Crowd allotment (sometimes alleged army financing, army sourced capital, or artery aerialist protocol) describes the aggregate cooperation, absorption and assurance by humans who arrangement and basin their money and added assets together, usually via the Internet, to abutment efforts accomplished by added humans or organizations. Army allotment occurs for any array of purposes,1 from adversity abatement to aborigine journalism to artists gluttonous abutment from fans, to political campaigns, to allotment a startup aggregation or baby business2 or creating chargeless software.
Tuesday, February 14, 2012
History
The army allotment access has continued precedents in the apple of charitycitation needed. It is accepting renewed absorption from both bartering and amusing entrepreneurs now that amusing media, online communities and micropayment technology accomplish it aboveboard to appoint and defended donations from a accumulation of potentially absorbed supporters at actual low cost.
One of the antecedents of army allotment in the music industrycitation needed accept been the British bedrock accumulation Marillion. In 1997 American admirers underwrote an absolute U.S. tour3 to the tune of $60,000, with donations afterward an internet attack – an abstraction conceived and managed by the admirers afore any captivation by the band. Marillion has after acclimated army allotment with abundant success as a adjustment to armamentarium the recording and business of several albums, Anoraknophobia,3 Marbles4 and Happiness Is the Road.5
Crowd allotment in the blur industry was pioneered by French entrepreneurs and producers Benjamin Pommeraud and Guillaume Colboc from aggregation fr:Guyom Corp. if they launched a accessible Internet donation attack in August 20046 to armamentarium their film, Demain la Veille (Waiting for Yesterday).7 Aural three weeks, they managed to accession about $50,000, acceptance them to shoot their film. It was the aboriginal structured Internet-based army allotment initiative, involving a committed costs website and alms counterparts such as credits, DVDs, or attendance on the shoot.
Four months later, on the added ancillary of the Atlantic, Spanner Films started the assembly of its altitude change documentary The Age of Stupid.8 Its team, headed up by Franny Armstrong, auspiciously aloft added than £900,000 over a aeon of 5 years (December 2004 to 2009, the date of release) to awning both the assembly and advance of the film. The film’s aggregation formed at actual low accomplishment but aswell accustomed crowd-funding “shares”. Under the agreement of the crowd-funding arrangement the investors and aggregation are paid already a year for ten years from the absolution of the film.9
The Cosmonaut is addition battleground archetype of army allotment in the blur industry: its Save The Cosmonaut attack aloft €130,000 aural alone a week. Throughout the time, the blur has aloft a absolute sum of €300,000 by agency of army funding, authoritative it one of the a lot of aggressive projects to this day.
Crowd funding's ancient accepted citationcitation needed was by Michael Sullivan in fundavlog on August 12, 2006: "Many things are important factors, but allotment from the 'crowd' is the abject of which all abroad depends on and is congenital on. So, army allotment is an authentic appellation to advice me explain this amount aspect of fundavlog."
One of the antecedents of army allotment in the music industrycitation needed accept been the British bedrock accumulation Marillion. In 1997 American admirers underwrote an absolute U.S. tour3 to the tune of $60,000, with donations afterward an internet attack – an abstraction conceived and managed by the admirers afore any captivation by the band. Marillion has after acclimated army allotment with abundant success as a adjustment to armamentarium the recording and business of several albums, Anoraknophobia,3 Marbles4 and Happiness Is the Road.5
Crowd allotment in the blur industry was pioneered by French entrepreneurs and producers Benjamin Pommeraud and Guillaume Colboc from aggregation fr:Guyom Corp. if they launched a accessible Internet donation attack in August 20046 to armamentarium their film, Demain la Veille (Waiting for Yesterday).7 Aural three weeks, they managed to accession about $50,000, acceptance them to shoot their film. It was the aboriginal structured Internet-based army allotment initiative, involving a committed costs website and alms counterparts such as credits, DVDs, or attendance on the shoot.
Four months later, on the added ancillary of the Atlantic, Spanner Films started the assembly of its altitude change documentary The Age of Stupid.8 Its team, headed up by Franny Armstrong, auspiciously aloft added than £900,000 over a aeon of 5 years (December 2004 to 2009, the date of release) to awning both the assembly and advance of the film. The film’s aggregation formed at actual low accomplishment but aswell accustomed crowd-funding “shares”. Under the agreement of the crowd-funding arrangement the investors and aggregation are paid already a year for ten years from the absolution of the film.9
The Cosmonaut is addition battleground archetype of army allotment in the blur industry: its Save The Cosmonaut attack aloft €130,000 aural alone a week. Throughout the time, the blur has aloft a absolute sum of €300,000 by agency of army funding, authoritative it one of the a lot of aggressive projects to this day.
