Kung Fury – a comedy funded through Kickstarter [video]

If Alice will pay $10 for a streaming copy (with DRM), Bob will pay $30 for a DRM-free copy, but Carol will pay $50 for an exclusive DRM-free copy, the rational approach is to sell to Alice and Carol for a total of $60. Bob says that other people would be willing to buy the DRM-free copy later, but from the producer's standpoint the only thing that matters is who's willing to pay money up front because a) there are a lot of costs that have to be paid up front* and b) backend revenue is uncertain.

* Of course you can defray those up-front costs by asking people to work for free or deferred pay, which has been a very popular trend over the last decade. But it's awful to work that way and none of the projects I've ever done that for ever turned a profit.

Unfortunately Kickstarter doesn't provide a way to play the two off against each other, eg setting up 2 projects for DRM advocates vs owners and going with whichever one outraises the others.

Take a look at fiasco with Veronica Mars crowdfunded film which was released with DRM.

I did. I think it was a storm in a teacup, because the intersection between fans of a TV show and people who care passionately about DRM is just not that big. The primary issue seemed to be that people did not care for getting their digital download through Flixster and would rather have redeemed through iTunes or Amazon. As best I can see from the project page, ~22k people were willing to pay a $10 premium over the next reward to get a digital download in addition to a T-shirt, but not another $15 to get a DVD. About 10% of the comments post-release consisted of grumbling about the Flixster download (primarily that it was slow and/or buggy and unreliable; I'm not sure what percentage of them cared about the underlying principle), so it looks like maybe 2500 people who spent about $25,000 were pissed off, or ~4% of the backers contributing 0.5% of the budget.

The basic problem for producers is this: you can estimate the number of people interested in purchasing a restricted version of the film by looking at other projects which offer that and seeing how many of those reward offerings actually sold. I believe you that there are people sitting on the sidelines instead of donating/purchasing because they care about a DRM-free release, but how do I quantify what that demographic is worth?

If I see a project that's interesting to me, I consider supporting it on condition that it doesn't plan to use such unethical garbage as DRM in result. How much would I invest in it? That depends on the project. I don't do it out of having unlimited funds. Not at all - my funds are pretty limited. I do it because I care for those projects and without my support they are less likely to be created.

OK, but your lack of support has to be set against the number of people who are willing to pay for some exclusive right. In the case of Kung Fury that was about $90,000 - ~6000 people were willing to pay $20 for a 1080p download with exclusive content, vs $5 for the DRM-hobbled streaming version you paid for. So what I'm asking is: if you see a film you think you would like, what extra amount are you willing to pay to ensure it is made available DRM-free? It doesn't matter if you'd make a big donation of $1000 once a year to advance the cause, or you'd rather donate and extra $20 to 50 different projects, or even just 5.

But right now I have no idea how much you and other people who care about DRM are holding back. I looked at several different Kickstarter projects that offer DRM-free downloads (including Game Loading - Rise of the Indies, which raised over $60k AUD) doing a similar analysis (trying to ID how much people were willing to contribute for the digital download only, rather than the next reward with additional swag) and the numbers seem to be in the low thousands. Even if I scale budgets the numbers are a good bit lower, eg about $45,000 in DRM-free download purchases if I imagine that other projects had brought in the same overall revenue as Kung Fury and allocate the appropriate amount to download rewards.

This suggests that there's only half as much money on offer up front for DRM-free downloads as for exclusive offerings, and so that it's more rational to use a market segmentation strategy than to offer the same thing at the same price to everyone. From a producer standpoint, cash is the only thing that people are willing to accept as payment for work, and real cash now is much more persuasive than hypothetical cash later.

I mean, maybe you and other anti-DRM people should set up a fund and disburse grants or something, but only to people who commit to DRM-free movie and game releasing. That's how other people promote their causes. Money talks, as they say.

There is research which shows that DRM always reduces potential for sales. So crowdfunding isn't any different in this aspect. Remember, they profit from sales post release too, and not only from crowdfunding investors.

> I mean, maybe you and other anti-DRM people should set up a fund and disburse grants or something, but only to people who commit to DRM-free movie and game releasing. That's how other people promote their causes. Money talks, as they say.

In my experience, most crowdfunded projects shun DRM (at least all that actually caught my attention), which is an indication for me that voting with your money works. They clearly see that DRM-free releases gives them more backers.