May 8, 2013

Kickstarter and Products in the Information Age

The single greatest obstacle to the creation of a good product is information.  Specifically, disseminating the information about the product to the group most inclined to buy it has, historically, been the first thing to overcome when preparing to bring a new product to market.  However, with the advent of the information age and, especially, the site Kickstarter, that may be changing.

Kickstarter is, according to the site, “the world's largest funding platform for creative projects”: it allows uses to give a certain amount of funding to any project they wish.  The creators of the project put up a page with a certain amount of information, usually a video and/or article, and if the public likes it, they’ll fund it.  This is, quite simply, the Holy Grail of venture capitalism.  Rather than having to acquire funding from a couple of wealthy individuals, or even through their own bank accounts, a person developing a new product can use the site to acquire as much funding as they may require: so long, of course, as a sufficient number of people feel that their product is worthwhile.

Kickstarter, coupled with the internet, has the potential to allow for a veritable explosion in the variety of products entering the marketplace.  The most obvious effect has been in video games: indy game developers have used Kickstarter to great effect when it comes to funding new games.  (FTL is the most successful example of this method.)  However, Kickstarter also provides for new technology, comics, art, and more.  The internet allows the developers to spread the word to even more audiences, further drumming up support. 

In short, thanks to Kickstarter and, in the future, websites like it, we may soon see the market open up to an even greater variety of products than there are currently.  From an economic perspective, this will motivate producers to innovate even more in an effort to stay ahead, and will afford consumers more choices when deciding which products to buy.  Better yet, entrepreneurs will be able to gauge enthusiasm for a new product before they take the risk of developing it, ensuring that their efforts go towards something that the market will support rather than wasting resources on a product that no one will buy.

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