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Financing Creativity: Crowdfunding as a New Approach for Theatre Projects

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Abstract

The aim of this empirical study was to shed light on the phenomenon of crowdfunding, particularly with respect to the cultural and creative economy. The results highlight the relationship between donors, entrepreneurs and the crowdfunding platform in the performing arts. Data from 875 theatre projects that had successful crowdfunding campaigns on the Kickstarter platform in 2011 reveal several key factors to be considered in order for a project to reach its crowdfunding goal. The study also analyzes the effect of the offer of material and symbolic rewards, in exchange for donations, on the amounts pledged by crowdfunders. It emerges that symbolic rewards such as public acknowledgement of the donor act as an incentive for crowdfunders, but only when no material rewards are offered. The findings also show that it is advantageous for entrepreneurs to back the projects of other entrepreneurs, as this has a positive effect on the propensity of crowdfunders to support their projects. Finally, crowdfunder support diminishes with the number of previous projects financed by the entrepreneur on Kickstarter. The prosocial behaviour of the actors involved in the crowdfunding process underscores the affinities between this phenomenon and the spirit of reciprocity that is inherent to the gift economy. KEYWORDS Crowdfunding, fundraising, rewards, prosocial behaviour
VOLUME 16, NUMBER 3 • SPRING 2014 33
Introduction
C
ultural organizations face many financial
challenges that have been compounded
in recent years by drastic cuts in public
funding and increasing competition for donors
and sponsors (Colbert, 2007; Sullivan Mort,
Weerawardena and Carnegie, 2003). Alternative
sources of revenue commonly used to supplement
the funding received by arts organizations
include building the loyalty of existing audiences
and increasing the share of wallet from them
(Rentschler et al., 2002), broadening the target
audience, and boosting the support received
from “Friends” organizations (Bussell and Forbes,
2006; Raymond, 1992; Slater, 2004).
However, many arts and cultural organiza-
tions are increasingly turning to a new prac-
tice known as crowdfunding. In the United
States, where private-sector support for the arts
is much stronger than public funding, several
crowdfunding platforms that allow individu-
als or organizations to submit artistic projects
have appeared over the past decade, including
ArtistShare in 2000, Kickstarter in 2009 and
Power2Give in 2011 (National Endowment
for the Arts [NEA], 2012). Crowdfunding is
defined as “a collective effort by people who
network and pool their money together, usu-
ally via the Internet, in order to invest in and
support efforts initiated by other people or
organizations” (Ordanini et al., 2011, p. 444).
With the increasing popularity of crowdfund-
ing in the past few years, many professionals in
the arts have come to view it as a solution to
the serious financial challenges facing cultural
organizations (Morfoot, 2011). To date, the
largest amounts raised on crowdfunding plat-
forms have gone almost exclusively to the cul-
tural industries; for example, the only areas that
have succeeded in raising over $1 million are
music, film and video games.
Arts organizations, and theatres in particu-
lar, appear to be the poor relation in this trend.
Theatre projects account for a mere 3.2% of
the $10,000 raised on Kickstarter since the
platform was created (kickstarter.com/help/
stats?ref=footer1). Despite the fact that it costs
much less to produce a play than to produce
a feature film or a video game, the amounts
collected for the performing arts (including
musicals) are rarely substantial. This raises the
question of the relevance for arts organizations
of appealing to the disparate and dispersed
community of Internet users for funding. It
should be noted, however, that 64.1% of the-
atre projects on Kickstarter reach their fund-
raising target, compared to a success rate of
43.5% across all sectors (kickstarter.com/help/
stats?ref=footer). Since theatre projects are per-
ceived by donors as a riskier investment than
projects in the cultural industries, theatre offers
an interesting testing ground for studying the
unique dynamics of crowdfunding as a means
of financing artistic projects.
A crowdfunding survey by Ordanini et al.
(2011), the most comprehensive to date, reveals
Benjamin Bœuf is a PhD
candidate and research
assistant at the Carmelle
and Rémi Marcoux Chair in
Arts Management at
HEC Montréal. His research
focuses on sports and arts
marketing.
Jessica Darveau is a PhD
candidate and research assis-
tant at the Carmelle and
Rémi Marcoux Chair in Arts
Management at
HEC Montréal. Her main
interests are consumer self-
concept and arts marketing.
Renaud Legoux is an
associate professor at
HEC Montréal. His research
currently focuses on temporal
perceptions in consumer
behaviour, consumer revenge
and arts marketing.
Financing Creativity:
Crowdfunding as a New Approach for Theatre
Projects
Benjamin Bœuf, Jessica Darveau, Renaud Legoux
Arts Funding
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
34
a similarity between crowdfunding and models
of charitable giving and social cooperation, as
the perceived return or benefit may be not only
material (e.g., gifts) but also intangible (e.g.,
sense of belonging to a community). The authors
highlight a feature of crowdfunding that sets it
apart from phenomena such as open source and
crowdsourcing. Similar to brand communities,
crowdfunding engages donors and entrepre-
neurs in a process of co-creation, while adding
a monetary aspect to the equation. This recipro-
cal dimension of crowdfunding, which reflects a
gift economy, could add to our understanding of
the actors involved (Ordanini et al., 2011). Based
on these assumptions, the aim of this study is to
shed light on the crowdfunding of theatre proj-
ects and to identify the main determinants of a
successful online fundraising campaign.
The study is based on an analysis of 875 the-
atre projects in the United States that reached
their fundraising target via Kickstarter in 2011.
Through a review of the literature on performing
arts funding and crowdfunding and the findings
of our analysis of the theatre projects financed
through Kickstarter campaigns, we identify
the importance of incentives and rewards in
encouraging crowdfunders to invest as well as
the main factors influencing the amounts raised.
The results give rise to a discussion of the unique
character of crowdfunding as a form of prosocial
behaviour as well as a portrait of crowdfunding
for theatre. The managerial implications of our
analysis may be of interest to artists and theatre
groups eager to use this model of funding.
Literature Review
Colbert (2007) draws a distinction between
organizations in the arts sector and those
in the cultural industries, based on the nature
of the products they offer: arts organizations
(performing arts, museums) offer unique pro-
totypes that are not designed to be reproduced,
while the cultural industries (film, music, video
games) seek to mass market reproductions of
prototypes. Research on crowdfunding has
focused mainly on the cultural industries (e.g.,
Gerber, Hui and Kuo, 2012). We argue that the
phenomenon of crowdfunding differs accord-
ing to the products offered. Thus, the specific-
ity of the performing arts should be seen as a
key factor in the unique relationship between
theatre projects and crowdfunding. It should be
noted that theatre projects are generally much
smaller in scope than films, with 76% of theatre
projects raising between $1,000 and $10,000
in funding, which is the case for the majority
(65%) of projects funded on Kickstarter (kick-
starter.com/help/stats?ref=footer). Thus, per-
forming arts products account for a significant
share of the artistic projects supported by crowd-
funders. Moreover, in contrast to the extremes
observed in the cultural industries, where 50
projects have raised amounts ranging from $1
to $1 million on Kickstarter (kickstarter.com/
help/stats?ref=footer), theatre projects are fairly
standard and easily comparable, which allows
us to draw a more complete portrait of crowd-
funding in relation to the performing arts.
In her review of research on the geographies
of the performing arts, Rogers (2012) argues
Acknowledgements
The authors would
like to thank
François Colbert
and Yannik St-James
for their helpful
comments on pre-
liminary versions
of this article.