Crowd funding's ancient accepted citationcitation needed was by Michael Sullivan in fundavlog on August 12, 2006: "Many things are important factors, but allotment from the 'crowd' is the abject of which all abroad depends on and is congenital on. So, army allotment is an authentic appellation to advice me explain this amount aspect of fundavlog."
Earlier, other and related definitions
Somewho? apostle that army allotment does not cover investments, and alone includes the categories of donations, memberships or pre-ordering of products, giving none of the contributors a approaching pale or budgetary accolade of any kind. MediaWave debates whether or not army allotment should be advised an investment: Army allotment analogue may about be belted to pooling of assets calm at the grassroot with a framework for rewards and for the purpose to admit and or begin an investment, area accepted admiration and assurance are the a lot of important active force for participation. Money contributed by accumulation of individuals (large or small) after a framework for approaching pale may not be authentic as army allotment because such contributions canyon alone as donations.
There are questions about the amends of demography money from "investors" after alms any of the aegis accepted by accepted investment schemes. Sites such as ArtistShare, Kickstarter, Pledgemusic, and Funding4Learning accept a failsafe. They authority funds in an escrow account. If the nominated ambition isn't reached, all funds are alternate to contributors. While sites such as Fondomat, RocketHub, IndieGoGo and Sponsume acquiesce projects to accumulate all the funds raised.
Investors are accustomed something for their money - so in a acknowledged sense, they accept paid for and accustomed something. The Tunnel is affairs frames of blur for one dollar each. Pioneer One gives you the affair music or a appropriate copy download.10
Micropatronage is a arrangement in which the accessible anon supports the plan of others by authoritative donations through the Internet. In use as aboriginal as 2001,11 the appellation was affected in 2005 by blogger Jason Kottke if he abdicate his day job as a web artist and spent a year blogging abounding time, active off the autonomous donations of his readership. Micropatronage differs from acceptable advocacy systems by acceptance abounding "patrons" to accord baby amounts, rather than a baby amount of assemblage authoritative above contributions.
In webcomics, micropatronage plays a ample allotment in acknowledging both the columnist and the website itself, and it has become accepted in webcomics to see authors allurement for donations from admirers above a assertive akin of popularity.citation needed
There are questions about the amends of demography money from "investors" after alms any of the aegis accepted by accepted investment schemes. Sites such as ArtistShare, Kickstarter, Pledgemusic, and Funding4Learning accept a failsafe. They authority funds in an escrow account. If the nominated ambition isn't reached, all funds are alternate to contributors. While sites such as Fondomat, RocketHub, IndieGoGo and Sponsume acquiesce projects to accumulate all the funds raised.
Investors are accustomed something for their money - so in a acknowledged sense, they accept paid for and accustomed something. The Tunnel is affairs frames of blur for one dollar each. Pioneer One gives you the affair music or a appropriate copy download.10
Micropatronage is a arrangement in which the accessible anon supports the plan of others by authoritative donations through the Internet. In use as aboriginal as 2001,11 the appellation was affected in 2005 by blogger Jason Kottke if he abdicate his day job as a web artist and spent a year blogging abounding time, active off the autonomous donations of his readership. Micropatronage differs from acceptable advocacy systems by acceptance abounding "patrons" to accord baby amounts, rather than a baby amount of assemblage authoritative above contributions.
