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Summary:

Penny Arcade, a webcomic publisher and event producer, is trying to use Kickstarter to finance its web operations for a year so it can replace traditional banner advertising with a reader-centric model. Could traditional publishers learn something from this crowdfunding experiment?

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We have already seen Kickstarter, the popular crowdfunding platform, used to finance some fairly interesting media experiments, including books from authors like Seth Godin, record albums by artists like Amanda Palmer and even an entire magazine in the case of Matter. But could a publisher use the service to crowdfund its way out of the advertising-revenue trap in which many media companies find themselves? Penny Arcade, which publishes online comics and puts on related events, is trying to do exactly that with an ambitious Kickstarter campaign aimed at replacing the revenue it currently gets from advertising with funding from fans. But will it work? And could it provide a model for other media companies?

Penny Arcade is anything but a traditional publisher: It began as a simple video-game-oriented webcomic that writer Jerry Holkins and artist Mike Krahulik posted semi-regularly online in the late 1990s, and it has become a regular series with a number of associated real-world products (including several video games) and its own gaming conference called PAX. It is one of the longest-running webcomics around, and Holkins and Krahulik have made their living by publishing it for the past several years — in part by running advertising on the site where the comics appear.

Returning to a reader-centric model

In the early days of the comic, Holkins says the two founders managed to run everything through direct donations and sales of related products, but as the site grew bigger they figured they had to sell out and offer advertising in order to survive. But in the description of the Kickstarter campaign and a related blog post, he said eventually he and Krahulik wondered whether the platform would allow them to raise enough money to go back to a fully reader-funded model:

I think we had assumed it wasn’t possible to do it that way anymore — to operate a site at this scale without advertising dollars — but it occurred to us that we’d never actually asked. People often want to know how they can support the site in a way that doesn’t involve t-shirts or looking at advertising, and I think we may have a way. What I’m saying is that we want to sell out, and we would love to sell out to you.

The initial goal for the campaign, which ends on Aug. 15, is to raise $250,000, which the two founders say will allow them to dispense with banner advertising. If more money is raised, Holkins says the two will “restore old services we used to offer, convert the entire site to a Creative Commons license, and ultimately remove every ad from the site for an entire year.” The Penny Arcade founder says the larger idea behind the campaign is to become a company “that succeeds by making things, specifically things for you.”

The two co-founders have also made it fun for participants in the Kickstarter fund-raising effort by including bizarre or unusual offers as part of the different tiers of funding. So the $1 pledge says one character “will shout out your name as he chases a duck” and for $25 or more, another “will name your pet.” Higher pledge amounts come with a chance to be one of 50 people on the set when Penny Arcade films a movie version of the comic, and for a $5,000 donation a fan gets to come to Penny Arcade headquarters and hang out for an evening of pizza and games with the creators and other staff.

Could other publishers follow this model?

One of the people watching the campaign is Rob “Commander Taco” Malda, who founded the online community Slashdot and is now working on digital projects for the Washington Post and mentioned it on Twitter and his Google+ page. Could a Kickstarter campaign have saved Slashdot from having to be sold multiple times to different companies as it tried to keep the servers behind the community running? It’s an interesting question. Crowdfunding seems to have become so well established that it could theoretically give website publishers a lot more financial freedom.

The Penny Arcade experiment has a humorous tone, but the intent behind it is a serious one. By turning to its readers, Penny Arcade wants to become a totally reader-centric business that answers only to its fans and supporters. In some ways it’s the ultimate extension of the model the New York Times and other traditional publishers have taken with paywalls and other subscription plans, except Penny Arcade has come at it from the opposite direction: Instead of hitting readers with a paywall when they try to read something, it is asking for funding up front before the content has even been created.

Targeted publications like the Financial Times and the Economist seem to already be on the road toward this kind of model, with subscriptions surging ahead of advertising to make up more than half of the revenues at the FT in a recent period. Is this a model other media entities could pursue? Perhaps. But they would need to have as devoted a fan base as Penny Arcade, which by late Tuesday had already come up with almost a third of the amount the site was looking for in less than 24 hours.