This aim of this empirical study was to shed light on the phenomenon of crowdfunding, particularly with
respect to the cultural and creative economy. The results highlight the relationship between donors, entre-
preneurs and the crowdfunding platform in the performing arts. Data from 875 theatre projects that had
successful crowdfunding campaigns on the Kickstarter platform in 2011 reveal several key factors to be
considered in order for a project to reach its crowdfunding goal. The study also analyzes the effect of the offer
of material and symbolic rewards, in exchange for donations, on the amounts pledged by crowdfunders. It
emerges that symbolic rewards such as public acknowledgement of the donor act as an incentive for crowd-
funders, but only when no material rewards are offered. The findings also show that it is advantageous for
entrepreneurs to back the projects of other entrepreneurs, as this has a positive effect on the propensity of
crowdfunders to support their projects. Finally, crowdfunder support diminishes with the number of previous
projects financed by the entrepreneur on Kickstarter. The prosocial behaviour of the actors involved in the
crowdfunding process underscores the affinities between this phenomenon and the spirit of reciprocity that
is inherent to the gift economy.
Crowdfunding, fundraising, rewards, prosocial behaviour
ABSTRACT
KEYWORDS
VOLUME 16, NUMBER 3 • SPRING 2014 35
that there is an essential link between the per-
forming arts and local communities, particu-
larly urban communities. Unlike film or music,
where the product itself can travel, theatre needs
a stage on which to perform and travelling
entails moving all the performers and sets. As a
performing art, theatre thus occupies a specific
place, and it both reflects and participates in
the structuring of the local space: “performance
is integral to infrastructural geographies of the
city” (Rogers, 2012, p. 68). In the case of the-
atre, in addition to donor behaviour based on
a philosophy of art for art’s sake, the desire to
connect with others through networking and to
be part of an artistic community can be power-
ful incentives for crowdfunders (Kottasz, 2004).
It is therefore likely that entrepreneurs rely on
the support of local donors and are inclined
to support other local entrepreneurs. To these
specificities must be added the importance of
eschewing commercialism. That being said, the
symbolic rewards (such as public acknowledge-
ment) of a monetary contribution seem to be
more consistent with the spirit of reciprocity
among entrepreneurs and donors in this sector.
For all of these reasons, crowdfunding in the
performing arts can be seen as part of the gift
economy in a public environment where the
actors on both sides are eager to demonstrate
the disinterested nature of their gesture.
Funding in the Performing Arts
Cultural policy in the United States is charac-
terized by a unique funding model that benefits
cultural organizations at different levels (gov-
ernmental, philanthropic and other). While
the United States does not have a ministry of
culture as such, the National Endowment for
the Arts, a federal agency founded in 1965, par-
ticipates in the funding of arts organizations in
a variety of fields, including literature, music,
museums, opera and dance (NEA, 2012). In
terms of public funding, the American system
favours not-for-profit arts organizations over
the for-profit entertainment industries. In the
French and Canadian systems, the latter are eli-
gible for funding if their mandate is consistent
with the country’s cultural policies (Mulcahy,
2000). Not-for-profit arts organizations include
art museums and the performing arts but not
the more profit-oriented Broadway-type pro-
ductions (Gray and Heilbrun, 2000).
The performing arts sector derives most of
its financing from philanthropy (36%), govern-
ment sources (6%) and various other sources
(58%) (Mulcahy, 1999). Corporate philan-
thropy towards the arts has a long tradition in
the United States (O’Hagan and Harvey, 2000)
and should be differentiated from corporate
sponsorship, a formula that appears to be grow-
ing at the expense of corporate philanthropy.
However, while philanthropic sponsorships in
the performing arts may be viewed more posi-
tively than commercial sponsorships (Colbert,
d’Astous and Parmentier, 2005), arts organi-
zations are always fearful of tarnishing their
image when seeking the support of corpora-
tions (Dalakas, 2009). While arts organizations
take pains to emphasize their artistic goals and
Cette étude a pour objectif de mieux comprendre le phénomène du financement participatif (crowdfunding) et la pertinence
de ce mode de financement pour l’économie de la culture et de la créativité. Un exemple réel de financement participatif
est étudié de manière empirique afin d’en faire ressortir les spécificités du rapport entre les donateurs, les entrepreneurs
et la plateforme de financement participatif, pour le secteur des arts de la scène. L’analyse de données provenant des 875
projets théâtraux ayant fait appel avec succès au financement participatif sur la plateforme Kickstarter en 2011 présente
un ensemble de facteurs importants à considérer afin de faciliter l’atteinte des objectifs fixés. En ce qui a trait aux rétributions
offertes, l’analyse souligne l’effet des rétributions (récompenses matérielles et récompenses symboliques) sur les sommes
versées. Les récompenses symboliques, sous la forme de remerciements nominatifs publics, constituent une incitation pour
les donateurs, à condition qu’aucune rétribution matérielle ne soit offerte. Les résultats obtenus démontrent également
que les entrepreneurs ont avantage à soutenir à leur tour d’autres entrepreneurs afin de s’assurer l’appui des donateurs.
Finalement, on remarque que l’appui des donateurs diminue avec le nombre de projets antérieurs financés. Les compor-
tements prosociaux des acteurs intervenant dans le processus de financement par le financement participatif soulignent
les affinités certaines de ce phénomène avec la logique de réciprocité propre à l’économie de don.
Crowdfunding, financement, récompenses, comportement prosocial
RÉSUMÉ
MOTS CLÉS
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
36
ambitions, funding by private corporations can
cause commercial considerations to be pushed
to the fore, particularly when sponsorship
effectiveness is directly related to the scale of
the promotional campaign targeting an artistic
event (Quester and Thompson, 2001). Thus,
a large-scale campaign will necessarily increase
the visibility of the ties between the cultural
organization and the sponsor.
In the United States, the number of not-
for-profit organizations in the arts sector is
constantly growing. For example, the not-
for-profit regional theatre movement includes
more than 900 theatre groups (Cherbo and
Wyszomirski, 2000). This has translated into
stiffer competition for corporate support in
the form of philanthropy or sponsorship. An
additional handicap faced by artistic projects
is the perception of inaccessibility and elitism
and the assumption that they have little mass
audience appeal (Oliver, 2011; Witcher et al.,
1991). In order to overcome these obstacles,
many performing arts companies have devel-
oped strategies for reducing production costs
(Hart, 2011). Co-productions are one example
of such a strategy (Gray and Heilbrun, 2000).
Using Crowdfunding to Finance an Artistic
Project
From the financing of the Statue of Liberty by
the citizens of France and the United States
(Hemer, 2011) to the fundraising campaign
of Barack Obama (Kappel, 2009), crowds
have always been solicited by entrepreneurs
seeking one-off assistance with projects. New
information and communication technologies
have multiplied the possibilities for collabo-
ration between the two actors. The Internet
in particular has greatly increased the role of
consumers by allowing for an interactive rela-
tionship between entrepreneurs, consumers
and the medium (Hoffman and Novak, 1996).
Consumers who play an active role in new
product development show a greater desire to
acquire the final product, even if there is no dif-
ference in quality compared to other products
(Fuchs, Prandelli and Schreier, 2010).
Crowdfunding involves three actors: the
person or organization that is proposing a
project and seeking funding (“entrepreneur”),
the Internet users who support the project
by pledging an amount of their choosing
(“crowdfunder”) and the Internet platform.
The phenomenon of crowdfunding attests to
ever-growing consumer empowerment, espe-
cially via information technologies and Web
2.0. As part of this trend, crowdfunding can be
understood as the monetary component of the
phenomenon of crowdsourcing. It must be dis-
tinguished from the active participation of the
consumer in the other stages of new product
development (conception, design, etc.). The
consumer is a crowdfunder only if he or she is
a source of funding. Unlike in the traditional
model of the producer of cultural products, the
crowdfunder is not an investor and thus cannot
expect the type of return a traditional invest-
ment would yield (Hui, Gerber and Greenberg,
2012). Internet users give money in exchange
for material or symbolic rewards, never for
monetary gain.
