Kickstarter Not Built for Ouya Failure

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Kickstarter Not Built for Ouya Failure

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Kickstarter advises people to use "internet street smarts" when deciding which projects to back.

It started as a question about the Ouya, but the conversation soon ended up in uncharted country. The question was simple enough; if Ouya never materialized, would backers of Ouya's very successful Kickstarter campaign get their money back? Ouya wasn't sure, but said that the matter was ultimately a question of Kickstarter policy and not Ouya's call to make. And that is where the train went off the rails, as Kickstarter's founder Yancey Strickler admitted that there was no policy in place for Kickstarter failures, let alone refunds.

"You know, that would be new ground," said Strickler. "I don't know. I mean, no, I don't think that we would. But certainly, the kind of thing you're talking about is not a bridge that has been crossed yet. Someday it will. And you know, I think if something did go awry, it would be ... it wouldn't be my favorite day." It certainly wouldn't; and if you had been one of those who, say, plunked down $10,000 or more - $10,000 was the top tier Ouya pledge level - on a dud, it wouldn't be your favorite day either.

Kickstarter's FAQ is worth consulting. "It is the responsibility of the project creator to fulfill the promises of their project," it says, but adds "Kickstarter does not investigate a creator's ability to complete their project ... If something sounds too good to be true, it very well may be." Kickstarter's final piece of advice is to "use your internet street smarts." Meanwhile Kickstarter's Terms of Service are somewhat less fluffy: "The Company does not guarantee that any Content will be made available through the Service. The Company has no obligation to monitor the Service or Content ... Kickstarter does not offer refunds. A Project Creator is not required to grant a Backer's request for a refund unless the Project Creator is unable or unwilling to fulfil the reward." In the case of a campaign like Ouya, where the console was part of the reward for those who pledged $95 or more, presumably this translates to 'anyone whose reward package includes a console is entitled to a refund if no console is forthcoming,' But as Kickstarter has no means of facilitating this process it will be up to the goodwill and resources of the Project Creator, which may or may not be able to meet refund demands. In the event of fraud - internet street smarts sometimes aren't enough, after all - it would seem backers will be left out of pocket.

Whether or not Ouya becomes Kickstarter's first high profile failure doesn't really matter. What matters is that one of these days a major Kickstarter project will get funding and then implode; demands for repayment will follow. Strickler's least favorite day will have arrived, and what happens after that will probably determine whether Kickstarter retains its reputation as a trusted crowdfunder or vanishes like the works of Ozymandias.

Source: NPR, Kickstarter

UPDATE: Kickstarter representative Justin Kazmark has contacted me and advised that the NPR quote replicated here was, as Kazmark puts it, "a bit confusing." Kickstarter co-founder Yancey Strickler was responding to a question about the Ouya console itself, and whether or not Kickstarter would get involved if the console failed to materialize. Cash refunds are handled as per Kickstarter's Terms of Service, as mentioned above.

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An investment is an investment. Sometimes it fails and you lose out. I don't think backing a product on Kickstarter should really be considered a proper "pre-order" so to speak.

I'm reminded of "The Producers". With this news, I am waiting to see someone orchestrate a high profile flop and try to run away with the investments.

Fappy:
An investment is an investment. Sometimes it fails and you lose out. I don't think backing a product on Kickstarter should really be considered a proper "pre-order" so to speak.

Pretty much this. Kickstarter is a way to invest. Investing is risky, and its easy to loose your shirt.

Yeah, what Fappy said. Kickstarter gives the public a chance to play investor for projects that can't be funded through traditional means.

Asking for money back if the project fails isn't how this works.

Kordie:
I'm reminded of "The Producers". With this news, I am waiting to see someone orchestrate a high profile flop and try to run away with the investments.

Haven't we had oen already?

Anyway, this really is an investment and should be treated as such. But shouldn't Kickstarter have some policy to say that (or not)? I mean, they're the facilitator of the whole deal, and whatnot.

Zachary Amaranth:

Kordie:
I'm reminded of "The Producers". With this news, I am waiting to see someone orchestrate a high profile flop and try to run away with the investments.

Haven't we had oen already?

Anyway, this really is an investment and should be treated as such. But shouldn't Kickstarter have some policy to say that (or not)? I mean, they're the facilitator of the whole deal, and whatnot.

