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March 21, 2014

Crowd-Funding Becomes a Potent Digital Consumer Tool

Posted by Vaibhav Bakre (View Profile | View All Posts) at 9:35 AM

Angry Nerd: The Veronica Mars Movie Project and the Pitfalls of Crowdfunding Films-WIRED [Source: http://www.youtube.com/watch?v=8NKhg5YpGnM]

I don't expect many of you to be familiar with Veronica Mars. Outside of the world of teenage popular culture, few people know who this character is. But Veronica's recent 'comeback' serves as a valuable business lesson of just how potent digital consumers can be. Veronica Mars is a fictional teenager who solves "whodunit" mysteries. A television series based on her sleuthing abilities was popular for a number of years. But then, like most TV shows, the series ran its course and the network eventually decided not to renew it for another season. During any other era, that would have been the end of Veronica's story.

But fans around the world took to social media and demanded more. They wanted to see their young detective return. What happened next was extraordinary. Her fan base decided that they would put their money where their mouths were - they raised enough funds on the Internet to pay for a movie version of the show. That a bunch of mostly teenage girls around the world crowd-funded the production of motion picture has not gone unnoticed by media companies. Some 92,000 fans contributed a total of $5.7 million via the crowd-funding site Kickstarter to make the film a reality. It's the first time people used a crowd-funding financial service in this way. Indeed, there have been a number of important shifts in consumer power during the last century, and the Veronica Mars project is one of them.

Media companies are adept at analyzing ratings and knowing which television shows command the most lucrative advertising rates. So when they make a decision to cancel or renew a show, it's never on a whim but based of plenty of quantitative analysis. The fact that young viewers around the world established their own online community and raised the funds to keep the character going is a testament to how the media sector is evolving. People in the younger demographics are not the passive consumers that their parents or grandparents are; they watch shows when they want and, depending on the medium, can cut out the commercials.

Digital consumers act similarly when shopping as they do when watching television. They are not shy about telling enterprises what styles, flavors, colors, scents, and sizes that they prefer when it comes to the products on the shelves in front of them. Such demands improve the enterprises that provide goods and services to them because all that data is a treasure trove of information with which they can develop new products.

Our recent consumer surveys reveal that digital customers are very willing to provide information to companies if they feel they get some kind of value in return. In the case of the crowd-funding of the movie, the producer offered digital copies of the script for a donation of $10 and a chance at a walk-on role in the film for $10,000.

I predict that we're going to see plenty more television shows and movies come about as the result of crowd-funding, just as this financial phenomenon has resulted in the building up of businesses across the spectrum that serve the needs of various consumer groups. When consumer groups have a say in how their products are delivered or in what ways, enterprises become better able to address their expectations. That's a winning position for all stakeholders.

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