Today, they can be divided into four diferent models (crowdgiving, rewardbased, equity, and lending), which have received the backing of international legal institutions—in France, the Banque de Prêt et d’Investissement (BPI) and the Ministry for the Economy and Finance2. Distinctions between these models are less a matter of thematic diferences than of the diferent ways in which they structure economic exchanges.
In the cultural sector, donation-based and donation/reward-based platforms are the most common. The first allow philanthropist, altruistic funding of projects. Widely used for musical, literary, film and video-game projects, donation/reward-based platforms ofer graduated perks according to the amount contributed. However, in Western countries, with the support of favourable legal and political frameworks, it is above all equity and lending platforms that have brought crowdfunding into the market economy. Lending-based platforms allow Internet users to lend money to third parties. As in mainstream banking, the return will depend on interest rates. Equity-based platforms enable users to invest in a project or business by becoming a shareholder and receiving dividends. These two models, which are regulated by financial market institutions and subject to the appropriate legislative frameworks, aim to let citizens and ‘partners’ invest in startups or projects with larger budgets. Given the potential for growth these models ofer, their extension into domains other than the cultural sector indeed seems to ofer a promising answer to recent financial crises and low investor confidence. These platforms have particularly attracted the attention of economic and political institutions because they generate much higher rates of return and growth than (giving- and reward-based) cultural platforms.3 Moreover, they can prove useful in allowing businesses to bypass traditional sources of funding (business angels, banks, or venture capital funds) (Kleemann , Voß, and Rieder 2008; Lambert and Schwienbacher 2010).
Since 2012, there has been consistent growth in these platforms and the funding they raise. According to the Banque Public d’Investissement France, between 2015 and 2016 growth in France was 40%, with 21,375 projects backed and a total of €233.8m raised.4 Figures given by the KPMG/Crowdfunding France Barometer show that, in France, crowdfunding in all its forms grew from €167 million raised in 2015 to €336 million in 2017. According to the Massolution annual report5, worldwide growth was distributed unequally across geographical zones, with North America, Europe, and Asia at the forefront (North America \$17.2 billion, Asia \$10.54 billion, Europe \$6.48 billion, Oceania \$68.6 million, South America \$85.74 million, Africa \$24.16 million).
Aside from economic considerations, crowdfunding platforms have raised the hopes of a great many citizens with social, cultural, and economic projects, who see these platforms as a possible means of funding. The platforms themselves have carefully used the media to communicate their success stories. In France, for example, the crowdfunding campaign for the film Noob, a spinof of the web series of the same name, received €681,046 on Ulule, having asked for €35,000, and the roleplaying game L’Appel de Cthulhu received €402,985, having asked for only €10,000. New records keep on coming. In 2012, the American singer Amanda Palmer raised \$1,192,793 on Kickstarter and had herself photographed with a billboard reading ‘This is the future of music’, calling for all artists to follow her lead. This led to an invitation to give a TED talk to promote ‘The Art of Asking’.6 We could list yet more successes that would lead us to believe that the future of funding for cultural and social initiatives lies in these forms of exchange between artists and their audiences, or between citizens. Unfortunately, as we shall see, not all projects have such a happy ending, and many fail to raise the amount they seek.
Introduction
3