Ethan Mollick’s Crowd-Funding Economic Impact Study

A few weeks ago, Ethan Mollick of the Wharton School at the University of Pennsylvania published Containing Multitudes: The Many Impacts of Kickstarter Funding. In the crowd-funding era of arts economics, Kickstarter isn’t the only game in town, and each site (or system) has its own quirks. But, let’s start with the paper’s abstract:

Using a survey of 61,654 successful Kickstarter projects, I examined the various long-term impacts of crowdfunding. I found that every dollar given to projects via Kickstarter resulted in a mean of $2.46 in additional revenue outside of Kickstarter (95% Confidence Interval (CI): $1.82 to $3.09), though these amounts were much higher in categories such as food and product design and lower in film. From inception to May, 2015, Kickstarter projects resulted in around 5,135 ongoing fulltime jobs besides those that went to creators (95% CI: 1,188 to 9,082), and led to the hiring of around 160,425 temporary workers (95% CI: 145,330 to 175,518). Over 50% of projects were reported as being innovative by both backers and creators, and projects produced over 2,601 patent applications. Creators also reported significant positive impacts on their careers, and suggested that many projects helped a community or society in some way.

A couple things to note – this is only Kickstarter data and the survey instrument is not available. Kickstarter projects cover a lot of things besides art, and a lot of art stuff that isn’t dance. For this paper, dance and theater are combined.

Still, an important bit of data emerges. Included in the paper is a graph of “dollars generated to dollars pledged” which suggests that, on average, for each dollar pledged in a successful, completed Kickstarter-backed dance/theater project, about $5 of additional revenue is generated. That’s close to double the Kickstarter-wide average of $2.46 generated per dollar pledged and the most efficient non-product category discussed in the paper. It’s easy to imagine this has a lot to do with non-pledge-benefit ticket sales in the dance/theater world, but that’s just speculation on my part.

It’s not something you can take to the bank (every crowd-funding exercise is different and this particular metric is highly variable), but if you are planning to do some crowd-funding for a dance project, keep that 5-to-1 multiplier in mind. That’s real leverage.