Saturday, 28 March 2015

Filling the YouTube Gap: Ongoing Financial Support for Small Creators Through Crowdfunding

This blog has discussed crowdfunding in many different contexts, including for basic research and large scale video game development.  A relatively new crowdfunding platform brings together the very best of crowdfunding: the ability of people to choose to support what they love through essentially a gift (with benefits); a source of funding for interesting projects, particularly ones that may not get accomplished because of a lack of funding; and bringing people together to support a common venture—with a sense of community.  Crowdfunding and the technology that enables it lowers the barriers that exist for people to join together to support one another financially for what they believe are worthy projects—and now for a potentially long term relationship. 

Enter Patreon (A clever trademark as well.).  In a recent article published March 28, 2015 by CNBC titled, “Starving Artists No More: Meet the Kickstarter for Music, Arts,” Trent Gillies discusses Patreon, a San Francisco startup crowdfunding platform for supporting dance and theater to animation to music to comedy.  The article notes that revenue from a source such as YouTube is insufficient to support “small” creators and Patreon moves in to fill the gap.  How does it do that?  It allows people to pledge ongoing monetary support for creators—another revenue source.  People are able to become “patrons” of specific artists.  Patreon appears to also allow the donation of funds for one-time projects as well, but the promise of funding on a long term basis could allow creators to actually quit that daytime job waiting tables (or at least cut down on some shifts) and spend the majority of their time and energy on their creative work (including promoting it).  A nice silver lining is that the ongoing patronage will not only lead to the works being created, but also to better quality works.  The artist has a nice incentive to keep up the good work and to improve it.  Of course, creators who use other sites such as Kickstarter have a similar incentive even if they are seeking funding project to project.  But, I imagine that the stress may be lower for the beneficiaries of, at least, the pledge of ongoing support and because of the good feelings behind the supporters commitment to their work inure to the benefit of the creator. 
So, how well is Patreon working so far?

Patreon says 250 thousand patrons are donating small amounts of money to 14 thousand active creators. According to the website, it is sending $2 million dollars a month to artists, and the average payment creators are receiving is $9 a month.

And, as the article notes, this is despite the fact that much of the creator’s existing work is already available “for free.”
I think Patreon is a worthwhile endeavor for sure.  I do wonder if ongoing support will create a greater expectation of “control” over a creator’s future work by funders.  What do you think?

Is IP the Answer for Kodak’s Comeback?

In a March 20, 2015 New York Times article titled, “At Kodak, Clinging to a Future Beyond Film,” Quentin Hardy authors a fascinating account of Kodak’s past and attempt to rebound from bankruptcy through leveraging its research and intellectual property.  This blog previously has discussed the deal involving the sale of a large amount of Kodak patents, here.  Interestingly, the article notes that:

Spend much time around Kodak, and the company’s faded glory is apparent. Mr. Clarke[, the new CEO,] emphasizes the power that history still gives the Kodak brand. But the odds are stacked against his salvage job.

“The question isn’t tech-related, it’s competition,” said Amer Tiwana, an analyst at CRT Capital Group. “Kodak’s intellectual property seems to be slightly better, but the hazard is that their competitors, eight or 10 strong ones in each market, kill them on pricing. They might never get to profitability on the new stuff.”

In 2013, Kodak sold 1,100 patents related to digital image capture to a group of 12 companies, including Apple, Samsung and Facebook, for $527 million. Kodak retained the same access to the patents as the bidders, should it wish to compete in, say, photography once again. And it kept about 7,000 other patents, largely connected to the chemistry and physics of creating images, which the market sees as having relatively little value.

I wonder about the brand and the nimbleness of Kodak.  As we know, Kodak was slow to change its business model to adapt to digital photography.  Has it emerged as a company able to react to the market quickly?  That is not so clear from the article.

Tuesday, 24 March 2015

Are coding boot camps the answer? President Obama announces the TechHire inititiave

Can software coding boot camps solve the twin problems in the United States of the alleged shortage of IT personnel as well as how to create a new kind of middle class employee, especially among minorities and other underserved populations in the high tech world, thereby creating the 21st century version of the 20th century auto worker? The Obama administration apparently believes that the answer is “yes” to both questions. At least that is the message being delivered by the administration in conjunction with its March 9th announcement of its TechHire initiative. In a speech given that day, President Obama noted that there are more than five million job openings, of which more than one-half million are described as openings in the IT field. TechHire is intended to address this shortage as well as to address the problem of stagnant wage growth for the folk in the middle. In the words of the President,
"What's more, these tech jobs pay 50 percent more than the average private sector wage, which means they're a ticket into the middle class."
A report on March 16th on characterized the program as follows:
"There's not one fix to get people moving in this direction professionally. The initiative includes getting employers to change the ways they recruit and place applicants based on skills; $100 million in federal investments toward "innovative approaches to training and successfully employing low-skill individuals with barriers to training and employment"; efforts on the part of "private sector leaders" to aid with free training online, and the expansion of coding boot camps, to name a few.”
The most interesting, and most controversial aspect of this initiative, is the focus on coding camps. The initiative currently involves partnering with various bodies in 21 communities, with the emphasis on reaching out to locales removed from the likes of Silicon Valley and New York City. An example brought is the TechHire Initiative is Louisville, Kentucky, which described as follows:
“In 2013, a free, 12-week course called Code Louisville launched, fueled by volunteer mentors, partnerships with local companies, and help from the KentuckianaWorks department. The program aims to help students develop coding skills through a mix of in-person mentorship and self-driven learning, done through a learning platform called Treehouse, available through the Louisville Free Public Library system….. Next year, Code Louisville will expand as part of the Workforce Innovation Fund grant from the Department of Labor, as well as grow relationships with local businesses.”
The debate over the program focuses on four related issues: first, is there really such a mismatch between skills and available IT positions. Skeptics question this, including no less an expert than Professor Alan Blinder of Princeton, the Vice-Chairman of the US Federal Reserve, who expressed doubts in a recent radio interview on Bloomberg. Secondly, can a coding camp provide sufficient training to enable a graduate to function at an entry-level position? Thirdly, does the training provide a sufficient skill set to enable one to advance from that entry-level position, i.e., will it enable a graduate of the program to enjoy a bona-fide career in the field? Fourthly, will it complement or supplant at some graduates of degree programs in computer science?

