S2, E39: On Crowdfunding


Holy cow, I went two weeks between episodes and came out with a behemoth of one – an it is mostly on topic! First I talk about my deadline failure and the video for the first $5 budget reduction, then had to give a quick shout out to my bud Petey’s new football podcast, First and Ten (https://www.facebook.com/1standten).

Then I get into the crazy long main topic – crowdfunding: what is it, major platforms of relevance to self-publishers, why bother, and the sort of process to go through and challenges to remember if you’re going to do a crowdfunding campaign. I wrap up with a few details about what I have so far on my mulling over of an Aisuru campaign.

Intro:

  • Finally shook off most of the coughing so should be able to get back to exercising and stuff. Got the second coat done on half of my upper kitchen cabinets, finally.
  • Petey’s new football podcast, First and Ten, https://www.facebook.com/1standten
  • Missed the August 31st deadline, as expected. Video of budget change to drop the first $5 is up on my YouTube, youtube.com/anmanatsu/

Main Topic:

  • BasicsofCrowdfunding
    • Funding a project or cause by collecting contributions, usually smaller amounts, from a number of people, primarily through the Internet
      • The most common form that we know is the reward-based, where contributers get rewards, usually related to what’s being funded and, in the case of products/goods, rewards are often “preorders” of the good
      • There are also equity-based (contributers get a stake in things) and credit-based (essentially like microlending – such as LendingClub, where contributers are loaning and expect repayment on agreed upon terms)
    • Numerous platforms available that tend to follow either an “all-or-nothing model” (if not successfully funded, person seeking funding gets nothing) or a “keep it all” model (even if not successful, person/company gets anything raised).
      • Kickstarter (creative projects that product something; all or nothing)
      • GoFundMe (geared for people needing help after accidents and illnesses; keep it all model obviously
      • Indiegogo (broad range; poster chooses all or nothing or keep it all)
      • Pubslush (geared for literary projects; minimum need that has to be met to get funded, and overall goal to show full need; does have a REALLY annoying “sign up to learn more” if you’re exploring the public side)
      • Patreon, for creators (including writers, podcasters, photographers, illustrators, etc); different from most as it is geared for continued smaller monthly contributions, i.e. teh traditional patron who regularly gives money to fund a creators efforts rather than funding a single project; rewards system is more fluid and longer term, often including pre-releases and the like and are usually contingent on remaining a patron until the reward occurs
    • Why do it?
      • For writers: To help fund the expenses of self-publishing, which can surpass the $2k mark fairly quickly if you have professional editing and cover work done, and a clearer indication of interest – even if it’s just $1, that’s $1 from a person who has an interest in your works! Also gets you a ready made group of first readers who may go review your works 😀
      • For funders: A way to support a upcoming or a favorite writer and preorder upcoming works with extra, and usually exclusive, goodies
  • Process
    • Is your novel done other than the final wrap up stuff, like line editing or cover design? If not, you aren’t ready – finish it first!
    • Decide if it is right for you, for now, and for this project – go old fashioned and make a pros/cons list, thinking about all of the elements around a crowdfunding campaign and what you really need for releasing your work
    • Research and decide which platform you will use. Look at visibility, success of projects, fit your your project, etc. Kickstarter is the most well known at this point, but the all or nothing might not work well for you. Pubslush is very writing oriented, but it’s newer so there may be less trust for potential funders to sign up for it.
    • Plan, plan, plan, plan! I really can’t emphasize this one enough. It is already a daunting challenge for me and I haven’t even done the campaign! There is a lot of planning that has to go into a campaign before you start. You need to:
      • Figure out how much money you need for the project
      • What rewards you’ll offer and how much it will cost you to deliver them (common ones include a eBook form, a paperback form, hardback, audio book, and extras like bookmarks or the like); don’t forget to factor in delivery costs!
      • What percentage of money received is going to go to the platform? Usually it’s 4-5% but it can be higher. And don’t forget the payment processing fees! These are usually listed separately!
        • Kickstarter charges 5% of the successful total for projects, plus a 3-5% fee from Amazon for the credit card processing, with range dependent on country
        • GoFundMe takes 5% from each donation and th payment processors charge a percentage + a per donation fee that can range from as little as 1.75% + 30 cents to as high as 4.25% (depending on country and if you’re a charitable group)
        • Indiegogo 4% if you reach goal; if you do the flexible option and don’t meet goal it jumps to 9%; 3-5% for CC processing
        • Pubslush is 4% plus a 3.5% fee for CC processing via Stripe
        • Patreon takes 5% plus $0.05 + 5% (Paypal) or $0.30 + 2.1% (Stripe) plus 25 cents to direct deposit your funds to your bank account or another $3 to send it to PayPal (US)
        • You need to make sure you’ll have enough left after that to actually do your project and do the rewards!