Apparantly not, or this issue would already have a solution.

I can agree that as an investment no one should be entitled a refund (unless, as kickstarted said they made a specific promise and failed to deliver i.e. the rewards). Someone does need to keep track of this though, if Ouya manages to fail while having not used up all the kickstarted capital where does it go?

Well then they'll just have-to make sure the Ouya doesn't fail.

Fappy:
An investment is an investment. Sometimes it fails and you lose out. I don't think backing a product on Kickstarter should really be considered a proper "pre-order" so to speak.

This is it, I'm honestly not sure if people, as a collective whole, are competent when it comes to investment. "Internet Street Smarts" sounds about as good of advice as telling someone to use "common sense".

What's worse is the numbers of people drawn to Crowd funded projects because of current day trends. They aren't aware of what this system entails. This is not the removal of high powered investors making demands to fit the market, this is the market taking the place of the investors.

People do think that funding a kickstarter is equivalent to purchasing a product. I'm sure people tossing thousands into these projects are aware of this, but the people funding just enough for the product as a reward might think they are paying for a product.

It worries me that when the shit does hit the fan, these people will end up turning on the concept of crowdfunding, which would be depressing since it's a great practice. It rejuvenates niche markets and is a great place to get a small project off the ground.

This could kill crowdfunding if it or something as big as it bombs.

Ragsnstitches:

Fappy:
An investment is an investment. Sometimes it fails and you lose out. I don't think backing a product on Kickstarter should really be considered a proper "pre-order" so to speak.

This is it, I'm honestly not sure if people, as a collective whole, are competent when it comes to investment. "Internet Street Smarts" sounds about as good of advice as telling someone to use "common sense".

What's worse is the numbers of people drawn to Crowd funded projects because of current day trends. They aren't aware of what this system entails. This is not the removal of high powered investors making demands to fit the market, this is the market taking the place of the investors.

People do think that funding a kickstarter is equivalent to purchasing a product. I'm sure people tossing thousands into these projects are aware of this, but the people funding just enough for the product as a reward might think they are paying for a product.

It worries me that when the shit does hit the fan, these people will end up turning on the concept of crowdfunding, which would be depressing since it's a great practice. It rejuvenates niche markets and is a great place to get a small project off the ground.

This could kill crowdfunding if it or something as big as it bombs.

The best we can do is yell louder than they do when they start bitching. Then again... telling people they are idiots on the internet rarely works out for anyone.

Yeah, and water is wet too.

Someday a kicksarter is going to go bust and everyone is going to see its not a magical infinite funds box made of puppies and rainbows. I look forward to that day because of how much self-delusion is floating around about kickstarter. Yes, its a cool platform, no its not some pace that you can do anything on.

Outrage is guaranteed, even if the outcome isn't actually a failure. We already see how supposedly rational and sane people react when all they have invested is interest and time. We have games and movies coming out on a regular basis that, while solid enough and true enough to the actual creators vision, just don't do exactly what the "fan" wanted and so a rage storm ensues. Now add potentially years of anticipation and the belief of having a personal say in the outcome via early monetary investment to the mix.

Yeah, something's gonna blow up real good.

Well, this article has pretty much put me off ever using Kickstarter again. I'm not willing to take the chance of being scammed out of my money.

Zachary Amaranth:
Haven't we had oen already?

Yes

[lots of misunderstading on my part]
EDIT: well... at least they made it clear

A Project Creator is not required to
grant a Backer's request for a refund unless the
Project Creator is unable or unwilling to fulfil the
reward.

Wait. My legalese may be a tad rusty, but isn't this saying a creator doesn't have to refund a backer, but if he doesn't want to (is unwilling), then he has to?

Zachary Amaranth:

Kordie:
I'm reminded of "The Producers". With this news, I am waiting to see someone orchestrate a high profile flop and try to run away with the investments.

Haven't we had oen already?

No. We've had scams, but those people didn't plan to deliver, and Kickstarter had tools to deal with them. A project like The Producers - in which the illusion of work happens followed by the illusion of failure so people never learn they've been had - would be... well, hilarious if I'm being perfectly honest.