Post and thumbnail images courtesy of Flickr user Christian Scholz

  1. One problem is, this sort of project is expressly against the Kickstarter guidelines. They are pretty brief, too.

    “A project will eventually be completed, and something will be produced by it. A project is not open-ended.”

    “Kickstarter is for projects that can be completed, not things that require maintenance to exist.”

    This is explicitly what they’re doing — asking for money for maintenance. It’s not what Kickstarter was meant for. They just figured Kickstarter would work better than the standard webcomic fundraising device, the PayPal tip jar. It’s kind of disgraceful.

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    1. I’m not sure that’s true, Neil — if you think about it as a series of comics rather than a website, what they’ve done is set up a project to fund a year’s worth of comics without ads. If it works, I assume they will convert it to some kind of regular funding. I believe they also checked with Kickstarter before they started, in order to make sure it was within the approved guidelines.

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      1. Matthew have to agree with you here. We need to think of this as the payment to get one year’s subscription of the content out.

        Also, from a revenue model this to me seems to be a crowdsourced subscription model where people buy subscriptions based on value perceived not value defined. However, this is chum change compared to what a publisher with good traffic can make – but Penny Arcade is not about the money it would seem…

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      2. “if you think about it as a series of comics rather than a website, what they’ve done is set up a project to fund a year’s worth of comics without ads.”

        So if I set up a KickStarter to fund a year’s worth of me writing about comic books on Tumblr without having to get a “real” job to keep the lights on, would that be cool with KickStarter?

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  2. glennfleishman Tuesday, July 10, 2012

    My first reaction was: right idea, wrong platform. They note that this is a yearly goal, not a permanent target. This is closer to membership than it is the point of Kickstarter or most crowdfunding, which is to provide individual rewards that give an incentive to raise funds that are typically just part of the money necessary to bring something new into being.

    Removing ads seems much more like a membership benefit, although in this approach, Penny Arcade has an interesting take. It’s not just backers that have the ads disappear, as in a membership model; rather, if the goal (or stretch goals) are met, ads disappear for everyone. Further, their higher-dollar notions, such as making everything available under Creative Commons license, reviving a podcast, and so forth, will benefit everyone as well.

    I wonder if they started at this from the wrong angle? What if they had proposed raising a sum for a large creative task that they currently couldn’t fund, and use stretch levels to have beneficial results for all site visitors beyond that?

    There’s something just off about the goal and approach. Given that they can sell advertising, and apparently don’t like to run advertising, it’s a tricky way to go about this. A membership model would have made more sense, with members gaining benefits, but clearly the guys want everyone to have the same outcome whether they contribute or not (plus specific rewards beyond the changes to the site).

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    1. Those are good points, Glenn — and I agree that the goal doesn’t really fit the usual Kickstarter model of a specific project. But then maybe they just want to take advantage of a popular platform to raise awareness of the idea, and then if it works they can turn it into a traditional membership approach. In any case, thanks for the comment.

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  3. Brick Rucker Tuesday, July 10, 2012

    There is a company called Vuier, that does exactly what this is trying to accomplish.

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  4. We (YourSports) successfully crowdfunded the media rights for historic NCAA football games and high school games. It was the only profitable business model for this expensive content… Lots of experience in this arena. My gut says this model can be scaled.

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  5. Matteo Fabiano Wednesday, July 11, 2012

    Isn’t there a long history of supporter-funded media e.g. KQED, KCSM, NPR…

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  6. I am giving ads space inside game for my video game crowd funding campaign.
    http://igg.me/p/115374?a=653395

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  7. Isn’t that called “subscription”?

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  8. The Tyee also has a history of raising funds from readers for specific investigative reporting features. http://thetyee.ca/About/Fellowshipfunds/

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