Against the Crowdfunding Economy
COOPS-COOPERATION-SHARING, 23 May 2016
Crowdfunding Websites Marketize Goodwill
17 May 2016 – Which people get to live their dreams and which do not?
In the art world, as elsewhere, success is often tightly correlated with pedigree and acceptance into elite institutions. Simpsons writers are likely to be Harvard grads; musician and writer Leonard Cohen purchased his Greek artist’s retreat with his trust fund; Lena Dunham’s debt-free college education gave her the financial freedom to make her first film.
Of course most artists aren’t so lucky. And amid the increasing consumption of digital media, the conditions for success have become ever more fraught. Instant access to media — and the massive amount of free content online — makes many feel they should be able to watch, listen, or read whatever they want, whenever they want, at no cost to them.
Tech companies, in turn, rely on free content to get eyeballs on their advertisements, and make a tidy profit in the process. Hence, while Silicon Valley profits from our collective free labor, many once-remunerated artists are now paid in exposure.
Famed rocker Iggy Pop recently admitted that he couldn’t survive off his music anymore. Actor Wil Wheaton described his frustration last year at being solicited by Huffington Post to write for free. And Nobel Prize–winning poet Tomas Transtromer was never able to support himself as an artist.
These examples might elicit little more than a shrug. After all, artists choose to follow their dreams knowing the attendant economic uncertainties. Yet, as author and cartoonist Tim Kreider, the double standard is glaring:
People who would consider it a bizarre breach of conduct to expect anyone to give them a haircut or a can of soda at no cost will ask you, with a straight face and a clear conscience, whether you wouldn’t be willing to write an essay or draw an illustration for them for nothing.
This double standard proliferates in a moment when demand for new artists, and art, is growing. Yet the days when the production of art was subsidized by the welfare state as part of a bigger societal vision are long gone.
Is there a solution to this conundrum? Silicon Valley seems to think so: crowdfunding.
The concept of crowdfunding began with platforms like Kickstarter (the inaugural crowdsourced fundraising platform) and IndieGogo, both of which allow entrepreneurs, start-ups, and nonprofits to solicit fundraising through small online donations.
Kickstarter and IndieGogo cater primarily to early-stage entrepreneurs trying to underwrite their ideas and products — things like video games, documentaries, magazines, apparel, or computer hardware. But unlike charitable donations, people who give money to these platforms expect something in return.
Since its founding, Kickstarter has spawned imitators like PeopleFund (for the United Kingdom), Gambitious (for video games), SpotUs (for journalists), and Patreon (for artists). Each of these platforms has the same business model: they take a small cut of every donation. That small cut adds up to a lot. Last year, crowdfunding platforms raised $1.9 billion.
If Kickstarter inaugurated the concept and applied it to companies and entrepreneurs, Patreon took the same idea and compressed it into the smallest possible entrepreneurial unit: the self. Rather than contribute to a specific product or cause, Patreon takes the ancient idea of arts patronage and digitizes it. As Patreon’s promo video declares:
Patreon lets fans become patrons of their favorite artists and content creators . . . It’s different from Kickstarter because it’s not about one big project that requires lots of funding. It’s more for bloggers, or YouTubers, or webcomics — anyone who creates on a regular basis.
From this premise, patrons sign up to donate “tips” whenever their favored “creators” produce content they like. Depending on their support, patrons also get additional perks like behind-the-scenes content or media that only they can view.
Patreon has taken off since its founding in 2013. The company has raised $17 million in seed and Series A funding, and hundreds of thousands of donors have signed on to patronize their favorite creators. Patreon takes at least 5 percent of each donation, though some sources report it to be closer to 12 percent.
Could the Patreon model be the long-sought-after solution to the starving artist problem?
Its artists are skeptical. “Patreon is really hard, unless you’ve already got an existing following that’s huge,” says one Patreon user, and “even if you do have a big social media following, you still have to pump your Patreon page all the time.”
Lauren Parker, a freelance writer and podcast producer from Oakland with her own Patreon site, is similarly unconvinced. “In some ways it’s the old, classic benefactor model,” she says. “It’s a lot better than the ‘exposure’ narrative — where we expect everything to be available for free — but at the same time, I’m kind of pissed off that we need it at all.”
Parker thinks Patreon works for some artists — like those who have heavily cultivated their social media presence — but the major drawback is that artists are forced to spend more and more time creating exclusive content for the highest-paying patrons to continue receiving funding. As she elaborates:
They start to get pissy when you make art they don’t want. Like they have a right to be involved in your life. If you piss them off, your revenue goes down. And the more time you spend on the exclusive art, the less time you have for what you really want to be working on. I don’t know anyone who makes a full-time living off this.
Perhaps it’s fitting then that Patreon describes its affiliates as “creators” making “content,” rather than “artists” making “art.”
Art and content are not the same. Content is produced with a specific, marketable goal in mind. Patreon turns artists into content-makers whose creativity is moderated by their patrons. Patrons with more money have more clout, and the ability to withhold funding shapes what creators make.
In this sense, Patreon reproduces key elements of the old patronage model, in which the power to commission and influence artists rests in the hands of those who can pay.
Catering to Donors
Matt Taibbi famously described Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
The colorful metaphor applies equally well to Silicon Valley start-ups. Hopelessly derivative, they keep jamming the blood funnel in to see if blood comes out. Friendster seemed lucrative, so why not try something similar in Myspace? Facebook? Snapchat? They’re all variations on a theme.
Likewise, in the quest for untapped crowdfunding markets, entrepreneurs were delighted to find fresh meat in an unlikely sector: social welfare. Hundreds of millions of people around the world are homeless, short on rent, drowning in bills, or in need of expensive medical procedures. Crowdfunding sites like YouCaring and GoFundMe have rushed to fill this void.