I didn't think this was really news to anyone. That's been my main problem with Kickstarter since day 1 and one of the main reasons I don't donate unless I think the people making it are trustworthy. Shadowrun Returns and Wasteland 2 come to mind. The risky ones are just that, risky. I backed The Dead Linger even though the creators only other game was Detour. But at least they made another game on the market. I likely wouldn't back anyone who hasn't actually produced a game before (at least for game kickstarters, similar rules apply for music, artists/story-writers, etc).

The Random One:

A Project Creator is not required to
grant a Backer's request for a refund unless the
Project Creator is unable or unwilling to fulfil the
reward.

Wait. My legalese may be a tad rusty, but isn't this saying a creator doesn't have to refund a backer, but if he doesn't want to (is unwilling), then he has to?

"to fulfil the reward" is the part you're missing. ie, some project creator says that if you pop in X amount, they'll personally come buy you dinner. However, you happen to live in Alert, Nunavut, and the when creator sees that they're like, "Oh, no way in hell am I going there!" Kickstarter says they have to refund your money.

On the other hand, if they fulfil the reward, then whether or not they deliver on the project is irrelevant.

And the added wrinkle is that if the rewards include the project being funded, then technically if the project doesn't get completed for some reason, the refund for the donations kicks in.

Of course, where it gets sticky is enforcing the refund policy once the funds have been handed over. Good luck with that.

Last I checked, Kickstarter is essentially a lower-risk version of the stock market, where people can only buy stock in a new business or opportunity if enough money is guaranteed to be chipped in.

Like the stock market, though, there is no guarantee that the final product or worth will be a net gain.

That said, I feel that the headline is pretty damn inflammatory/insinuative, since it implies that Ouya is ALREADY a failure, despite no evidence for this. Poor choice of headline.

I'm fairly sure that in the states at least there is tax relief failed investments.
So that might help ease the burn of a failed kickstater.

And henceforth, the troll-starters began...

Ok, so can someone bring me up to speed? Has the Ouya actually failed, or is this speculation based on it's life cycle?

I've assumed that any money I've put on Kickstarter was an investment, and therefor subject to risk. I pretty much assume the money is gone. I may get something out of it, I'm gambling on that, but I'm only investing in projects I believe in and only pledging money I can afford to lose. And if something fails, oh well. I didn't go in blind, and neither did any other investors. The terms of service are very clear on that.

All this about Ouya's failure, is there any evidence that the project has hit rocky ground? Are we looking at a potential dud? Or was this simply a "What if" scenario?

I guess Kickstarter is like any investment: it's a risk. It's not wether you lose your money; it's WHY you do if it happens (There are sad fraud stories out there, and that's damaging to this great project).

We live in an era where people refuse to take the brunt of their actions.

I firmly believe that the Ouya can make it if people do not get cold feet.

Okay now, let's get this very, very straight: Kickstarters are not investments. Kickstarter makes this very, very clear because investments are policed with a heavy hand by (I believe) the SEC.

Kickstarters are preordering products that have not yet been created. Presumably they will become created. If they don't, your recourse would be (given Kickstarter's TOS) to go after the project creator in court (small-claims or class-action, depending on the size of the project). However, I doubt anyone would actually be able to get anything via the courts, as these are obviously speculative products, and any project creator worth their legal salt will be hiding behind a corporation that will, upon the project busting, be worth absolutely nothing, and you would then be trying to take the corporation for all it was worth (absolutely nothing).

For those that might be confused:
Kickstarter ≠ Amazon

Azuaron:
Okay now, let's get this very, very straight: Kickstarters are not investments. Kickstarter makes this very, very clear because investments are policed with a heavy hand by (I believe) the SEC.

Kickstarters are preordering products that have not yet been created. Presumably they will become created. If they don't, your recourse would be (given Kickstarter's TOS) to go after the project creator in court (small-claims or class-action, depending on the size of the project). However, I doubt anyone would actually be able to get anything via the courts, as these are obviously speculative products, and any project creator worth their legal salt will be hiding behind a corporation that will, upon the project busting, be worth absolutely nothing, and you would then be trying to take the corporation for all it was worth (absolutely nothing).

Apparently Kickstarter did not make it very clear that it is a preorder service based on every single comment above.

I would hope that the people investing in a kickstarter already know the risks of "investing". This isn't really a transaction.

drkchmst:

Azuaron:
Okay now, let's get this very, very straight: Kickstarters are not investments. Kickstarter makes this very, very clear because investments are policed with a heavy hand by (I believe) the SEC.

