A Taxonomy of UK Crowdfunding and Examination of the Potential of Trust and Empathy in Project Success

The proposed research aims to comprehensively scope the UK online crowdfunding field and develop a 'taxonomy of UK crowdfunding'. This will map out current activities across domains (e.g. investment, reward-driven, philanthropy), economic scale, geographic location and economic 'reach' etc. to create a clear picture of the heterogeneity of the developing online crowdfunding sector in the UK. It will do this through a systematic search and review of existing crowdfunding platforms and related literature from across academic publications, crowdfunding practitioner reports, policy, reports produced by the charitable economic innovation and development sectors (e.g. NESTA) and business reports. A 'taxonomy of crowdfunding' will be developed which identifies and defines domains of activity against, for example, funders' motivations, to develop an understanding of the success factors in bringing projects to fruition. Following this, qualitative analyses will explore communicative exchanges within the social networks that are generated on crowdfunding platforms around particular projects, among and between project 'founders' and project 'funders'. Preliminary empirical research on Kickstarter by Briggs (2013), and analyses elsewhere of the 'success signals' of funded projects on this platform (Mollick, 2013) suggest that communication and building of a sense of community by project founders, with and among funders plays an important role in project success. In this context success is measured as a project idea presented on the site attracting enough backers to reach its stated funding goal and go forward to realisation. Building on this, and drawing from media and visual communications theories around mediated forms of representation, and marketing theories on trust signaling and commercial value networks, the research will examine if and in what ways trust is built by project founders within project networks and any potential impact on funders' behaviour, including buying and investment decisions. The proposed research will also explore the potential affective role of audio visual media, particularly in relation to empathy; and examine if and how founders signal 'pitch trustworthiness' in promoting their projects to potential funders using mediated forms e.g. video.

The research will focus on UK-based platforms, and to a lesser extent international sites that enable use by UK-based founders. The proposed research aims to develop greater understanding around the potential of the crowdfunding model: from economic, social and cultural perspectives, while identifying its limitations and specific pitfalls for particular sectors and domains.

Producing a clear picture of current crowdfunding in the UK and mapping its characteristics with regard to domains of activity and geographic and economic scope, while also eliciting insights into the potential of 'ERT' in leveraging project success (or otherwise), will have potential benefit for public, private and third sector organisations and individuals.

The public sector include: Government departments BIS and DFID; MPs, including the Westminster Crowdfunding Forum; and the Northern Ireland Executive and DETI. The Digital Economy has generated a host of as yet unregulated but rapidly growing novel investment opportunities through various micro-finance models which are still establishing: the research potentially impacts other related bodies such as financial and internet regulators FSA and OFCOM. The work also potentially has value for policymakers working in economic policy.

The research will impact on a wide range of academic disciplines but particularly those involving research into new business models and ways in which services and products are marketed, financed, produced and distributed.

The project will establish and develop a new research team across a Newcastle-upon-Tyne-Northern Ireland or 'NCL-NI' corridor, and further develop and train-up researchers.

The research potentially has value by contributing to an informed debate on the sustainability of the Cultural Industries. In the regions, this is increasingly a political issue as London is perceived to be "eating up" limited public cultural funding resources (Powell, Gordon and Stark, 2013). As cultural organisations adopt entrepreneurial and charitable funding models to sustain what was previously publicly-funded, the research will impact across organisations such as Arts Council England, and hundreds of national and regional arts and cultural charities and associated Community Interest Companies.

Similarly, by generating discussion and raising awareness around micro-funding opportunities, the research will impact charities, non-profit and third sector organisations.

Another important areas of potential impact includes the financial services sector, businesses and business consultants. And related to this: regional investment organisations e.g. Invest NI; think tanks, and charitable innovation organisations such as NESTA, which has produced reports on crowdfunding and other new alternative financing models.

The Creative Industries are often discussed (including by the British Government and NI Executive) as a future area of jobs growth. Already prominent on reward-driven crowdfunding sites is a spectrum of creatives (artists, product designers, filmmakers, gaming companies etc.) who adopt this financing model in their attempts to enable economic and cultural sustainability. The research will help to inform project founders in the Creative Industries on approaches to crowdfunding products and servcies. The research potentially impacts on the critical issue of economic sustainability more broadly, on jobs creation and changing patterns of labour. While crowdfunding provides opportunities, it is also associated with trends towards informalisation and 'precarity' of labour. The research then potentially impacts on researchers in media theory and sociology.