GoFundMe is to personal charity what Patreon is to individual artists: it provides a platform for those in need to make a pitch to raise money for their cause.
The GoFundMe homepage features fundraising pitches that hit virtually every bullet point in the United Nation’s list of basic human rights. Charity cases include Abigail Kopf, whose family is asking for help paying the teen’s medical bills after she was struck during a shooting rampage in Kalamazoo, Michigan; a homeless Australian woman named Tarnie, whose friends have banded together to raise money to help her obtain food and transitional housing; and Jerónimo Lozano, a leukemia patient unable to cover her medical expenses.
The stories on GoFundMe are tragic and sad, and the people and families who post them deserve every penny they raise. But what about GoFundMe itself? How much does it deserve? It currently takes a 5 percent cut of every donation (in addition to other fees depending on the payment) and has raked in at least $100 million in revenue so far.
While GoFundMe has a broad mission statement that extends beyond mere social needs, other sites are more specific in their intent. For example, YouCaring is a “compassionate crowdfunding” site for those suffering from tragic illness. Its users raise funds to defray the cost of medical bills stemming from cancer, leukemia, accidents, and other medical conditions.
Of course, the often-absurd cost of medical care is the result of a system in which health care is privatized, and access to care depends on your ability to pay. By bypassing any movement towards the right to health care, YouCaring further rationalizes the oppressive logic of private, for-profit healthcare.
The social logic of crowdfunding also abounds in higher education. San Francisco–based nonprofit ScholarMatch, which was founded by author Dave Eggers, describes its raison d’etre like this: “Our mission is to make college possible for underserved youth by matching students with donors, resources, colleges, and professional networks, [though] crowdfunded scholarships remain at the core.”
ScholarMatch’s website lists information about students who need funding — short profiles that includes their interests, career goals, accomplishments, and a short blurb about the student. But what’s troubling about Scholarmatch is not who it helps, but who it doesn’t.
Which students are more likely to be funded? The aspiring business leaders or the aspiring labor organizers? At the same time, the nonprofit does nothing to challenge skyrocketing tuition costs, instead searching for an individual solution — rather than a collective one — to a social problem.
The nonprofit fundraising world raises the frightening specter of an undemocratic welfare state run solely on donations and subject to the caprices of the wealthy. Most modern nonprofits and foundations have large, Orwellian-named “development” departments, where number-crunchers mine data from donor management systems to calculate who to hit up for donations and how. Usually that means rich people — it’s often easier to get one person to donate $20,000 than get one hundred people to donate $20.
As a result, many nonprofits that provide a semi-public service have adjusted their missions to fit the whims, vision, and needs of wealthy donors.
Most large nonprofits and foundations — including many institutions we might consider public, like charter schools, museums, and hospitals — now hold galas, lavish balls at fancy hotels that can cost hundreds of thousands, even millions of dollars, and host a small number of monied patrons who pay hundreds of dollars for tickets. Nonprofit leaders fluff the egos of attendees, praising them for opening their wallets and purses and making the world a better place.
In both the case of nonprofit fundraising and crowdfunding, those with money are told the way to make the world a better place is to donate; that they are the key to preserving art, ending poverty, or saving lives. Yet there is a paradox here: the reason that schools, artists, and health care are underfunded is because rich people are under-taxed in the first place.
Criticizing crowdsourced fundraising might appear deeply cynical. Certainly Patreon has opened up doors for artistic and personal projects that, without widespread support, wouldn’t exist. And GoFundMe has undoubtedly saved the lives of people who haven’t been able to afford health care or housing. In a capitalist society, a little charity is better than none.
But the problem doesn’t lie with the charity cases themselves. The problem is the social model they embody.
As Oscar Wilde once wrote, “it is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property.” Charity perpetuates the illusion that capitalism is basically just — that all it needs is a smattering of individual benevolence to mitigate its harms. But capitalism systematically creates injustice.
And holding up charity as an effective means to attack its ills only obscures what created them in the first place. Exalting charity often makes it more difficult to build an equitable system in which everyone’s basic needs are met.
At their core, sites like GoFundMe and YouCaring contain the seed of an idea about what social welfare provision should look like. Crowdsourcing our basic human needs implies that the welfare state has failed, or worse, is incapable of existing. In its place, we are offered a world where our value is based on how much donors think we’re worth.
In this sense platforms like GoFundMe fulfill a deep desire on the part of elites for an alternative to the social welfare state that is voluntary and not dependent on (their) taxes. In this vision social problems are not actually social, but individual. And collective solutions — much less collective action — are unnecessary to the task at hand.
Perhaps the sharpest irony is that a weak welfare state and an insecure, unequal economy only make these platforms stronger and more profitable. The less robust our welfare state, the more people will turn to fundraising online.
Indeed, it is in these companies’ best interest that social security is cut, that public housing is privatized, that supplemental nutrition assistance programs are eliminated. It means more people will turn to their for-profit platform.
There is something profoundly Dickensian about directing those who suffer to market their penury and compete against others in a similar condition. Who deserves to have their trade funded? Who deserves to live their dream? Who deserves to be housed? Who deserves chemotherapy? In the existential morass of crowdsourcing websites, the answers to these question are arbitrary, or worse, map onto existing hierarchies of race, gender, or ability.
Tens of thousands have put their faith in these new digital platforms, hoping for moral outcomes from an immoral system. But crowdsourced social welfare marketplaces exist for profit. They don’t care who does or doesn’t get funded. They just care about getting a cut.
Keith A. Spencer is a freelance writer and graduate student from the Bay Area.
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