Give The People What They Want – Reverse Crowdfunding

While researching alternatives to the “traditional” model of publishing I came across a slew of “how to get your book published” listicles and negative articles about how the book industry is doomed. Refining my queries, I was presented with positive articles all seemingly focused on the wonders of crowdfunding. There was one article by Gartland (n.d.) that stood out from the mass as it presented a new idea: reverse crowdfunding. Although it wasn’t elaborated on in too much detail, this idea deserves more exploring.

But before going into this idea, let’s briefly go over how crowdfunding itself works. Bearmean (n.d) quotes Techopedia, which accurately sums up the concept stating that it’s “… a method of raising capital in small amounts from a large group of people using the Internet and social media”. In the case of crowdfunding a book, a writer presents the idea for the book, maybe supplying a sample chapter, and then relies on the pockets of the Internet to supply the necessary funds. There are a plethora of platforms to choose from, most notably Kickstarter and book specific sites Unbound and Pubslush. Not without it’s challenges, this model can completely avoid the traditional publishing formula in a very 21st century manor.

One of it’s downfalls however is that it relies on the public to 1) take interest in the book, 2) trust the author to actually write the book, and most importantly, 3) the author needs to get enough attention for the campaign. If all of these requirements are met then crowdfunding can be a great choice for an author. Morkes looks at the benefits of this model, stating that crowdfunding:

  1. Lets you activate your audience and catalyze a movement
  2. Validates your book before you write it
  3. Creates eager anticipation
  4. Legitimizes your self-published book

With that explained, let’s look at the model in reverse order. When Gartland proposed the idea, he broke traditional crowdfunding down into three parts: “(1) author has book concept -> (2) author pitches book concept -> (3) readers fund book concept (if they like it)”. Gartland then reversed the model:“(1) readers want book concept -> (2) readers commission book concept -> (3) author writes book (in exchange for the gross commission)”.

Gartland elaborates, proposing the creation of a platform where someone can suggest an idea for a book. They can choose to put some funds down to entice authors, other readers may see the idea and choose to contribute financially, and then authors can be suggested to write the book for commission, where they will either accept or decline. Something similar to this model, but done out of interest rather than economic incentive, is Reddit’s Writing Prompts. Here, a user publishes an idea, and the community writes stories around it, with the most popular being “upvoted” to the top.

This model takes the proverb “give the people what they want” quite literally. If not enough people like the book idea then it will flop before a single word has even been written. Giving the people what they want is something the traditional publishing industry has been criticized for in the past. They publish what they assume will sell (taking a financial risk in that assumption), rather than publishing what they deem to be good literature.

I would argue that the traditional publishing industry has typically been using what Chesbrough (2003) has called “closed innovation”, whereas this new model would be closer to “open innovation”. This business term plays on the idea of using more external sources rather than one’s own research and development. Although the traditional publishing industry has always relied on external authors with whom they work with to create a product that will sell, this new idea follows the concept of open innovation more closely. Chesbrough describes open innovation stating “firms commercialize external (as well as internal) ideas by deploying outside (as well as in-house) pathways to the market” (2003, p.36-37). An example of this could be Hey Lululemon where users can suggest ideas to the brand, which can then be voted on by the community. The company has essentially externalized their research and development by becoming open to ideas from the public. This concept of reverse crowdfunding has been done in a general sense (i.e. not book publishing specific) before, with companies such as Quirky.

Imagining this platform for solely book publishing, one could speculate that both independent writers and publishers could possibly benefit. However, that depends on the way the rights are set up. This divides the concepts into what I will call model A and model B. In model A, once a book is funded, the author writes it, takes the money donated by backers, and the book is released online for free. In model B, the person who came up with the idea, the writer, and possibly the other backers, will be entitled to royalties, and the book will be sold. A writer benefits in both of these models as they are able find a well-funded idea and, with the backers’ approval, be able to write the novel. Depending on their ability to write and how much each book is funded, it could be a very economical. Some may argue that the idea would stifle creativity; however, the act of creating an idea people like could be creative, as well as the writer’s ability to add their own flair to it. A study on open innovation found “empirical evidence that the impact of open innovation is not limited to a particular aspect of innovation performance, but that it positively influences a broad range of innovation performance indicators” (Cheng & Huizingh, 2014, p.1247). This was done in a business setting, but one can assume it would apply to the field of publishing as well. Not every book would be successful, but the writer would get paid and the audience would get the book they wanted (whether they are happy with the results would likely be a case by case basis). In model B, one could argue that publishers too could benefit. Rather than gambling on every book they publish, they will have the base knowledge that there is a community that wants a certain book. They will also not have to front as much of the costs as they would in the traditional model. Although the reward if a book is successful won’t be as high, considering the amount of people with some royalties, but it could save various costs making it a worthwhile endeavor. Model B would also be more of an incentive for backers to help fund a book.

Looking at this open innovation, or reverse crowdsourcing model, from strictly a book publishing perspective, what could be some of the downfalls? The model of open innovation is a starting point, as there have been a number of critiques that we can relate here. Rigby and Zook (2002, p.84-85) have suggested two that can relate to this scenario:

  1. Innovation transfers take time
  2. Managers tend to underestimate the strengths of suitable substitutes.

Although these are proposed as strictly technology and business related, we can adapt them to publishing. The first critique touches on the idea that this model (both A and B) could take a significant amount of time, from coming up with a suggestion to finding backers, to finding a suitable author, to the time is takes to actually write the book. Of course, the last point could build anticipation, but all that leads up to it could act as a deterrent. Next, we will replace managers with authors, suggesting that they would assume their ideas for novels are superior to the suggestions by an audience. From the perspective of what good literature is, this may be true, but perhaps writers may see the benefit of taking an idea from an audience willing to fund it.

