Crowdsourcing

Crowdfunding: A Question of Precedent

One of the pleasures of writing a book is that it forces me to consider thorny, subtle questions that I would ignore in a magazine article, and also provides me with the kind of  time frame in which to slowly develop answers to them. One such question was whether or not to include crowdfunding in the book at all. Crowdfunding, in broad strokes, involves tapping the crowd's wallets to fund everything from movies to software projects to football (er, soccer) teams to third-world entrepreneurs.

I originally underestimated crowdfunding's potential, but in the last year or so crowdfunding has emerged as a surprisingly robust and flexible model of financing. In the end I devoted an entire chapter to crowdfunding, and early readers have been both surprised and impressed by the stories within it. What my editors (on both sides of the Atlantic) were intelligent enough to note is that crowdfunding provides a final, persuasive link in the crowdsourcing argument.

To wit: The crowd can think it, the crowd can make it, the crowd can refine it, but who's going to pay for the crowd's crazy ideas? Oh, right: The crowd has that covered too. Crowdfunding has forced me to broaden my definition of crowdsourcing a bit: It's not that crowdsourcing replaces employees, but that it replaces "designated agents." The simple way to phrase this is that crowdsourcing takes place when the many perform the functions once restricted to the few.   

But I'm still troubled by a trickier question that's plagued me ever since I first started researching crowdfunding models: How is this different from political fundraising? Haven't candidates always been dependent on the crowd? Has the Internet—which was famously used to great effect by Howard Dean in 2004—changed the nature of political fundraising in a qualitative fashion ("More small donors change the whole  paradigm!") or merely quantitative manner? ("Pshaw. Small donors have always been an essential ingredient to a campaign. Now they're just a bit more important.")

I think we have an answer to this question, and please excuse me for burying the lede: Today Barack Obama announced that he had collected contributions from one million donors. As Jeanne Cummings notes in yesterday's Politico, "The source of the Democratic strength is the fundraising story of the year: the rise of the small donors, those who give less than $200." McCain, by contrast, has only 150,000 small donors (Which historically speaking, is also a huge number of small donors, says Michael Malbin of the non-partisan Campaign Finance Institute) and Hillary Clinton has 225,000. Here's Meyer:

To appreciate the impact of his small-donor base, consider these facts:

In 2004, there were a total of 2.5 million donors to the entire presidential field — Republicans and Democrats. At the rate he’s attracting small donors, Obama alone could surpass that number if his campaign marches on to November.

Only about 3 percent of Obama’s donors have given the maximum contribution of $2,300, his campaign says. That means he can go back and ask for more money from 97 percent of his contributors.

The sum raised by his small givers through January — $47 million — roughly accounts for the difference between his net contributions for the primary race from individuals, $132 million, and Clinton’s, $96 million.

Based on today's announcement, and the accompanying political analysis, I'm staking out a position: Crowdfunding is an unprecedented phenomenon. While it predates the Internet in theory, it doesn't do so in practice. Obama, a game changer in so many other ways, has become the first crowdfunded presidential candidate. Care to disagree? As always, I love nothing better:

A Coup for Crowdsourced Journalism ...

I really have no business posting anything to my blog today, so I'm going to keep it short, but I couldn't pass up the opportunity to congratulate Joshua Micah Marshall and the other folks at the Talking Points Memo and TPM Muckraker. On Tuesday TPM won a George Polk Award for their coverage of the US Attorney General scandal last year. Muckracker—and more to our point here, its readers—not only helped break the story, but proved the stunning efficacy of distributed reporting by delving through thousands of e-mails and internal documents released by the DOJ. If you're not a journalist (and maybe even if you are), the Polk award won't ring any bells. Suffice to say it's a big enough deal that by recognizing TPM the traditional journalistic establishment is essentially also recognizing that powerful new forms of journalism are emerging.

I won't recount the whole story, which can be found at the NYTimes, but here's Dan Kennedy's take:

Dan Kennedy, a media critic who teaches at Northeastern University, has followed the site from its inception. What Talking Points Memo does, he said, “is a different kind of journalism, based on the idea that my readers know more than I do.”

Writing on a blog for his journalism students, Mr. Kennedy called the announcement of the Polk award “a landmark day for a certain kind of journalism.” Talking Points Memo, he said, “relentlessly kept a spotlight on what other news organizations were uncovering and watched patterns emerge that weren’t necessarily visible to those covering just a small piece of the story.”

He added, “This is crowd sourcing — reporting based on the work of many people, including your readers.”

Chapter Two: Rise of the Amateur, Continued

Excuse the extended pause. There was a little uncertainty about whether excerpting the book on Crowdsourcing.com, but that's been resolved and now we're back on track. The best argument for doing this is the quality of the comments I received on my first excerpt. So without further delay, I offer you another selection from my second chapter, after the jump.