The project is built around a comparative study of crowdfunding in the Nordic countries and Spain. While Spain has come a long way in this area, crowdfunding can be said to be in it is infancy in Norway and the Nordic territory – that said, there is a substantial interest in the mechanism and concept from various stakeholders and representatives from the different cultural industries.
To examine how, why, when and in relation to which cultural projects crowdfunding works. An important question is to what degree crowdfunding can help as an alternative source of financing for the production of masters or prototypes. Despite digitization, which has resulted in lower expenses related to the sale and distribution of cultural products, costs associated with research, development and production of the master copy of a product within the cultural industries bear the characteristic trait of high development costs and low reproduction costs.
To answer these questions it is important to understand crowdfunding paradigms and practices from both platforms, promoters and donors, as well as government policies in a comparative perspective (north and south Europe).
Stakeholders in the cultural industries have traditionally had five main forms of financing:
a) income from activity (sales, rentals, etc.)
b) public subsidies and tax benefits
c) private investment (funds, credit and loans)
e) private philanthropic activities
Traditionally each country's legal framework and institutional system had a major influence on how the funding mechanism works and interacts, and there are considerable differences between countries.
The Spanish part of the research-project was carried out by Eva Sastre Canelas in collaboration with professor Bonet. The project was based on analysis of project promoters and their chosen strategies when using the largest Spanish crowdfunding platform Verkami, to seek financing for their projects. Verkami promotes primarily projects related to the cultural industries, and has since its inception in 2010 collected close to 15 million Euros, which has funded 3052 projects.
The informants were the 2368 projects and owners of these that in the period from 2011 to 2014 achieved required minimum funding for their initiative, in crowdfunding context a “successful project”. Their motivations and satisfaction in relation to opting for reward and donor based crowdfunding as means of financing projects was analysed. Among the key findings were:
• The presented projects sought on average 2500 Euro to fund their project. Comparatively, in the context of Spain, it is estimated that funding needed to establish a business is 65,000 Euros
• Many of the project owners are not professional artists, business owners with established operations or entrepreneurs with significant needs for long-term financing.
• Reward or donor based crowdfunding works best for projects with a limited period and for financing products and services that can be easily produced and distributed.
• The donor’s main motivation to contribute with finance is to receive copies of physical product or access to the service as a gift.
• Music, movie and board game project have the highest success rate
• Reward and donor based crowdfunding cannot replace traditional financial policy tools, subsidies, grants, private investment or other traditional financing methods. It must be viewed as a supplement.
Part 2: The Nordic
Will build on surveys and focus groups with project and platform owners supplemented with various academic and professional experts. A report drawing on data and information from the surveys and group meetings will attempt to present a situational snapshot of how far and advanced the various forms of crowdfunding (gift donor, equity investment and loans) are in the Nordic countries. It will also look into some of the barriers to further development and uptake of crowdfunding, especially in relation to fiscal policy.
Perhaps we Europeans can learn from the United States, where there is a strong popular tradition associated with philanthropic donations or funding? What we need in a European context, is to build a public engagement for gift and donor based crowdfunding and examine proposals for updates and adjustments of current fiscal and tax policy, so as to legitimize the activities of the project owners and provide private investors with incentive to participate in equity based crowdfunding”.