Con este estudio se pretende ganar mejor comprensión del fenómeno de la financiación colectiva o crowdfunding y su perti-
nencia para la economía de la cult ura y la creatividad. Se presenta el estudio empíri co de un ejemplo real de crowdfunding con
el fin de destacar las especifidades de la relación entre donadores, empresarios, y la platafo rma de crowdfunding en el sector
de las artes escénicas. El anál isis de los datos obtenidos para los 875 proyectos teatrales que utilizaron con éxito el crowdfunding
sobre la plataforma Kickstarter en 2011, presenta un conjunto de factores importantes que se han de tener en consideración
para facilitar la realización de los o bjetivos fijados. Se destaca asimismo el efecto de las retrib uciones (recompensas materiales
o simbólicas) sobre los montos contribuidos. Las recom pensas simbólicas, bajo la forma de agradeci miento público nominativo,
constituyen un incitativo motivador para los crowdfunders, siem pre y cuando no se ofrezca ninguna retribución materi al. Los
resultados obtenidos demuestran también que es ventajoso para los empresarios respaldar a su vez a otros empresarios para
asegurar el apoyo de los crowdfunders. Finalmente, no tamos que el apoyo de estos últimos disminuye en funci ón de la cantidad
de proyectos financiados anteriormente. Los comportamientos prosociales de los actores involu crados en el proceso de finan-
ciación mediante crowdfunding revelan las afinidades certeras de este fenómeno con la lógica de reciprocidad propia a la
economía de la gratuidad.
Crowdfunding, financia ción, recompensas, comportamiento prosocial
RESUMEN
PALABRAS CLAVE
VOLUME 16, NUMBER 3 • SPRING 2014 37
Crowdfunding platforms promote these
incentives via the customized pages of entrepre-
neurs. Each project profile features a detailed
description along with photos or video.
Entrepreneurs and their place of origin are eas-
ily identifiable. Donation levels vary from one
project to the next and are determined by the
entrepreneurs. Naturally, the larger the dona-
tion, the more attractive the associated perks.
On the Kickstarter platform, the value of
pledges can vary from $1 to $10,000.
There are two types of reward: symbolic
rewards such as public acknowledgement, and
material rewards such as gifts. To be eligible
for a campaign on Kickstarter, a project must
involve a final product (e.g., a work of art, a
book) that falls into one of 13 categories: Art,
Comics, Dance, Design, Fashion, Film and
Video, Food, Games, Music, Photography,
Publishing, Technology, Theatre. Kickstarter
does not accept projects associated with chari-
table causes or “fund my life” projects.
A campaign is successful if the initial funding
goal is reached before the deadline. It is at this
point that the entrepreneur receives the amount
raised. If the full funding goal is not reached,
the entrepreneur receives nothing. Kickstarter
recommends a deadline of 30 days or less in
order to “create a helpful sense of urgency”
around the project (Strickler, 2012). It also
encourages entrepreneurs to provide a project
description, inlcuding elements such as video,
a biography, and an overview of the risks and
challenges associated with the project. Since it
is important to gain the trust and support of
crowdfunders, the disclosure of more personal
information about the entrepreneur is an added
incentive. In terms of rewards, there are a num-
ber of gifts that Kickstarter does not allow,
including coupons and discounts and products
not linked to the project. Kickstarter suggests
four main types of reward: a copy of the prod-
uct (album, DVD, poster); creative collabo-
ration (e.g., a backer appearing in the work);
creative experiences (e.g., a telephone call from
the entrepreneur); and creative mementos (e.g.,
acknowledgement in the credits).
Donating in a Public Context
Several studies have highlighted the unique
characteristics of donor behaviour in a public
context, whether it be support for charitable
projects or volunteer work (Frey and Götte,
1999; Gneezy and Rustichini, 2000). Using
the example of the Red Cross, Ariely, Bracha
and Meier (2009) show that support in a pub-
lic context is negatively affected by the offer of
material or monetary rewards in exchange for
donations. Conversely, verbal reinforcement,
which is similar to public acknowledgement,
does not decrease intrinsic motivation but,
rather, appears to enhance it (Deci, 1971). The
logic at work here is akin to that of prosocial
behaviour.
In crowdfunding, donations are made in the
public sphere and the use of avatars does not
guarantee donor anonymity. As Giesler (2006)
points out, Internet sharing networks are at
once hierarchized and interpersonal commu-
nities in which the effect of reputation plays a
key role. The social dimension of any virtual
community is part of what motivates members
to participate actively in exchanges (Weng and
Fesenmaier, 2003). In the context of giving,
then, we can expect to find prosocial behaviour,
which is driven largely by image motivation
(Ariely, Bracha and Meier, 2009; Deci, 1971).
Thus, in prosocial behaviour, symbolic rewards
or public acknowledgement can be expected to
generate higher levels of giving.
Gerber, Hui and Kuo (2012) note that
material rewards play an important role in the
motivation of crowdfunders in music, film
and technology but not in theatre, as theatri-
cal initiatives are more closely associated with
not-for-profit projects. While crowdfunders
in the cultural industries are motivated by the
acquisition of tangible goods such as DVDs
or CDs, crowdfunders of theatre projects are
motivated by a desire to help entrepreneurs
in need and may be negatively affected by the
offer of material rewards such as tickets or mer-
chandise. These observations appear to reflect
the sense of community that artistic projects
inspire, as well as a desire for social recognition
in a virtual public space. In short, the logic of
giving assumes that material rewards convey the
impression that the donor is motivated by the
material value of the product rather than by a
prosocial impulse.
H1: The total amount raised by a project is
positively affected by the offer of public acknowl-
edgement only if no material rewards are offered.
As noted by Joy (2001), giving necessarily
involves a logic of exchange: “a ‘gift’ applies
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
38
only to consumption activities/objects within
certain contexts that involve an exchange
between two or more individuals” (p. 251).
There can be no giving without reciproc-
ity, whether material or otherwise (Marcoux,
2009). On the Internet, peer-to-peer exchange
networks are sustainable only as long as new
content is added by large numbers of people.
A consumer who takes advantage of such net-
works, such as by downloading music that oth-
ers put online without posting content himself
or herself, is perceived by other consumers as a
“leecher” (Giesler, 2006). Similarly, during the
Burning Man event, people who do not partici-
pate actively in the community, through either
gifts or disguises, are looked upon as “tourists”
by the rest of the community (Kozinets, 2002).
In general, consumers encourage reciprocal
behaviour within these communities, whose
survival depends on the voluntary participation
of large numbers of people. Crowdfunding is
rooted in a similar logic: if consumers use the
site only to ask for money, without ever giving
any themselves, then the community of crowd-
funders can no longer function. We thus posit
that crowdfunders will be more inclined to
give money to an entrepreneur who has dem-
onstrated his or her own personal involvement
in crowdfunding by financially supporting the
projects of others. Through this reciprocity,
the entrepreneur demonstrates that he or she
is neither a parasite nor a tourist out to take
advantage of the benefits offered by Kickstarter
without giving anything to the community in
return.
H2: The total amount raised by a project is
positively affected by the entrepreneur’s partici-
pation in the crowdfunding campaigns of other
entrepreneurs.
However, we believe that the same cannot
be said of the number of projects previously
financed by the entrepreneur through crowd-
funding. Indeed, since crowdfunding is based
on a communal logic, we can expect to see a
degree of exhaustion of the networks solicited.
An entrepreneur’s networks are necessarily
limited, especially when it comes to financing
his or her activities (Shane and Cable, 2002).
Activation of the network, which depends
at least partly on the same pool of members,
can taper off over time, making it impossible
to repeatedly solicit the same crowdfunders for
successive projects. Webber (2004) points out
the relatively high attrition rate of donors in the
context of an organizations fundraising activi-
ties, since some of the consumers taking part in
the fundraising are guided by extrinsic or image
motivations rather than an intrinsic desire to
support the organization. Similarly, charities
that rely on donations to finance their activities
find it increasingly difficult to mobilize their
donor networks over the long term (Quinton
and Fennemore, 2012). We can assume that
entrepreneurs who solicit crowdfunders will
face the same phenomenon of erosion when
seeking to activate their network of supporters
for successive projects. This can be expected to
translate into lower total amounts raised.