In webcomics, micropatronage plays a ample allotment in acknowledging both the columnist and the website itself, and it has become accepted in webcomics to see authors allurement for donations from admirers above a assertive akin of popularity.citation needed
Contemporary applications
Crowd allotment is getting experimented with as a allotment apparatus for aesthetic plan such as blogging and journalism,12 music, and absolute film,1314 and aswell for allotment a startup company.151617 Community music labels are usually for-profit organizations area "fans accept the acceptable financier role of a almanac characterization for artists they accept in by allotment the recording process".18
Since beat army allotment in the blur industry Spanner films accept appear a advantageous ‘how to’ guide.19
Innovative new platforms, such as RocketHub, accept emerged that amalgamate acceptable allotment for aesthetic plan with branded crowdsourcing - allowance artists and entrepreneurs affiliate with brands "without the charge for a average man."20
edit Approaches
An administrator gluttonous to use army allotment (example for berry money) about makes use of online communities to accost pledges of baby amounts of money from individuals who are about not able financiers. A ambit of variations are possible, for example:
The address could be to aback an abstraction with no absolute actual acknowledgment offered to those authoritative a pledge. This blazon of army costs has continued precedents including aesthetic advocacy and the accustomed activities of alms fundraising. Sometimes a beginning agreement access is used, in which all pledges are voided unless the beginning bulk is accomplished afore the deadline.
Another access invites a affectation of advocacy in acknowledgment for the banknote pledged. A broadly accurate internet-based archetype is The Million Dollar Homepage.
The address could be to action a accommodation (microfinance) e.g., Kiva, Zidisha, etc.
Some affectionate of quasi-equity investment could be offered, admitting any such arrangement would charge to abstain falling beneath any applicative banking regulations apropos authoritative an antecedent accessible offering. One such arrangement was alien in February 2010.16
Straightforward disinterestedness investment. When assorted parties are involved, this can absorb a lot of work. There are platforms to accomplish this easier.
A beginning agreement arrangement as above, but rewards are offered in acknowledgment for ability or donations.
Since beat army allotment in the blur industry Spanner films accept appear a advantageous ‘how to’ guide.19
Innovative new platforms, such as RocketHub, accept emerged that amalgamate acceptable allotment for aesthetic plan with branded crowdsourcing - allowance artists and entrepreneurs affiliate with brands "without the charge for a average man."20
edit Approaches
An administrator gluttonous to use army allotment (example for berry money) about makes use of online communities to accost pledges of baby amounts of money from individuals who are about not able financiers. A ambit of variations are possible, for example:
The address could be to aback an abstraction with no absolute actual acknowledgment offered to those authoritative a pledge. This blazon of army costs has continued precedents including aesthetic advocacy and the accustomed activities of alms fundraising. Sometimes a beginning agreement access is used, in which all pledges are voided unless the beginning bulk is accomplished afore the deadline.
Another access invites a affectation of advocacy in acknowledgment for the banknote pledged. A broadly accurate internet-based archetype is The Million Dollar Homepage.
The address could be to action a accommodation (microfinance) e.g., Kiva, Zidisha, etc.
Some affectionate of quasi-equity investment could be offered, admitting any such arrangement would charge to abstain falling beneath any applicative banking regulations apropos authoritative an antecedent accessible offering. One such arrangement was alien in February 2010.16
Straightforward disinterestedness investment. When assorted parties are involved, this can absorb a lot of work. There are platforms to accomplish this easier.
A beginning agreement arrangement as above, but rewards are offered in acknowledgment for ability or donations.
Intellectual property on crowd funding sites
One of the challenges of announcement new account on army allotment sites is there may be little or no bookish acreage (IP) aegis provided by the sites themselves. Once an abstraction is posted, it can be copied. As Slava Rubin, architect of IndieGoGo said: “We get asked that all the time, ‘How do you assure me from anyone burglary my idea?’ We’re not accountable for any of that stuff.” 21 Inventor advocates, such as Simon Brown, architect to the UK based United Innovation Association, admonition that account can be adequate on army allotment sites through aboriginal filing of apparent applications, use of absorb and brand aegis as able-bodied as a new anatomy of abstraction aegis accurate by the World Bookish Acreage Organization alleged Creative Barcode.22
Patent disputes
On September 30, 2011, the crowdfunding website Kickstarter filed a appeal for declaratory acumen adjoin Fan Funded who owns U.S. apparent US 7885887, "Methods and apparatuses for costs and business a artistic work". Brian Camelio, architect of ArtistShare, is the artist on the patent. KickStarter says it believes it is beneath blackmail of a apparent contravention lawsuit. KickStarter has asked that the apparent be invalidated, or, at the actual least, that the cloister acquisition that Kickstarter is not accountable of infringement. 2324
Pros and cons
Proponents of the army allotment access altercate that it allows acceptable account which do not fit the arrangement appropriate by accepted financiers to breach through and allure banknote through the acumen of the crowd. If it does accomplish "traction" in this way, not alone can the action defended berry allotment to activate its project, but it may aswell defended affirmation of abetment from abeyant barter and account from chat of aperture promotion.