      • Plan out stretch goals now! These are goals for if you go past your target, what happens at higher levels (i.e. you said $5k and have it, so what will $10k do? Add an audio book? Bigger rewards?)
      • Study successful crowdfunding projects that delivered and see what sort of things they did and costs they factored in
      • Whatever total you come up with, add some padding – 5-10% – like you would a tile job estimate. This will help with unexpected shipping, like a lot of foreign orders, or costs in production that occur while the campaign is running
      • Decide how long you want the campaign to run for, generally 30 days is ideal, but some run as long as 60; experts recommend 30-45 days for the best results
      • Plan your marketing strategy – consider it premarketing for your book and be ready to do some work! You can’t get funding without getting the word out there and selling people on the project!
      • Carefully plan out your delivery objectives, padding dates to account for shipping delays, weather, illness, the moon being out of phase, etc.
      • Remember the maxim, under promise and over deliver!
      • Line up the companies/people that will produce the rewards in advance! You don’t want to end up having to delay reward shipping because you still haven’t found someone to make the awesome idea you had for a reward
    • Consider what free time you will have during the project – you’ll be expected to post regular updates during and after your campaign, especially as goals are hit, and you’ll need to keep the marketing buzz going the entire time the project is on-going
    • Be realistic – with most projects, 80-90% of funding comes from existing fans, family, and friends – so make sure you don’t set your goal so high, especially if you do all or nothing, that you end up with nothing
    • Don’t forget – the funding is income! You will have to report it on your taxes – they are not donations or investments. So if you haven’t started doing taxes for the writing business, you’ll want to start the year you decide to do a crowdfunding campaign!
  • Challenges
    • Coming up with rewards – hard to find something unique for your project, particularly novels versus comics or illustrated works
    • Accurate budget – the only thing worse than a failed crowdfunding campaign is a successful one built on bad budgeting! At best you’ll come out in the hole and not be able to actually use the money for its intended purpose – at worse you won’t be able to deliver, potentially destroying your reputation
    • Accurately gauging the time needed to do both the project you are funding and the rewards – they are going to add more overhead, so factor it in
    • Not getting enough support – the reality is, many projects fail.
      • According to Massolution’s 2013 Crowdfunding Industry Report, the overall average success rate for a crowdfunding campaign is 50%. Platform can play a factor, though.
      • As of January, the average success rate for Kickstarter projects was at around 44% (though it was significantly higher in some categories, with dance, theater and music having the highest success rates).
      • Indiegogo reports a much lower rate of 10% (though this low percentage can also be accounted for due to the ability to set a project to receive funds even if not successful, allowing for the setting of overly ambitious goals).
      • The larger, well known platforms also tend to have higher success rates, as do those that curate projects.
      • Momentum is important! Reaching milestones tends to help push success as well – for most smaller projects, if a project can reach 30% of it’s goal, it’s likelyhood to success jumps to 90%. At 35% funding, it is almost guaranteed!
  • AisuruCrowdfunding
    • Which platform – leaning towards Pubslush for the greater flexibility but some of their site design elements annoy me (like the “sign in to learn more” if you browse awhile), else Kickstarter
    • Goal – still hard to determine because I also have to decide what I want from it – just the print and eBook? Much lower goals. Audio book too? Have to up the stakes. Right now I’m thinking I’d need at least $2,000, not counting the rewards and platform costs
      • $1,000-2,000 for editing
      • $575 for a block of ISBNs – which would cover Aisuru and future works
    • Rewards? Standard stuff:
      • EBook – costs nothing to me
      • Paperback – about $10 per copy to send with shipping
      • Hardback with autograph, at the minimum – up $20 or more per copy with possible order limit
      • Ideally would be able to add a cool custom cover and illustrations sprinkled throughout from a skilled graphic artist – adding in another couple hundred to the overall cost for that
      • Audio book? Would need another $3,000 or more in funding then sending would presumably be little to no cost to me
    • Other fun stuff?
      • Bookmarks – How to make and what would be on them?
      • Postcards – would anyone want those?
      • Poster prints would again require an artist.
      • One cool thing I found was custom chopsticks that I could design with cherry blossoms and the like. Approximately $12 each plus shipping
      • Also thought it would be cool to replicate Sakura’s hair clip – but would most male readers be okay with that and to do it?

Progress Report: In the last 2+ weeks, I finished and polished chapters 13-18, and have 19 & 20 done waiting for a final polish; almost 2/3rds of the way there!

Monthly Goals: Finish, that is my goal for now – already lost $5; also to get back on schedule, didn’t even realize I let over 2 weeks go by between eps!