H3: The total amount raised by a project is
negatively affected by the number of projects
an entrepreneur has already financed through
crowdfunding.
Methodology
Our research is based on a study of theatre
projects in the United States that met
their fundraising goals on Kickstarter in 2011.
Kickstarter has emerged as the most popular
crowdfunding platform, with over 4,000 proj-
ects successfully funded in its first 21 months
(Hemer, 2011). All of the projects that reached
their objective from 1 January to 31 December
2011 were eligible – a total of 875. For each
project, we consulted the dedicated page on
Kickstarter and coded the following informa-
tion: location, funding goal, amount raised,
genre, sociopolitical engagement, number of
crowdfunders, launch and end dates, rewards
offered, number of previous projects funded by
the entrepreneur via Kickstarter, and number
of projects supported by the entrepreneur. We
were unable to include projects that did not
reach their funding target because their page
was automatically withdrawn by Kickstarter,
making information about them inaccessible.
Kickstarter projects offer backers several
reward tiers. To facilitate coding, we chose
to code the rewards linked to donations with
a value of $70. All of the projects, from the
most modest to the most ambitious, included a
reward tier of $70. This tier also represents the
average pledge on Kickstarter (Hemer, 2011).
Moreover, the rewards offered for pledges of
$70 encompass all lower-tier rewards, while
VOLUME 16, NUMBER 3 • SPRING 2014 39
adding a reward or multiplying the number of
rewards (for example, two tickets rather than
one for a donation of more than $70).
The rewards were divided into two cat-
egories. The first includes material rewards,
such as a ticket to a performance or a poster,
T-shirt, CD or DVD. The second includes
public acknowledgement of the donor in the
program, on the Web site of the project or the-
atre company, on social networks, on the poster
and so forth. Overall, 98% of projects offered
a reward in exchange for a donation of $70,
with 61% offering both material rewards and
public acknowledgement; 30% offered only
material rewards and 7% only public acknowl-
edgement. The most common rewards offered
were as follows: acknowledgement in the play’s
program (47%), tickets to the play (46%), a
poster (25%), acknowledgement on the Web
site of the theatre company or the play (21%),
a T-shirt (14%), a CD (14%).
The three dominant genres are dramas (245
projects, or 28% overall), musicals (173; 20%)
and comedies (144; 16%). Theatre projects fea-
turing a mix of genres and techniques (such as
dance, puppet shows, use of video) account for
25% of the total (219 projects). Thrillers, hor-
ror and science fiction represent 6% of requests
(49 projects). Finally, support for a theatre
troupe, a venue or a festival accounts for 5%
of cases (45 projects). Binary variables were cre-
ated for the dramas, musicals and comedies,
with the other genres constituting the reference
category.
The projects span 158 cities and 41 states,
with a strong concentration in the country’s cul-
tural hubs: New York (289; 33%), Los Angeles
(92; 11%), Chicago (80; 9%), San Francisco
(44; 5%). A binary variable is used to describe
the effect of each of these cities, with the other
cities forming the reference category.
With an average of 53 crowdfunders per
project, the total amounts raised represent, on
average, 123% of the funds requested, with
funding successfully completed within 36 days,
on average. From the smallest project ($114)
to the largest ($67,605), the average amount
raised is $3,929 (median: $2,515), suggesting
that entrepreneurs generally use crowdfunding
as part of a broader financing plan as opposed
to seeking to finance their project exclusively
through this means.
To test our research hypotheses, we per-
formed multiple linear regressions with the
amount raised through crowdfunding and
the average amount donated per crowdfunder
as dependent variables. Since the number of
crowdfunders per project is a count variable, a
negative binomial regression was used. In addi-
tional analyses, we performed multiple linear
regressions, with the amount requested by the
entrepreneur and the ratio of the amount raised
to the amount requested as dependent variables.
A logarithmic transformation was employed
for the dependent variables in order to account
for heteroscedasticity in the residuals. The two
dichotomous independent variables of interest
are the offer of public acknowledgement and
the offer of material rewards. Control variables
were included to account for the city where the
play is performed, the genre of the play, the
duration of the funding phase (in days), the
number of projects previously submitted by the
entrepreneur on Kickstarter, and the number of
projects the entrepreneur has helped fund.
In order to make it easier to interpret the
parameters, the duration of the project funding
was centred on the mean.
A diagnostic test shows no collinearity
between the independent variables.
Results
In the principal analysis, the amount raised is
the dependent variable. Two additional anal-
yses help to identify the cause of variations in
the amounts raised by observing whether the
effect of the explanatory variables is stronger for
the average amounts donated or for the number
of donations made. Finally, at the suggestion
of one of our reviewers, we analyzed models
where the ratio of amounts raised to amounts
requested are used as dependent variables.
Amount Raised
The adjusted R2 for the model with the amount
raised as the dependent variable is 19.4%. The
results of the first regression model (cf. Table 1)
reveal significant interaction between rewards
and the amount raised. The simple effect of
public acknowledgement reveals that projects
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
40
offering acknowledgement without any mate-
rial rewards obtain a higher total amount than
projects that offer neither public acknowl-
edgement nor material rewards (β = -0.49;
t test = -2.06, p < .05). These results confirm
hypothesis 1.
Figure 1 illustrates this interaction by con-
verting the values associated with the depen-
dent variable into dollars. One can observe
that a material reward attenuates the effect of
public acknowledgement. Thus, for a play held
outside of the cultural hubs (New York, Los
Angeles, Chicago, San Francisco) a crowdfund-
ing appeal for a theatre production that offers
donors public acknowledgement raises contri-
butions of $3,141; however, when a material
reward is offered in addition to public acknowl-
edgement, the donations drop to $2,188.
A positive effect is observed in cases where
the entrepreneur has provided financial support
to other projects on Kickstarter. In other words,
if an entrepreneur is a crowdfunder himself or
herself and has donated to projects, this has a
positive effect on the amount raised (β = 0.02;
t test = 3.67, p < .001). For each project sup-
ported in the past, we observe an increase of
approximately 2% in the funding raised; this
represents a contribution of $79 per project
funded. This amount compares favourably with
the average donation made to Kickstarter pro-
jects. This finding suggests that project fund-
raising is guided by a sense of reciprocity, thus
supporting hypothesis 2. Conversely, cultural
entrepreneurs who have previously funded
their own projects through Kickstarter raise less
money when launching a new project (β = -0.07;
t test = -2.88, p < .01). The exponential of the
parameter reveals that each previously funded
PREDICTIVE MODELS FOR AMOUNT RAISED, AVERAGE AMOUNT AND NUMBER OF CROWDFUNDERS
Amount raised Average amount Number of crowdfunders
β (SE) β (SE) β (SE)
INTERCEPT 7.60 (0.22) *** 4.05 (0.13) *** 3.72 (0.18) ***
PUBLIC ACKNOWLEDGEMENT 0.45 (0.23) * 0.15 (0.14) 0.32 (0.19)
MATERIAL REWARDS 0.13 (0.21) 0.04 (0.13) 0.12 (0.17)
ACKNOWLEDGEMENT X REWARDS -0.49 (0.24) * -0.11 (0.14) -0.38 (0.20)
PREVIOUS PROJECTS -0.07 (0.02) *** -0.004 (0.014) -0.06 (0.02) **
PROJECTS SUPPORTED 0.02 (0.005) *** -0.005 (0.003) 0.03 (0.005) ***
CITY
New York 0.33 (0.07) *** 0.21 (0.04) *** 0.14 (0.05) **
Los Angeles 0.37 (0.1) *** 0.18 (0.06) ** 0.3 (0.08) ***
Chicago 0.02 (0.10) -0.12 (0.06) * 0.25 (0.08) **
San Francisco 0.36 (0.13) ** 0.1 (0.08) 0.32 (0.11)
GENRE
Comedy -0.12 (0.08) -0.13 (0.05) ** -0.06 (0.07)
Musical 0.24 (0.08) ** 0.04 (0.05) 0.18 (0.06) **
Drama -0.02 (0.07) -0.05 (0.04) -0.03 (0.06)
DURATION OF ACTIVITY 0.02 (0.002) *** 0.005 (0.001) *** 0.02 (0.002) ***
DURATION OF ACTIVITY SQUARED -0.0003 (0.0001) *** -0.00002 (0.00004) -0.0003 (0.0001) ***
TABLE 1
* p < .05 ** p < .01 *** p < .001
VOLUME 16, NUMBER 3 • SPRING 2014 41
project is associated with a 6.8% decrease in
the amount raised for the new project. For the
average project, this translates into a shortfall of
approximately $266. This is an indication that
a fatigue effect can take hold on Kickstarter in
the case of entrepreneurs who have used it more
than once. This supports hypothesis 3.