Kickstarters are preordering products that have not yet been created. Presumably they will become created. If they don't, your recourse would be (given Kickstarter's TOS) to go after the project creator in court (small-claims or class-action, depending on the size of the project). However, I doubt anyone would actually be able to get anything via the courts, as these are obviously speculative products, and any project creator worth their legal salt will be hiding behind a corporation that will, upon the project busting, be worth absolutely nothing, and you would then be trying to take the corporation for all it was worth (absolutely nothing).

Apparently Kickstarter did not make it very clear that it is a preorder service based on every single comment above.

Azuaron:
Kickstarter's TOS makes this very, very clear because investments are policed with a heavy hand by (I believe) the SEC.

FTFMe

Azuaron:
Kickstarters are preordering products that have not yet been created.

No they're not. This is demonstrated very simply by the many reward levels that do not, in fact, include a pre-order for the product. As far as I am aware there is not even a requirement to offer rewards at all. You can simply ask for money and hope people give it to you. Many projects include pre-orders as one reward option since it's a fairly obvious way to encourage people to invest, but that in no way suggests that therefore all backers must always be pre-ordering something. Just look at the Ouya as an example. 3668 backers will not be getting an Ouya no matter how well the project goes, because they backed the project without ordering one.

Kahani:

Azuaron:
Kickstarters are preordering products that have not yet been created.

No they're not. This is demonstrated very simply by the many reward levels that do not, in fact, include a pre-order for the product. As far as I am aware there is not even a requirement to offer rewards at all. You can simply ask for money and hope people give it to you. Many projects include pre-orders as one reward option since it's a fairly obvious way to encourage people to invest, but that in no way suggests that therefore all backers must always be pre-ordering something. Just look at the Ouya as an example. 3668 backers will not be getting an Ouya no matter how well the project goes, because they backed the project without ordering one.

From the Kickstarter FAQ:

"Are projects required to offer rewards?

Yes. A series of creative and engaging backer rewards is essential. Rewards are typically things produced by the project itself."

Further, Kickstarter is:

"Funding for projects only. A project has a clear goal, like making an album, a book, or a work of art. A project will eventually be completed, and something will be produced by it. A project is not open-ended. Starting a business, for example, does not qualify as a project."

Backers are not required to choose an award, and can donate more than the reward they are getting, in the same way that I could walk into a coffee shop and drop money in a tip jar without ordering, or buy something and give an additional tip. And, while those 3668 backers aren't preordering an Ouya, they are preordering their username. That's still a preorder. Things can get more ridiculous (Gabe of Penny Arcade will be yelling my name at a duck) or even be as ephemeral as a "Thank you!" but Kickstarter will not even accept a project that does not have some rewards that are actual products--and preferably products produced by the project (again, the Penny Arcade Kickstarter walked that line more than any other project I've seen).

There's a whole bunch more in the Kickstarter guidelines, and, I'm sure, even more in some unreadable legal document somewhere, but the bottom line is that Kickstarters are neither charities nor investments, they are businesses.

You can gift these businesses money, if you choose, and you can buy products from these businesses, though the products usually do not exist yet. But you are not buying stock, you are not getting a return on an investment in the legal sense of those words.

And they are definitely not 501(c) registered organizations for which you can get a tax write off.

you arent buying a product you are making an investment in something that you hope but might never see.

hope for the best plan for the worst

*excuse typos recovering from concussion*

The ouya release is going to be hilarious.

This day will be marked in the annals of history. The day one million asses were shattered simultaneously.

While reality be a harsh mistress, those who wish for things to collapse just for the delight of the spectacle are a bit too grim for my tastes.

Kordie:

Apparantly not, or this issue would already have a solution.

Keep in mind that Max and Leo only went to jail because they failed to fail, funny in itself. I mean, Max didn't get caught in the first place, which is where they come up with the scheme in the movie.

However, there have already been a couple large cases of fraud reported in gaming sites.

I can agree that as an investment no one should be entitled a refund (unless, as kickstarted said they made a specific promise and failed to deliver i.e. the rewards). Someone does need to keep track of this though, if Ouya manages to fail while having not used up all the kickstarted capital where does it go?

To Max and Leo. >.>

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