That's not quite true, though. KS backers are entitled either their reward or a refund, just like anyone else in any other case. That's true in both the KS terms of service and as a matter of contract law. The problem is that the only time you don't get your reward is if the company has used up all the money and gone bankrupt, in which case how do you get your refund? Well, you can sue them and you'd win, but how do you enforce judgment? You can't enforce a small claims judgment against a bankrupt company. And is it a judicious use of your time? No, not really, especially not for $10.
This is true with conventional advance purchases as well. If you go to a print shop and say "I want you to print me <xyz>" and give them a downpayment, and you go back when the job is supposed to be done and they've gone bankrupt, what do you do to get your downpayment back? If you book a venue for an event next year and the venue shuts down before the event rolls around, how do you get your deposit back? In all cases, the answer is that if a hostile actor is not cooperating with you, you sue them to get legal remedy, and you shoulder the burden of enforcing judgment against them, and if they well and truly have no money with which to refund you, chances are you're not ever going to get a refund. A bird in hand is worth two in the bush (wow, the double entendre there is brutal, I've never noticed that before) is a lesson worth repeating here. It's still a purchase, you're still owed it, but if they don't fulfill, you're probably up shit creek without a paddle.
Or imagine some other kind of fraud. Imagine you have internet service through Comcast, and they just randomly decide to overcharge you $15 this month. So you call them, and they say "Oh yeah, you got overcharged. We'll refund you." and then they don't. So you call again, and they say "No, we issued the refund, tough shit." What are your options at this point? Well, you can do a credit card chargeback. That will get you your money but presumably you will never be able to get service from Comcast again. The same is true here--nothing prevents you from doing a chargeback and facing the consequences from Amazon, which handles the payments for KS. You could go to the media and try to kick up a stink. You can do that here, as well--but the people responsible for taking your money aren't hiding or burying the fact that things didn't work out, they simply can't refund you because they don't have the money to. Or you could sue Comcast. You'd win, of course. But the odds of it being worth your time are pretty near none. You can do that here. So again, the entire basis of our market system is trust, and the entire thing that supports that trust is reputation and the legal system.
Or imagine something as simple as being at a fast food place, ordering food, paying, and never getting your food and the store won't give you a refund. If they keep being obstinate, you eventually need to sue them. It's not worth your time, but you will have to do that if they resist.
KS isn't just a donation to a cash pile. It is a purchase. You are entitled to something for your money, or you are entitled to a refund. Just like any other purchase. But like any other purchase, you are basically doing it on the basis of trust and confidence, and if those fail, only the legal system protects you, and it doesn't protect you very well, and it's not worth it for the smallest stuff.
In terms of consumer protection, the most obvious way KS could protect you would be to offer optional purchase insurance that insures a refund of the project. They could pretty easily do an actuarial table. The question is who would buy it. So I donate $25 to a project. KS gives me a pop-up saying "For only $10, we can insure your $25 purchase against the project not being fulfilled." If I thought the chance of failure was high enough to merit the insurance, why would I pledge? So, decline the insurance. Anyone who'd be willing to buy the insurance shouldn't be pledging at all, which just gets us back to square one, right?
Alternatively, KS could offer a type of project funding where instead of taking 5% or whatever they take, they take 25% as a hedge against project failure. There's two possibilities for how project creators could react to this. One is that instead of asking for $100k, they'd ask for $120k+ to cover the fee. In which case, fewer projects would be funded (there's no reason to believe that the security of insurance would make people pledge more because there's no reason to believe people are pledging less today as a result of risk, as these projects show) to begin with. Alternatively, the project creator asks for the same amount of money, but has even less to spend on the project. This makes narrowly-funded projects even more likely to fail once funded, albeit reducing the risks if they do fail once funded. This is similar to the approach a lot of places use to pay for your expenses if you're in a car accident with a driver that has no car insurance; a liability pool. But remember that the impact of this is that people who do pay for insurance pay more, so while it solves one problem, it creates another.
So I mean thinking about consumer protection, there are options, but none of the options magically fix the problems that lead to projects failing to begin with. Ultimately it's still going to come back to a judgment call on the part of the funder. Anyone who spent 10 seconds of rational thought on Yogsventures would have found the project lacking.
- Why am I funding this? Because of the Yogscast name. Who is working on it? A bunch of people who are not Yogscast.
- What pedigree does this team have? None, admittedly they have never made a game. Some of them have maybe worked on previous games, but we don't know who or which or who is on project management.
- How much are they asking for and is it likely to fund the project to completion?
Let's do a Fermi estimation. $250k (so probably than $200k after physical rewards, KS, taxes, Amazon, etc). $200k gets you about 20 person-months of employment in the US (I'm going for $75k a person year and then thinking licensing, administrative costs, rent, equipment, etc. I'm in the ballpark). We know this was a professional team taking professional salaries, nothing about the project purported that this was a garage operation or someone taking enough money to pay for ramen and peanut butter and a dial-up connection while slavign away. For a team of 5-6, that's about 4 months. For a team of one person, that's about two years. Can you make a 3d open-world adventure game in 4 months with a team of 5 people? No. Can one person make this in two years? Maybe? Maybe not? Is there any evidence of external funding to plug funding gaps? No.
- Is this an interesting looking game? The answer is honestly no, but I guess different strokes for different folks. But still, I mean, it probably wouldn't hurt to check whether or not they seem to have a really good core idea for a game with proof of concept stuff in their pitch. These guys didn't. It looks like they had an extremely basic 3d engine (Unity?) prototype with a few models. I don't see any evidence that they had much of a game design at the time they pitched it.
It took me maybe 60 seconds to type that and well under 10 seconds to think it. I have to assume that the people who backed it either spent less than 10 seconds considering the risks, in which case, like, honestly? I spent more than that when I'm standing in front of a vending machine considering buying a bag of chips. Or they did consider the risks, but they lacked the capacity to do the above analysis, in which case I feel bad.
To those people, I say: for 10% of your Kickstarter pledge to any Kickstarter project, I will produce a one page briefing telling you my assessment of whether the project is likely, plausible, implausible, or impossible including hard-hitting analysis like the above. Paypal only, no refunds. Let me know. I'm sure now that I've offered this wonderful service, no one will ever again be burned by a KS.
. What did I miss?