The control variables also have an effect on
the amounts raised through crowdfunding. For
example, the average amount raised is higher if
the project is located in New York (β = 0.33; t
test = 5.06, p < .001), Los Angeles (β = 0.37; t
test = 3.82, p < .01) or San Francisco (β = 0.36;
t test = 2.73, p < .01). Despite the lively theatre
scene in Chicago, projects originating there do
not receive higher amounts than those in other
US cities.
Moreover, musicals are associated with
higher amounts raised (β = 0.24; t test = 3.13,
p < .01), an unsurprising result considering
that musicals typically require more investment
than the average theatre project (the average
amount sought for musicals on Kickstarter is
$4,430, compared to $3,195 for other theatri-
cal genres).
Finally, the duration of the crowdfunding
activity has a non-linear effect on the amount
raised: the simple effect and the quadratic term
are both significant (p < .01). Figure 2 illustrates
this effect in the form of a bell curve. Amounts
increase in the first 68 days or so, after which
they begin to taper off. It appears that while
some time is needed for word of mouth to build
around a project, this period must be short
enough to encourage donors to take action. It
should be noted that since 2012 Kickstarter has
shortened the maximum project duration to
60 days, most likely to spare entrepreneurs the
disadvantages of overly long funding deadlines
(Strickler, 2012).
Average Amount Pledged
In the second regression model, the depen-
dent variable is the average amount pledged
per crowdfunder (cf. Table 1). The R2 is
7.5%. No significant interaction is observed
between material rewards and public acknowl-
edgement on the average amount pledged.
Nor are there any significant simple effects of
material rewards or public acknowledgement.
EFFEC T OF ACKNOWLEDGEMENT AND MATERIAL R EWARDS ON AMOUNT RAISED
FIGURE 1
500
0
1,000
1,500
2,000
2,500
3,000
3,500
Without material
rewards
With material
rewards
Amount raised ($)
Without public acknowledgement With public acknowledgement
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
42
Therefore, the average amount pledged is not
influenced by the nature of the rewards offered.
Crowdfunders do not make higher average
pledges based on the previous projects crowd-
funded by the entrepreneur or on the entrepre-
neur’s role as a crowdfunder.
Thus, if the total amount raised fluctu-
ates with the offer of rewards, this cannot be
imputed to the average pledge made by crowd-
funders. Instead, to explain the effects of these
variables on the amount raised, we analyzed two
determinants: the number of crowdfunders,
and the amount requested by the entrepreneur.
Number of Crowdfunders
A negative binomial regression appears to be the
most suitable model when dealing with a count
variable such as the number of crowdfunders per
project. A negative binomial regression is more
adequate than a Poisson regression in situations
where there is overdispersion (Pedan, 2001).
This is because, with Poisson distribution, the
mean is equal to the variance, while the mean
and the variance can be assessed separately in
a negative binomial regression. The confidence
interval of the dispersion test, situated between
0.39 and 0.47, confirms the superiority of the
negative binomial specification.
The effect of public acknowledgement in
cases where no material reward is offered is
marginally significant (β = 0.31; Wald statistic
= 2.82, p < .10). In terms of the total amount
raised, this effect is cancelled out when the
project offers both public acknowledgement
and material rewards (β = -0.38; Wald statistic
= 3.80, p = .05). Figure 3 shows that the inter-
action is similar to that in the model predicting
the total amount received.
The propensity to donate is greater when the
entrepreneur offers public acknowledgement
without material rewards; it is weakest when
no rewards are offered at all. Similarly to the
effect observed for the amount raised, material
rewards have a negative influence on the num-
ber of crowdfunders who choose to support a
project in cases where public acknowledgement
is offered.
The number of previous projects funded by
the entrepreneur on Kickstarter and the num-
ber of projects of others to which the entrepre-
neur has contributed have a similar effect on
both the number of donors and the amount
received. Here, the variance in the total amount
raised seems to be explained more by the vari-
ance in the number of donors than by the aver-
age amount pledged per donor.
EFFEC T OF ACTIVITY DURATION ON AMOUNT RAISED
FIGURE 2
0
020 40 60 80 100
500
1,000
1,500
2,000
2,500
3,000
Amount raised ($)
Number of days
VOLUME 16, NUMBER 3 • SPRING 2014 43
Ratio of Amount Raised to Amount Requested
Table 2 shows that the variables of interest do
not appear to have an effect on the ratio of
the amount raised to the amount requested.
Indeed, the explained variance is only 1.1%.
However, the amount requested reflects
the results obtained for the estimation of the
amount raised. The explained variance is 18.4%.
The effect of public acknowledgement without
material rewards is positive and marginally sig-
nificant (β = 0.43; t test = 1.77, p < .10). The
interaction between public acknowledgement
and rewards is negative and significant, as it was
in the main analysis of the amount raised (β =
-0.49; t test = -1.95, p = .05). The parameter
for the number of projects previously crowd-
funded is negative and significant (β = -0.07; t
test = -2.54, p < .05), while the parameter for
the number of projects supported financially
by the entrepreneur is positive and significant
(β = 0.02; t test = 3.33, p < .01). The control
variables have a similar effect to that seen in the
first model, with the exception of the duration
of the activity, which does not have a significant
effect on the amount requested.
These results suggest that entrepreneurs who
use Kickstarter to raise funds adjust their expec-
tations based on the characteristics of their
projects. Thus, the ratio of the amount raised to
the amount requested is not affected, because
expectations vary in the same manner as for the
amount received. It would appear that entre-
preneurs – at least those who have successfully
met their fundraising target – have internalized
the behaviour of Kickstarter users.
Discussion and Managerial Implications
The purpose of this study was to gain a bet-
ter understanding of the crowdfunding of
theatre projects and to identify a theoretical
framework for the phenomenon, whose unique
characteristics seem to be overlooked in the lit-
erature (Ordanini et al., 2011). Our analysis of
the 875 theatre projects that were successfully
financed through crowdfunding on Kickstarter
in 2011 reveals several distinctive features of
this type of funding, in which the behaviour
of the different stakeholders (crowdfunders
and entrepreneurs) appears to be guided by a
logic of prosocial exchange. Our findings indi-
cate that crowdfunding in the performing arts
EFFEC T OF ACKNOWLEDGEMENT AND MATERIAL R EWARDS ON NUMB ER
OF CROWDFUNDERS
FIGURE 3
10
0
20
30
40
50
60
Without material
rewards
With material
rewards
Number of crowdfounders
Without public acknowledgement With public acknowledgement
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
44
is a non-commercial phenomenon involving a
monetary transaction that is motivated by nei-
ther a logic of financial return nor a logic of
charity. These results highlight the specificity
of crowdfunding in the performing arts. Since
performing arts organizations offer unique pro-
totypes that cannot be reproduced, the crowd-
funding of theatre projects differs from that
of projects in the cultural industries. While
Gerber, Hui and Kuo (2012) highlight the fact
that crowdfunders in the cultural industries are
motivated by the opportunity to acquire the
final product (e.g., a DVD or CD), our find-
ings show that crowdfunders of theatre projects
are motivated by different factors. We offer four
main observations in this regard.
