The new thundering herd

Jun 16th 2012

There are over 450 “crowdfunding platforms”, including four in China, up from under 100 in 2007, with Kickstarter America's largest.  

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Crowdfunding is well suited to industries that create intellectual property, says Hal Varian, Google's chief economist. Instead of today's approach of restricting access to content using copyright, crowdfunding facilitates an alternative, whereby the creator agrees to provide content if enough people commit themselves to paying for it. Mr Varian argues that this overcomes the free-rider problem, a particular pain for makers of online content because it can often be reproduced at zero cost.

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For big companies, raising money matters less than gaining information about customers or even good PR. For many smaller firms, money matters most.  

http://www.economist.com/node/21556973