President Obama apparently thinks the answer to each of these questions is “yes”, having observed in his speech that "[i]t turns out, it doesn't matter where you learned code, it just matters how good you are in writing code." President Obama’s statement was particularly well received by Dave Hoover, co-founder of Dev Bootcamp, who stated that , “it's true that not every employer is comfortable with hiring someone without a four-year computer science degree, but they're limiting their talent pool.” Also, it provides an alternative for persons who cannot afford a four-year degree program for whatever reason.

Despite the Obama administration’s support and the upbeat position of people such as Hoover (who admittedly may not be strictly neutral), this blogger still wonders how the Obama administration and will go about evaluating the effectiveness of these various local programs in light of the four questions raised above. As well, one can ask whether it is appropriate to view the skill set that is meant to be developed in such boot camps in strictly local terms. In a world where coding skills are international, why will an employer in Louisville necessarily engage a newly minted graduate of a boot camp when it obtain coding work product from equally or even more highly trained IT personal from places such as Bangalore and Estonia? Maybe yes, maybe no. The golden age of the Detroit autoworker in the 1950s was characterized in part by the absence of any credible substitutes. That is not the case for today’s IT world. The TechHire initiative definitely warrants close attention as it continues to be rolled out.

Monday, 23 March 2015

"IP Protection: Under Attack": Hyperbole or On Point

In Adam Jaffe and Josh Lerner's excellent 2004 book, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, the authors describe the historical ebb and flow of the availability and scope of patent rights.  The authors point to the 1980s to 2004 as a time when patents rights were strong and appeared to be getting stronger.  Indeed, those rights were becoming so strong that they were endangering innovation, according to the authors.  The rights were certainly flowing during that time.  And, for sure, there has been a backlash against patent rights.  The authors caution, however, that we tend to push either too far in one direction toward weak rights or too strong rights.  Are we moving too far against patent rights already? 

On March 27, 2015, from 1:00 to 2:00 pm Eastern Time in the U.S., the Federal Circuit Bar Association's Corporate Counsel Committee is sponsoring a webinar titled, "IP Protection: Under Attack."  The panelists are Fernand A. Lavallee, Partner, Jones Day, Nicole J. Owren-Wiest, Partner, Wiley Rein LLP, and Andrew E. Shipley, Partner, Perkins Coie.  The moderator is Mary M. Calkins, Senior IP Counsel, SAP.  The description of the panel states:

Please join us for a panel discussion about current threats to intellectual property protections that rights owners and businesses have long relied upon. The panel will cover areas such as limitations on software and data rights, procurement concerns, developments in 28 U.S.C. § 1498 actions in the Court of Federal Claims, and recent decisions of the Supreme Court and Federal Circuit affecting the scope of IP protection.

Does this panel title accurately describe the current situation concerning patent rights, and IP more broadly?  Is IP protection under attack?  Is it hyperbole?  Is it a bad thing for IP protection to be under attack?  Have we already gone too far against IP rights?  How do we know when we have gone too far—in either direction?  Do we continue to “reform” so long as a so-called "patent troll" exists?  Where are we headed?

Thursday, 19 March 2015

If you think that crowdfunding is only for small fry games, think again

For those of you who think of crowdfunding for artistic endeavours in terms of modest amounts, a million or so dollars at the most, the report in the February 14th issue of The Economist, “The stars are the limit”, is certainly an eye-opener. The article describes the fundraising that has accompanied the development of a new video game by Cloud Imperium Games (CIG), entitled “Star Citizen”, set for release in 2016. According to the report, this game has attracted aggregate investment of more than $72 million dollars, which amount puts it on a par with several of the most expensive game development budgets ever, such as the iconic series “Grand Theft Auto”. The magnitude of this amount can be seen by comparing it with the second largest amount invested via crowdfunding, $18 million dollars for a Bitcoin-related publishing platform called Ethereum. This makes the current aggregate investment in Star Citizen four times larger than the next largest crowdsourced amount ever invested.

It is not merely the amount that has been invested in Star Citizen which is remarkable, but the number of investors who have participated in the funding of the game’s development. The article reports that over 750,000 people have pledged to invest in the game, with the amount of the investments ranging from $36.00 to $18,000. What do these investors expect to receive in return? If you think that the answer is equity, or a share of any profits, you would be wrong. Instead, the investment in the Star Citizen project is perhaps the leading example of what is called “reward crowdsourcing.” In this context, it means, in the words of the article, that the investors receive “virtual spacecraft to use in the game, early access to unfinished versions, T-shirts and so on.” As such, the motivation derives more from a certain commitment to the game itself and the collective desire to see the game successfully published.

The article suggests that this type of investment, as opposed to seeking more conventional sources of funding, enables the developer to connect with the population most likely to become users of the game once it is launched. As such it represents the use of social media in the dual role of product development and product marketing. Thus CIG is releasing the game in stages, in part to reassure investors about the viability of the project, as well as to elicit their feedback regarding the game itself. The ultimate goal is to instill “rabid devotion in fans” long before the actual launch. It is crowdfunding that makes possible this integration of funding with pre-launch marketing. That said, the question remains whether this form of engagement of small investor-cum-user can be generalized to other video games and the like, or if the Star Citizen project is a one-off success.