First, the importance of public acknowl-
edgement as a reward for one’s contribution
illustrates that, unlike the traditional model of
funding of cultural products, crowdfunding is
not motivated by the expectation of a mate-
rial return on one’s investment. This confirms
the view that donations must be understood
as exchanges that take place in the non-com-
mercial sphere (Joy, 2001; Kozinets, 2002;
Marcoux, 2009), even when they are based
on virtual exchange (Giesler, 2006). The sym-
bolic dimension is a key motivating factor for
crowdfunders.
Our findings corroborate those of Ariely,
Bracha and Meier (2009) and Gneezy and
Rustichini (2000) on the adoption of prosocial
behaviour by people who support charitable or
volunteer projects. Whereas symbolic rewards
can fuel donor motivation, material rewards
can have the opposite effect. The literature
PREDICTIVE MODEL FOR AMOUNTS REQUESTED
Ratio for amount raised/
requested Amount requested
β (SE) β (SE)
INTERCEPT 1.21 (0.12) *** 7.44 (0.23) ***
PUBLIC ACKNOWLEDGEMENT 0.03 (0.13) 0.43 (0.24)
MATERIAL REWARDS 0.03 (0.12) 0.12 (0.23)
ACKNOWLEDGEMENT X REWARDS 0.01 (0.13) -0.49 (0.25)
PREVIOUS PROJECTS -0.01 (0.01) -0.07 (0.03) *
PROJECTS SUPPORTED 0.002 (0.003) 0.02 (0.01) ***
CITY
New York -0.06 (0.04) 0.36 (0.07) ***
Los Angeles -0.09 (0.05) 0.41 (0.1) ***
Chicago -0.01 (0.06) 0.01 (0.11)
San Francisco -0.11 (0.07) 0.42 (0.14) **
GENRE
Comedy 0.01 (0.05) -0.13 (0.09)
Musical 0.01 (0.04) 0.24 (0.08) **
Drama 0.01 (0.04) -0.02 (0.07)
DURATION OF ACTIVITY 0.0002 (0.0012) 0.02 (0.002)
DURATION OF ACTIVITY SQUARED -0.00001 (0.00004) -0.0003 (0.0001)
TABLE 2
* p < .05 ** p < .01 *** p < .001
VOLUME 16, NUMBER 3 • SPRING 2014 45
on prosocial behaviour demonstrates the role
of rewards in controlled environments only,
mainly based on experiments that manipulate
the offer of rewards (e.g., Ariely, Bracha and
Meier, 2009). Our analysis offers the first obser-
vation of prosocial logic in an uncontrolled
empirical context using data on the behaviour
of crowdfunders.
Second, our findings point to signs of a
potential phenomenon of fatigue. The greater
the number of projects an entrepreneur has
previously submitted for crowdfunding, the
lower the amount raised in his or her current
campaign. This is explained not by lower aver-
age amounts pledged, but by a lower number
of crowdfunders supporting the new project.
On the other hand, in a further demonstration
of prosocial behaviour in the crowdfunding
of theatre projects, our results show a positive
effect of symbolic public acknowledgement as
opposed to material rewards. This suggests that
entrepreneurs who have used crowdfunding
previously can limit the erosion of the num-
ber of crowdfunders for their new projects by
adjusting the rewards offered in exchange for
donations. Given that entrepreneurs appeal to
the same network of donors for each of their
projects, this social circle can be expected to
shrink over time. Indeed, soliciting the same
crowdfunders repeatedly tends to have a fatigue
effect. Thus entrepreneurs should focus on
image motivation as a way to maintain their
network of crowdfunders. Image motivation,
which is driven by a desire to be liked and well
thought of, tends to increase in cases where
symbolic and public rewards are offered (Ariely,
Bracha and Meier, 2009; Bénabou and Tirole,
2006; Deci, 1972).
In a public context where the contributions
of donors are made visible, the effect of material
rewards is less desirable. For the crowdfunder,
accepting a material reward in exchange for a
donation considerably reduces the symbolic
and altruistic value of the gesture. On the other
hand, prosocial behaviour combines altruism
and concern about one’s reputation or self-
respect (Bénabou and Tirole, 2006). Public
acknowledgement not only announces the
donor’s contribution to the rest of the commu-
nity, but also – and more importantly – indicates
the intrinsic motivation and image motivation
underlying the contribution, including the
desire to support a noble cause. Thus, crowd-
funders are motivated to give money repeatedly
to an entrepreneur whose offer of rewards is
consistent with prosocial behaviour.
Finally, crowdfunding appears to reflect the
phenomenon of reciprocal exchange as opposed
to one-way giving. The financial participation
of entrepreneurs in the projects of other entre-
preneurs has a positive effect on the propen-
sity to donate, in terms of both the number
of crowdfunders and the amounts raised. If
the total amounts raised are positively influ-
enced by the participation of entrepreneurs in
the crowdfunding of other projects, it is not
because crowdfunders pledge more on aver-
age, but, rather, because more crowdfunders are
willing to support their project financially. In
other words, when entrepreneurs are themselves
crowdfunders, backing other projects, the pro-
social effect of the phenomenon is reinforced.
Moreover, information on their participation is
publicly available, as it is automatically posted
on the entrepreneur’s project page. This means
that crowdfunding is guided by principles
of community in which reciprocity plays an
important role (Muñiz and O’Guinn, 2001). In
this regard, Clark and Mills (1979) differenti-
ate between relationships of exchange, in which
giving is motivated by the goal of receiving
something in return, and communal relation-
ships, in which the motive for giving is a desire
to respond to a need.
This is another indication that the phenom-
enon of crowdfunding should be seen as more
than a simple commercial exchange in which
a person donates money to an entrepreneur in
exchange for a reward in the form of material
goods. Crowdfunding should be seen as a com-
munity-based phenomenon in which the actors
take part publicly in a reciprocal exchange. This
perspective sheds new light on our understand-
ing of the prosocial dimension of giving.
These findings are consistent with the claim
that participation in fundraising on crowd-
funding platforms is motivated by a desire to
belong to a community of creative individu-
als who share common interests. There is an
important lesson here for cultural organiza-
tions, which need to put strategies in place in
order to maximize their funding. The informa-
tion that Kickstarter makes available to visi-
tors to its site can have an impact not only on
the amount pledged, but also on the number
of crowdfunders who decide to back a project.
By offering donors different types of reward,
entrepreneurs can influence how donors’ moti-
vations are perceived. Our study builds on the
work of Wiggins Johnson and Ellis (2011),
which focuses on donors in the performing arts.
While the findings of these authors highlight
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT
46
the importance of the type of reward for the
motivation of consumers, our analysis distin-
guishes between two types of reward: material
and symbolic. In a public environment such
as a crowdfunding platform, an offer of mate-
rial rewards can tarnish the image of the donor
within the community of crowdfunders and
affect the donor’s image motivation.
Moreover, our findings suggest that entre-
preneurs who use crowdfunding have acquired
expertise from previous experiences with the
platform. For example, entrepreneurs tend to
set lower target amounts if they have previ-
ously submitted a project for crowdfunding.