Another possible downfall to this idea comes from an online commenter, Maxim Price on Quora (2014), who mentions non-disclosure agreements. Although again, brought up in the context of product and technology ideas, it can be related here. In model B, how would the individual who submits the idea, the writer, possible publishers, and perhaps backers, organize the copyright and who gets how much of the royalties? The complexity of this scenario pushes me to only support model A, where the author receives the money from the backers and the book is released online for free. In this scenario, the publishing industry would have difficulties getting involved, possibly offering their services as graphic designers or editors for a fee.

Although this model has complexities, I believe it has the possibility of being successful. By following an open innovation model, other businesses have had huge success (Chesbrough (2004) gives he examples of “Intel, Microsoft, Sun, Oracle, Cisco, Genentech, Amgen, Genzy”(p.23)). The reverse crowdfunding model essentially eliminates the middleman and turns authors into a for hire position. It would make the audience happy, as they are seeing the books they want written come to fruition, it could ensure profitability for authors for whenever they need money they can go online and see what ideas are out there, but it would likely affect the publishers negatively. Looking at this model it is unlikely to ever become the be-all end-all for book publishing. Many people with great ideas would still likely want to write and publish their own books, whether they choose to attempt the traditional route, the self-published route, or even the standard crowd funding route we have today. However, this model could stand as an option for many aspiring writers and an incentive for authors with previous success to write more novels for a series.

References

Bausells, M. (n.d.). Kickstarting a books revolution: The literary crowdfunding boom. Retrieved November 6, 2015.

Bearman, S. (n.d.). Crowdfunding for Authors: Is it right and is it right for you? Retrieved November 6, 2015.

Galley, B. (2014, September 14). Top Tips on Crowdfunding for Authors. Retrieved November 6, 2015.

Chesbrough, H. W. (2003). The Era of Open Innovation. MIT Sloan Management Review, 44(3), 35-41.

Chesbrough, H. W. (2004) Managing Open Innovation, Research-Technology Management, 47(1), 23-26.

Cheng, C. C. J. and Huizingh, E. K. R. E. (2014), When Is Open Innovation Beneficial? The Role of Strategic Orientation. Journal of Product Innovation Management, 31: 1235–1253. doi: 10.1111/jpim.12148

Crowdfunding. (n.d.). Retrieved November 6, 2015.

Gartland, M. (n.d.). Will Crowdfunding Books Replace Author Advances and Further Empower Readers? Retrieved November 6, 2015.

Morkes, T. (n.d.). The Complete Guide to Crowdfunding Your Book. Retrieved November 6, 2015.

Price, M. (2014, October 6). What’s wrong with the idea of a ‘reverse Kickstarter’? Retrieved November 6, 2015.

Rigby, D., & Zook, C. (2002). Open-Market Innovation. Harvard Business Review, 80(10), 80-89.

2 Comments

  1. This is a very well thought out and written paper. The model is extensively researched, using not only an example created by a specific individual, Gartland, but it also looks at other sources to back up the potential of the reverse crowdfunding model. I think the application of business ideas to the publishing world worked really well in this case. Kit Crowe lists all of the potential ways reverse crowdfunding could work, as well as being critical of this potential model in a convincing way. It has merit, but it also contains flaws and it is important that both were highlighted. Also, I find myself agreeing with the assessment that although there are two potential ways of doing this, Model A is a more viable option for readers and authors, if not for publishing houses. The examples used are relevant and increase the overall understanding of how this model could function in a publishing world.

    Overall the flow is good. The introduction does not really fit the tone of the rest of the essay in its informality, but for the most part there are no unnecessary or choppy sections. I am referring to larger sections here, rather than specific sentences. The essay discusses all of the required elements, neatly tying together how the various components of the publishing industry would work under such a model. The conclusion provides a good overall assessment of the author’s own position on the model.

    However, there are some things that could be improved. First, the grammar. Throughout the essay there were a few consistent errors, such as the misuse of “it’s” and various spelling errors. There was also some choppy language and sentences that either didn’t make sense or simply ended without clearly saying anything. What this shows is that the paper would benefit from more thorough editing on the part of the author. Many of the mistakes were fairly easy to fix.

    As I read the essay, I could clearly see the flow of ideas and that there is inherently a structure to the essay. However, I wasn’t sure exactly what the essay would discuss. There was no clear direction in the introduction so that the reader would know what to expect when reading this piece. Yes, the paper would be about reverse crowdfunding, but what about it? There should be a clear statement describing the intentions of the author about reverse crowdfunding and how it will be explored as a potential method for writers to make money without directly selling their content.

    Otherwise, it is an interesting and well-researched paper with a strong body and conclusion. Just lacks a clear beginning and suffers from grammatical errors.

  2. This essay presents one model of crowdfunding, with two possible implementations, and nicely frames it in the context of open vs closed innovation. This framing presents the opportunity to do some interesting comparisons with other types of industries, and although this aspect is not deeply explored, the essay does offer an opportunity to think about these. The author also aptly identifies some of the complications and implications of such a model, including the copyright issues and the likely users of such a model. These aspects could have been borne out a little more in the essay, or even made into the centerpiece of the discussion had the author abbreviated the introduction.

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