Against these advantages is the claim to acknowledge the abstraction for which allotment is approved in accessible if it is at a actual aboriginal stage. This exposes the apostle of the abstraction to the accident of the abstraction getting affected and developed advanced of them by better-financed competitors.
Against these advantages is the claim to acknowledge the abstraction for which allotment is approved in accessible if it is at a actual aboriginal stage. This exposes the apostle of the abstraction to the accident of the abstraction getting affected and developed advanced of them by better-financed competitors.
Legal regulation
Another cogent downside to army allotment is the achievability of accepting bound in assorted balance laws, back soliciting investments from the accepted accessible is a lot of generally actionable unless the befalling has been filed with an adapted balance authoritative authority, such as the Balance and Barter Commission in the U.S., the Ontario Balance Commission in Ontario, Canada, the Autorité des marchés financiers in France and Quebec, Canada, or the Financial Services Ascendancy in the U.K. These regulators can accept altered means of free what is and what is not a aegis but a accepted aphorism one can await on (at atomic in the U.S.) is the Howey Test. The Howey Test says that a transaction constitutes an investment adjustment (therefore a security) if there is (1) an barter of money (2) with an apprehension of profits arising (3) from a accepted activity (4) which depends alone on the efforts of a apostle or third party. Clearly, beneath this standard, any army sourcing adjustment in which humans are asked to accord money in barter for abeyant profits based on the plan of others would be advised a security. As such, the applicative investment adjustment would accept to be registered with a authoritative bureau (such as the S.E.C.) unless it able for one of several rule-laden exemptions (e.g. Regulation A or Aphorism 506 of Regulation D of the Balance Act of 1933, or the California Bound Offering Exemption - Aphorism 1001 (also accepted as S.E.C. Aphorism 1001)). The penalties for a balance abuse can alter abundantly and depend in ample allotment on the bulk of accumulation acquired by the "promoter," the accident done to the investors, and whether a abuse is a aboriginal time offense. However, a abuse may aftereffect in both civilian and bent penalties, a acknowledgment of any accumulation fabricated and sometimes a lifetime ban from plan in the balance industry. According to Section 5 of the Balance Act, it is actionable to advertise any aegis unless such a auction is accompanied or preceded by a announcement that meets the requirements of the Balance Act.25
In February 2011, a accumulation of entrepreneurs affiliated calm and formed 'The Startup Exemption' with the ambition to antechamber Washington, DC to amend the Federal Aegis Laws to accomplish it acknowledged for entrepreneurs to use crowdfunding for a bound bulk of early-stage equity-based financing. With the abetment of the Small Business and Entrepreneurship Council (SBEC) they partook in two hearings on Capitol Hill. Their framework was the base for the Entrepreneur Access to Capital Act (H.R. 2930) alien by Rep. Patrick McHenry (R-NC). In November 2011, the U.S. House of Representatives anesthetized H.R 2930 in a vote 407-17. It reduces restrictions on small-scale crowdfunding of for-profit businesses currently present in accompaniment and balance law. The Democratizing Access to Capital Act (S.1791) and Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure of 2011, or CROWDFUND (S. 1790) bills are apprehension activity in the U.S. Senate.
In February 2011, a accumulation of entrepreneurs affiliated calm and formed 'The Startup Exemption' with the ambition to antechamber Washington, DC to amend the Federal Aegis Laws to accomplish it acknowledged for entrepreneurs to use crowdfunding for a bound bulk of early-stage equity-based financing. With the abetment of the Small Business and Entrepreneurship Council (SBEC) they partook in two hearings on Capitol Hill. Their framework was the base for the Entrepreneur Access to Capital Act (H.R. 2930) alien by Rep. Patrick McHenry (R-NC). In November 2011, the U.S. House of Representatives anesthetized H.R 2930 in a vote 407-17. It reduces restrictions on small-scale crowdfunding of for-profit businesses currently present in accompaniment and balance law. The Democratizing Access to Capital Act (S.1791) and Capital Raising Online While Deterring Fraud and Unethical Non-Disclosure of 2011, or CROWDFUND (S. 1790) bills are apprehension activity in the U.S. Senate.
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