Similarly, they set their goal higher if they offer
symbolic as opposed to material rewards, which
suggests that they have taken into account the
factors motivating the prosocial behaviour
of crowdfunders. Thus, in order to increase
their chances of securing a large amount and
attracting a large number of crowdfunders,
entrepreneurs must understand that crowd-
funding is not driven primarily by charitable
behaviour; they must therefore capitalize on
image motivations and expectations of public
reciprocity between crowdfunders and entre-
preneurs. Hence, a strategy of soliciting a small
amount but repeatedly appealing to the same
network of crowdfunders will not be effective.
In the performing arts, when crowdfunding is
used to raise one-off, limited funds as part of
a broader financing plan, one can obtain sig-
nificant amounts (up to $67,605 in 2011 and
$175,395 in 2012 on Kickstarter) by offering
benefits that encourage prosocial behaviour.
Another important factor in successful
crowdfunding is the duration of the activity,
a decision that rests with the entrepreneur. A
crowdfunding campaign lasting between 40
and 60 days appears to be optimal; this period
is sufficiently long to attract a large number of
crowdfunders and sufficiently short to convey a
sense of urgency, encouraging people to donate.
The progress of funding during the project’s
fundraising phase can also be decisive. On
Kickstarter, 82% of projects that reach at least
20% of their target ultimately obtain full fund-
ing, while projects that reach 60% of their tar-
get have a success rate of 98% (Strickler, 2012);
this suggests a ripple effect within the network
of potential crowdfunders.
This study has several limitations. First,
we did not take into account failed projects –
that is, projects that did not meet their fund-
ing goal by the deadline. The reason for this
is that Kickstarter automatically removes such
projects from its site as soon as the deadline
set by the entrepreneur expires, rendering such
data inaccessible. An analysis of the informa-
tion on failed projects would have enabled us
to examine some of the reasons for their failure.
In addition, the absence of failed crowdfunding
campaigns from our study could have intro-
duced a selection bias in the estimation of the
parameters. An analysis of the success or fail-
ure of a fundraising campaign as well as of the
amounts raised in successful campaigns – using
a Heckman (1979) selection model, for exam-
ple – would have allowed us to correct for this
potential selection bias. However, our study
was aimed at shedding light on the phenom-
enon of crowdfunding in the arts, the nature of
which was impossible for us to define because
of its novelty and the lack of previous research.
The results suggest the need for a more in-
depth, qualitative approach in order to confirm
and expand on our findings. A qualitative study
could shed further light on the prosocial aspects
of crowdfunder behaviour and offer additional
lessons on the deeper motivations underlying
consumer behaviour in the case of both crowd-
funders and entrepreneurs.
Notes
1. The Kickstarter Web page kickstarter.com/help/
stats?ref=footer was accessed on 22 May 2013. All information
cited from this source is current as of that date.
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... This paper discusses crowdfunding-calls to a broad public for the provision of financial resources to support the development of a specific, novel good or servicefrom a perspective of cultural economics. The first online crowdfunding platform, ArtistShare launched in 2001, was specialized in the cultural sector (Boeuf et al., 2014;Bradley & Luong, 2014;Dalla Chiesa & Handke, 2020). By now, crowdfunding is applied for many types of projects, but cultural and creative industries (CCI) continue to be one of the most important areas for applications of crowdfunding (Agrawal et al., 2015;Bürger & Kleinert, 2020;Hobbs et al., 2016;Mendes-da-Silva et al., 2016;Mollick, 2014). 1 Crowdfunding is a case in point where the cultural sector has spawned an innovative business idea with much wider applications, which makes crowdfunding an important topic for cultural economics. ...
... Here, crowding theory (DiGaetano & Mazza, 2017;Frey & Jegen, 2001) as a staple of cultural economics is useful. 26 For instance, if crowdfunding invokes commercial incentives on both sides-also among investors/backers-crowding-out of other incentives from rewards or in particular from selfless contributions may occur (Boeuf et al., 2014;Cecere et al., 2017;Dalla Chiesa & Dekker, 2021). What is more, founders must strike a precarious balance between motivating selfless contributions or a community spirit, and the inevitable pecuniary aspect of crowdfunding as a means to provide sufficient capital to commence with the project. ...
... Pre-selling is also more suitable with non-rivalry in consumption, which may restrict pre-selling via crowdfunding for performing arts (cf. Boeuf et al., 2014) or fine arts, for instance. ...
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Crowdfunding is an innovation from the cultural sector that has found broad applications in other aspects of the economy. We document that cultural economics provides a refined structure to explain much of the crowdfunding phenomenon, which will be useful for any research on this topic. Based on central themes of cultural economics (including quality and demand uncertainty, socially interdependent demand formation, public good attributes, and intrinsic motivation to create), we extend on the current understanding in the crowdfunding literature regarding three fundamental questions: (1) under what circumstances is crowdfunding a superior alternative to traded means of financing innovative projects? (2) What types of crowdfunding are best suited for specific (cultural and creative) industries (CCI)? (3) What is the potential of crowdfunding for cultural and creative industries? Overall, we describe crowdfunding as a flexible tool for mitigating various, fundamental challenges in CCI and beyond. We also identify limitations of crowdfunding, which for now, severely restrict its application. Arguably, the main boon of crowdfunding for cultural economics is not so much that it makes markets (for cultural products) much more efficient and fosters growth. Instead, crowdfunding enables sophisticated empirical research on central topics of cultural economics, and a rich and diverse literature has begun lifting that treasure.
... While traditional funding channels are limited to a small group of expert critics (such as venture capitalists and grant-making bodies) who play crucial roles in allocating artistic and culture funding (Woronkowicz et al., 2012), crowdfunding provides those seeking funding with the opportunity to raise funds from diversified sets of "crowd investors" in a digital environment, replacing the judgement of a few experts. Early empirical observations from Europe and the USA reveal the positive outcomes of crowdfunding in CCIs (Boeuf et al., 2014;Mollick & Nanda, 2016). Cultural and creative projects may have more funding opportunities when targeting crowdfunding, especially in industries (such as the theatre and film industry) where the crowds are end-users (Mollick & Nanda, 2016). ...
... Those sectors include, inter alia, architecture, archives, libraries and museums, artistic crafts, audio-visual (including film, television, video games and multimedia), tangible and intangible cultural heritage, design, festivals, music, literature, performing arts, publishing, radio and visual arts. The literature on entrepreneurial finance recognises that European firms operating in CCIs face difficulties and barriers in raising finance (Boeuf et al., 2014;Collins, 2018;Hackett et al., 2000;Landoni et al., 2020;Lazzaro, 2017). Although cultural and creative firms in Europe contribute 4.4% (approximately €509 billion) of the GDP and 7.5% (12 million full-time jobs) of the total workforce, 5 it is estimated that the financing gap for European firms operating in CCIs was somewhere between €8 and €13 billion over the period (European Commission, 2018b. ...
... These results are consistent across all campaign categories, including KICs. In a sample of 875 successful theatre projects financed through Kickstarter in 2011, Boeuf et al. (2014) show that the offer of symbolic rewards, such as public acknowledgement of the donor, is positively associated with the amount of capital raised for a project and its subsequent success, but only when no material rewards are offered. By analysing 100 creative crowdfunding campaigns within the film and video category from Kickstarter, Hobbs et al. (2016) find that pitch quality and updates, as well as network management, are key drivers of crowdfunding success. ...
