage most concerns or fears. Also, it's important to note that Kickstarter does not guarantee that a given project will actually come through on its promises. All they do is prevent someone from taking your pledge if the project does not make.
-- Kickstarter makes it easy to mail information to all donors: Listservs have been around for a long time, thanks.
-- Kickstarter protects the anonymity of the pledgers until the project makes: Fair enough. You can come close to this with existing tools, though. I suspect a competent coder could implement this fairly quickly.
-- Kickstarter provides a nifty reward/pledge structure with a big countup tracker for amount donated, along with a countdown timer: Yeah. That'll be a pain to recreate. This is probably the biggest "bonus" that Kickstarter provides.
-- Kickstarter lends its "cachet" to the projects on it: This is a straw man argument that I really should not include. Any perceived legitimacy is largely undeserved. Nowadays, anyone can put up a project on Kickstarter. When Inevitable was Kickstarted, it was invite only like the start of GMail was, so it had the "air" of being more exclusive and special. (Get offa my lawn ya' darn kids!)

Tools Advantage?: Moderate to significant. It would not be too hard to whip up your own site that does about 75% of what Kickstarter does. That last 25% isn't utterly essential, but it's certainly nice to have.

* The Cost:
-- Kickstarter takes 10%.
-- Amazon Web Services takes (if I recall correctly) about 3.5%.
-- The income is taxable, so it'll be taxed at the rate of whatever entity receives the cash.
-- Note that you should also collect sales tax for every "pledge" that's in the state you'll be selling the game from, (since they're actually sales -- they're giving you money in exchange for tangible goods)
-- There's also a significant time cost that you'll invest in creating the resources and managing the campaign.

This point makes it increasingly likely that my next project will not use Kickstarter. Of the $9,435 we raised, $943.50 went to Kickstarter and $330 went to Amazon. We paid the two of them over $1,000 to provide the tool and host our Kickstarter site. (I'll say this: The folks who started/own Kickstarter? They're sitting pretty.) On top of that, there's the taxes on the "pledges"...

If I'd spent time up front to create a functionally equivalent site (that I could reuse -- or even share/market to other people), I wager it'd've cost me less than that $1,000. Yes, that's an up-front expense that many Kickstarter types can't afford, but it's an important consideration. For many people, they're more than happy to let Kickstarter do this. To their minds its like, "Hey, I'm happy to give 10% of money that would have otherwise been nothing." But is that the smartest thing you can do? Shouldn't you be getting more for your money than just a tool and some "hosting"?

Consider this:
* Alien Frontiers raised $14,885. $1,488 of that went to Kickstarter (and a total of $2,010 to KS and AWS).
* Alien Frontiers: Factions raised $76,078. $7,607 of that went to Kickstarter (and a total of $10,270 to KS and AWS).
* Schlock Mercenary: The Board Game raised $82,056 $8,205 of that went to Kickstarter (and a total of $11,077 to KS and AWS).

What did Clever Mojo owe that *massive* boost in funding to for their second campaign? Did Kickstarter provide them with $4,800 worth of extra ad space on their site? No. That massive increase in funding was all due to the awesome job they did on the game and promoting it. Could the Schlock team have spent that $8,000 on internet ads and just done all the sales through The Tayler Corporation's online store? I bet they could. For that matter, I bet they could have spent only $2,000 on some website infrastructure improvements and raised roughly the same amount of funds in pre-orders while maintaining Kickstarter-equivalent features and tools. It may seem like sacrilege, but I assert that Kickstarter did not really deserve or "earn" most of the money it received from AF:F or SM:TBG. (Don't get me wrong. Kickstarter deserves to be compensated for what they provide. I just think that some projects are spending waaaay more than they need to and had alternatives that were functionally equivalent (or better) and would have cost less.)

So if I'm so smart, what's my suggested alternative? Honestly, I'm not sure yet. Also, I'll admit that my plans for alternatives rely in part on having a successful Kickstarter project in the past. All that said:

* I'm sure as heck that if you're riding the coat-tails of your prior successful project, you should find another way to gather pre-orders. Spend some cash and build your own tool... Something... Anything. The same holds true if you have a license that you *know* will gather support from a rabid fan base.
* It's easy to set up a site with forums, chat, listservs, blog, a store, shopping cart, photo galleries, etc... with any number of free open-source content management systems (My preferred CMS is Drupal). For the things that Drupal can't do yet, well... I don't yet know how to take a delayed payment through AWS, but I'm sure I could learn (or hire someone who knows how). Anything can be built, and it's better to invest in a thing you own and can re-use than to rent the use of something you're going to use over and over again.
* Investors or bank loans have several advantages over pledges, from several points of view (taxes, partnership, and expected return on investment (odds are good that with interest rates what they are, you'll be able to beat 10% to 13.5%). Funding your project with a bank loan could very well be viable -- especially if you're collecting pre-orders on your web site.

Other topics I want to touch on, but it's getting too late:
* Getting that $$$ up front makes you feel more secure (as a developer) since you know you'll get it. A no-cash pre-order is too easy for the pledger to "break". How do you address that in your home-baked pre-order site?
* Knowing that your KS project has "made" (or not) is a clear sign to you that you have a commitment to complete (or not). Can you get that same clarity when you run your own pre-order site?
* If you see a drop-off in pre-orders when you go over to your own solution, will it result in a 10% drop in funds raised? Is this a bad thing?

I'm eager to hear your opinions on this. I acknowledge that this presentation is incomplete, but I think it makes a nice starting off point.