Problem: People creating and publishing things for free on the internet are providing something of immense value to everyone in the entire world, but they aren't getting paid commensurately for it, and in some cases, aren't paid at all.
Proposed solution: Incremental Converse Crowdfunding (ICC) is a system for precise and meaningful donations. Its sub-goals are to:
- Provide an income to people who create and publish things for free on the internet
- Allow funders to more precisely express what they want and how they feel
- Encourage creators to provide something that their funders actually want without sacrificing autonomy or integrity
To explain exactly how it works, I will walk through a series of legally distinct case studies, starting with:
Derbert is making a rhythm game exclusively featuring avant-garde jazz music. Because he is extremely cool, Derbert believes in the benefits of free culture, and wants his game to be free-source. He has been working on the game for about 3 years now, and has a public demo out. Now he wants to try and somehow make enough money from it to work on it full-time.
To get people to pay him for something he is publishing for free, Derbert could take the following steps:
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Propose
Derbert publishes proposals for each of the tasks he could spend his time on, whether that's a new feature for the game, a new song, improvements to the anti-cheat system, etc. |
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Pledge
The players of the game make pledges towards each of these proposals. The amount they pledge is based on how much they want Derbert to work on that task. |
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Present
These pledges are analyzed and presented to Derbert as an estimated payout that he would receive for completing and publishing each task. It is up to Derbert to decide how much that influences the priorities of each task. |
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Progress
Derbert works on his game. |
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Publish
Derbert publishes his work, and the players try it out to see what it's like. A lot of people really like it! But some people don't. |
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Payment
Each player who made a pledge towards that task is invoiced. They can choose to adjust their donation based on whether the published work was better or worse than they expected. |
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Predict
Players who donate less than they pledged have their future pledges scaled down during the weighting and combining process. This makes it so Derbert has a more accurate prediction of the actual expected payout for each task. As a side-effect, this also acts as an informal penalty to the player. |
The last step of adjusting scoring is the heart of ICC, and there are many ways that it could potentially be done. I get deep into the weeds of some possible implementations in ICC Scoring, but for now, just be aware that ICC works only if this score can accurately approximate the relative expected donations for completing each task.
And of course, this process is not exclusive to Derbert and his game, and can apply to any work that can be trivially copied and distributed, such as a webcomic, blog post, or operating system.
Lets see how this process satisfies the sub-goals we set out to accomplish earlier:
| Provide an income to people who create and publish things for free on the internet | ❔ Derbert released the feature update for free, and got paid. Whether Derbert is paid enough to make a living remains an open question, and answering it will be the primary goal of the first ICC trial run. |
| Allow funders to more precisely express what they want and how they feel | ✅ The donations that the players pledged influenced Derbert's decision of what to work on, and the amount of money Derbert ultimately received went up or down depending on how they felt about what he released. |
| Encourage creators to provide something that their funders actually want without sacrificing autonomy or integrity | ✅ This one is a little tougher to be definitive about, but Derbert chose which proposals to put up at the beginning, and chose which of the proposals to work on, so I'd say his autonomy is intact. Assuming he cares about having money, he was nudged towards the proposals with higher payouts. |
Not bad! There are still some uncertainties, but for the most part, this seems like a plausible solution to the stated problem.
Incremental? Converse?
The linchpin of ICC rests on the theory that by making donations less risky and more useful, a creator's audience will be willing to donate more money more often. To accomplish this, ICC adopts two deviations from traditional crowdfunding:
- converse crowdfunding: flip it so that the final result is presented before any money leaves the funders' hands
- incremental crowdfunding: split campaigns up into smaller pieces that can either be funded individually or trigger a partial amount of the total pledge to be paid out
Converse crowdfunding
The traditonal method of crowdfunding can be described by the statement: "If I fund this, then you will produce it". The logical converse of that statement would be: "If you produce it, then I will fund this". As such, in converse crowdfunding, donors pledge money towards a work, and only donate after publication of that work. This gives creators an incentive to deliver a work quickly, but with minimal sacrifices to quality.
In my view, the greatest benefit of converse crowdfunding is the way it moves the source of risk:
In traditional crowdfunding, whether or not the implicit contract ("If I fund this, then you will produce it") is fulfilled depends entirely on the abilities and circumstances of the creator, which is, at most, usually a small team of people. Any sudden unexpected cost or life event affecting even one person on the team can completely derail the project.
In ICC, since the order is flipped, fulfillment depends instead on the donors, who are usually much greater in number, and completely isolated from each other. Based on the law of large numbers, as long as the approximated payout is accurate, the actual payout will consistently be around the approximation, greatly reducing the risk involved. Plus, unless every donor simultaneously becomes unable to pay for some reason (an exceedingly unlikely event), the creator gets at least part of the expected payout.
Incremental crowdfunding
Because converse crowdfunding stipulates that no money is transferred until after each task is completed, creators are essentially working off their own money for any given task. As a result, it is in their best interest to split their project into meaningful milestones, and be as transparent in their progress as possible. In this way, incremental crowdfunding follows as a natural outcome of implementing converse crowdfunding, and so it isn't necessary for the platform to have any explicit mechanism to force creators to split tasks.
Incrementalism has a couple of benefits:
- Gives donors more opportinuties to evaluate how much they want the project, and increase or decrease their pledges if their expectations change
- Gives creators regular feedback on how their work is being received in the form of their donors' pledge amounts, allowing them to improve their skills and decisionmaking processes more quickly and consistently
- Shows donors a more comprehensive view of the effort and work required to develop a project
And a couple downsides:
- Many donors don't want to deal with pledging to 8 different subtasks instead of just a completed final product
- Potentially less intuitive (though that goes for ICC as a whole)
No silver bullet
It is worth noting that there are no silver bullets. That is, there is never any single solution that will instantly solve all of your problems, and anyone who makes such claims is probably running some sort of scam. ICC is only one of many ways to improve the process of a project little by little.
That said, I think ICC works really well with other paradigms. For example, there is nothing about ICC that requires someone to release their project under a FOSS or Creative Commons license, but I think it's a natural fit.
FAQ
Is this like Patreon?
A little, but not really. It's intended for a different kind of creator and a different kind of work. There could be a world where someone uses both Patreon and ICC, or one where they would not use Patreon but would use ICC (or the other way around).
Are project rated the way donors are?
I think any sort of project score would become a metric to be gamed, and rather than optimizing for community contentment and long-term sustainability, projects will seek to work on tasks that optimize this metric. This is less of an issue for donors because the money is both the metric and the actual desired thing, so it's much easier and more direct to quantify.
Additional notes
Send questions to questions@jaxter184.net, I'd love to hear where you think this could fail, what features you would like to see from it, things you're excited about or afraid of, or anything else you have to say!
Below are a few more articles with more detail on specific aspects of ICC:
All pages
2023-09-25 20 min read
2022-11-10 20 min read
2022-12-28 7 min read
2023-10-02 5 min read