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The trend towards digitalisation and technological innovation has reshaped the cultural and creative industries (CCIs) by changing the existing funding models and structures. The aim of this article is to explore the impact of cultural dimensions and policies on the adoption of reward-based crowdfunding as a new form of finance for firms in the CCIs in 12 different European countries during the 2015–2019 period. Our results show that national cultural dimensions and policies significantly affect the demand for cultural and creative crowdfunding. Specifically, the adoption of crowdfunding is broader in individualistic countries and in societies characterised by higher uncertainty avoidance, indulgence, short-term orientation, and lower levels of discrimination between genders. Furthermore, we find that the liberal welfare state model, characterised by limited government interference, market orientation, privatisation and a focus on self-responsibility, and the Southern European welfare model, based on a weak and inefficient state, increase the adoption of crowdfunding in the CCIs. The presence of a central ministry with cultural competence also increases the adoption of crowdfunding in the CCIs. Our findings show a U-shaped relationship between European grants and the demand for crowdfunding, mainly driven by a high or low European involvement within these sectors. We also identify a moderation effect of EU grants on the relationship between cultural dimensions and crowdfunding adoption, suggesting that the magnitude of this relationship depends on the amount of EU grants awarded in a specific country. As a robustness check, we run a set of Poisson regressions with correlated random effects (CREs), confirming our main results.
... The limited research conducted thus far is mainly focused on the determinants of campaigns' success (e.g., Tosatto et al., 2019) and on the motivation to use crowdfunding (e.g., Huang, 2020). Boeuf, Darveau, and Legoux (2014), for example, investigate the success factors of projects in the theatre industry by using data from the UK-based platform Kickstarter. The authors show that symbolic rewards positively influence campaign success, increasing the amount of capital raised at the end of the campaign. ...
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The landscape of cultural and creative industries (CCIs) has been changing strongly because of new players who have entered the arena by reshaping financing strategies. This work represents a first attempt to describe and compare the European population of crowdfunding platforms used by firms and creatives to launch cultural and creative projects. Specifically, we provide an assessment of how and where cultural crowdfunding platforms emerge. We also explore the extent to which government expenditures on cultural services in the EU affect crowdfunding platform origin and development, finding evidence that cultural crowdfunding is more developed when public engagement in promoting CCIs is high. In contrast, we find evidence of a strong substitution effect when the attractiveness of a country for other alternative funding sources is low. The results reveal that the number of successfully funded projects is higher when the platform is not dedicated exclusively to cultural and creative projects. Finally, higher information transparency and the use of social networks foster the platform's operational performance.
... Although some form of crowdfunding was used before the diffusion of the internet [29], crowdfunding can generally be perceived as an emerging phenomenon based on the spread and development of informal and information technologies [29,30], especially in arts and culture [31]. Crowdfunding consists of a form of micro-financing that generally aims to collect small amounts of money from a large number of donors and uses the internet as its field of action [32]. ...
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This paper addresses the conditions that can facilitate the long-term effectiveness of civic crowdfunding fundraising strategies. While previous studies have provided a broad picture of the possible conditions for fostering effective fundraising strategies, most have considered the implications of fundraising only for management or only for cultural policy, neglecting an integrated approach that contemplates the needs of both. Thus, this work integrates cultural management and cultural policy perspectives by discussing a specific exploratory case study: Art Bonus, a cultural patronage tax incentive strategy introduced by the Italian government in 2014, which also includes civic crowdfunding features. To the best of our knowledge, Art Bonus is the first national civic crowdfunding platform supported by a national government. As an innovative and unique platform, its analysis is particularly relevant. This work analyzes the system’s functioning and the results obtained in its first years of operation (2014–2016) by accessing the public database relating to the donations transited through the platform. While the initiative effectively channeled more fundraising resources into the cultural sector, the results also illustrate potential points for improving such a system.
... Campaign duration is another key driver in determining crowdfunding success. According to Mollick (2014) and Lukkarinen et al. (2016), there is an inverse relationship between the campaign duration and its success: the lower the campaign duration the higher the chances of success will be, because lower duration contributes to create a sense of urgency among potential financiers (Boeuf et al., 2014). Zheng et al. (2014), on the other hand, failed to find a significant relationship between the campaign duration and its success. ...
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Purpose In recent years, crowdfunding is assuming an increasingly central role in the development of business projects as an alternative financing tool to traditional sources. This study analyses the role of communication in the success of crowdfunding campaigns in the restaurant sector in the European context. Design/methodology/approach This study conducts a regression analysis on a sample of 442 European restaurant crowdfunding projects launched on the Kickstarter platform in a time period spanning from 2014 to 2021. More specifically, this study uses a logistic regression model to test the impact of communication on the success of restaurant crowdfunding projects. Findings Empirical results suggest a strong impact of communication, declined in its different forms, on the success of restaurant crowdfunding campaigns. More specifically, they highlight a positive impact of the number of images, number of videos, readability and community orientation of the project description, number of comments and number of updates on the success of restaurant crowdfunding projects. Originality/value To the best of the authors’ knowledge, this study represents the first research that examines the effect of the communication on the success of restaurant crowdfunding projects conducted in the European context.
... The literature identifies one of the factors influencing reward crowdfunding campaigns as project presentation (e.g., Madrazo-Lemarroy et al., 2019;Mollick, 2014). When aiming to empower crowdfunding campaign communication, social venture entrepreneurs must provide a clear and interesting crowdfunding proposal to be published on the platform webpage (e.g., Boeuf et al., 2014;Gafni et al., 2019) in such a way that potential backers can understand and evaluate the characteristics of each venture and project (Colombo et al., 2015). That is, entrepreneurs must narrate the company's project, business, and story (Guo et al., 2019;Miglietta et al., 2015) to establish legitimacy and acquire capital (Martens et al., 2007). ...
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One of the most important challenges for social venture entrepreneurs is acquiring resources. Reward crowdfunding is considered a suitable tool for meeting the financing needs of social ventures, whose backers are particularly interested in firm ideas and core values rather than in collaterals or business plans. A strategic factor that is able to influence the outcome of crowdfunding campaigns is the entrepreneurial narrative. Very few scholars have examined the key factors that support a crowdfunding campaign, particularly those on reward-based crowdfunding platforms, and the effects of entrepreneurial narratives on investors’ decisions. Aiming to fill this research gap, this paper investigates how entrepreneurs in the technology industry describe their social ventures and projects on Eppela, an Italian reward-based crowdfunding platform. Thematic analysis was applied to detect the five following key factors of effective entrepreneurial narratives in reward-based crowdfunding campaigns for social ventures: 1) problem/need; 2) project; 3) product; 4) team; and 5) venture. Each key factor includes specific subfactors. Lexical data analysis was then performed to identify the following expected effects of the examined entrepreneurial narratives on potential investors, leading these investors to understand, trust, and approve the project proposal, and thus, finance the social venture’s project: 1) reassurance, 2) reliability, and 3) credibility. Based on these results, this study proposes an explanatory model about how to design effective entrepreneurial narratives to be presented to contribute as much as possible to the success of projects in crowdfunding platforms.
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As vertical crowdfunding platforms (e.g., cultural and creative crowdfunding) are gradually gaining widespread attention, it is vital to explore the determinants specific to their success. For this reason, drawing on the signal theory (i.e., combining project cultural background, peer review valence, and face information disclosure), we develop an econometric model to examine the success determinants of cultural and creative crowdfunding (CCCF) projects. A data set with 2877 real CCCF projects obtained from Modian.com is used for analysis. The Natural Language Processing (NLP) approach is used to calculate the sentiment and information entropy of reviews in crowdfunding projects, and an open-source image processing library is used to identify face information. Moreover, an instrumental variable is considered to address endogeneity problems. The empirical results show that cultural background and peer review valence in CCCF projects positively influence crowdfunding success, while initiators' real face information disclosure negatively influences crowdfunding success. Furthermore, the information entropy of peer reviews negatively moderates the influence of peer review valence on crowdfunding success. This research provides a new perspective, i.e., latent features in CCCF, to explore success determinants. In addition, this study contributes to guiding the CCCF platforms in developing appropriate strategies and helps to improve the initiator's chances of successful fundraising.
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The only book on contemporary issues which covers the arts and entertainment sectors, from social networking and Twitter, to reality TV and digital rights management.
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