Amanda Palmer : New Model or Casino Win?

[initialsBB]

Originally Posted by rack gear

It's the future of music when more than one person (not previously signed to a major label) can do it (raise $1m dollars).

Why $1 million? I don't think that's a typical budget for an independent label is it?

Originally Posted by rack gear

There we're 75,000 albums released in 2010, how many artists per year do you think can fund albums on Kickstarter?

223 musical projects received more than $20,000 in funding through Kickstarter since 2009. There are 929 musical projects up there, so about a quarter of them have broken the $20k mark. Just by browsing through, I would guess that maybe 10% of them are people I recognize as former major label artists. Out of those 223, only two of them are from the end of 2009, so for the past 2.5 years that's an average of 88 projects a year that raise more than $20k. Show me an independent label that puts out 88 releases each year.

Although to be honest, the actual number is probably a little lower than that. The thing about Kickstarter's all-or-nothing system is that it encourages a kind of mild fraud. If you ask for $20,000 and people have pledged $15,000 with only a day or two to go, you might as well have a "friend" donate $5000 so that you cross the 100% threshold and get the other $15k. Otherwise you get nothing. So I would be skeptical of all of the projects that have 105% or 101% funding, which is quite a few of them.

[rack gear]

Originally Posted by initialsBB

Why $1 million? I don't think that's a typical budget for an independent label is it?

similar spends / investments are not uncommon for labels the size of roadrunner, epitaph, subpop, others... keep in mind that $1m is covering more than album production, it's covering the operating costs of her "team" essentially, a label staff... and, it's also offsetting some of her tour support costs. So when you drill down into it, I think the trade off really is, she owns her rights, it's sweat equity.

She puts in the labor and raises the investment capital and she get's to own her rights. Other than raising the money online, this does not to be too different from other artists funded/founded labels such as Perfecto, Projekt, Righteous Babe, Epitaph (in it's early days), etc.

Originally Posted by initialsBB

223 musical projects received more than $20,000 in funding through Kickstarter since 2009. There are 929 musical projects up there, so about a quarter of them have broken the $20k mark.

the big question is, how does that $20k play out over the life of the record, and the needs of a band over say a year, or two years?

Originally Posted by initialsBB

Just by browsing through, I would guess that maybe 10% of them are people I recognize as former major label artists. Out of those 223, only two of them are from the end of 2009, so for the past 2.5 years that's an average of 88 projects a year that raise more than $20k. Show me an independent label that puts out 88 releases each year.

not one label, but certainly way more than that as a community... there were 75,000 album releases in 2010, the majority of those on indie labels as the majors are dramatically scaling back new releases.

Originally Posted by initialsBB

Although to be honest, the actual number is probably a little lower than that. The thing about Kickstarter's all-or-nothing system is that it encourages a kind of mild fraud. If you ask for $20,000 and people have pledged $15,000 with only a day or two to go, you might as well have a "friend" donate $5000 so that you cross the 100% threshold and get the other $15k. Otherwise you get nothing. So I would be skeptical of all of the projects that have 105% or 101% funding, which is quite a few of them.

I have nothing against Kickstarter in principle. My caution is for mistaking it as (yet again) something it is not. Recognizing it for what it is, makes it useful. Pretending it's something it is not, is going to lead to a lot of disappointment.

I'd love to see some 2 year case studies of say the top 20 kickstarter financed music projects and really see what they look like. That would be the way to determine 1) if a profitable model actually exists, and 2) what is required to achieve it.

The web/internet folks are desperate to show a sustainable model that is actually working, but in fact, professional musicians have been suffering for over a decade following one half baked theory after another... at some point the truth is pretty obvious.

I also think that artists that get money from kickstarter are less likely to see legally paid album/music sales & downloads. And, even if all of this is true, it's still not acceptable to illegally exploit an artists work for profit without consent.

[grawk]

An important thing to note is that Amanda's last "real" record was on Roadrunner, produced by Ben Folds, and she netted either $0 or close to $0 on the record. So Kickstarter does seem to be a viable alternative for mid-level artists who were getting screwed over in the label system.

Then you get folks like Natalie Dawn, Kim Boekbinder, and Sxip Shirey who are using kickstarter for smaller scale projects. Between kickstarter and similar ways to raise funding, and bandcamp and similar ways to distribute music, it's getting to be more possible to produce music that you continue to own, and earn a reasonable living doing so.

This is the future, at least a good part of it.

[rack gear]

Originally Posted by grawk

An important thing to note is that Amanda's last "real" record was on Roadrunner, produced by Ben Folds, and she netted either $0 or close to $0 on the record.

how do you know? and how could she have netted $0 if she didn't pay anything to create it?

Originally Posted by grawk

So Kickstarter does seem to be a viable alternative for mid-level artists who were getting screwed over in the label system.

we'll see, I think it offers an option, but it's not a cure all for everyone. screwed how exactly?

Originally Posted by grawk

Then you get folks like Natalie Dawn, Kim Boekbinder, and Sxip Shirey who are using kickstarter for smaller scale projects. Between kickstarter and similar ways to raise funding, and bandcamp and similar ways to distribute music

yeah...

Originally Posted by grawk

it's getting to be more possible to produce music that you continue to own, and earn a reasonable living doing so.

everyone keeps saying that, but yet the numbers just don't bare it out.

Originally Posted by grawk

This is the future, at least a good part of it.

I'm not sure about that. Again, I don't have a problem with Kickstarter in principle, but calling it the future (and of what?) remains to be seen.

I'm all for supporting those for whom it works, but it won't work for everyone and we don't know that it actually creates sustainable professional creative careers.

My wife sells stuff on etsy, there are some professional people on etsy who have managed to make it a professional business. But the majority of people on etsy are hobbyists, and mostly (like my wife) operating at a net loss because it's not their primary source of income, it's a hobby.

I'm all for people getting paid, so one more time, I have no problem with Kickstarter in principal, I would just advise caution in predicting the future, because the result of every other prediction for musicians regarding the internet has resulted in a net loss of professional musicians...

[grawk]

Amanda has talked in great length on her blog about her experiences with Roadrunner. Zoe Keating has also posted about her experiences on and off labels. In today's world, it seems like you have to be pretty mainstream to make a living making music while working for a non-indy label.

[initialsBB]

Originally Posted by rack gear

similar spends / investments are not uncommon for labels the size of roadrunner, epitaph, subpop, others.

Right, so a few of the largest indies / major label subsidiaries.

Originally Posted by rack gear

the big question is, how does that $20k play out over the life of the record, and the needs of a band over say a year, or two years?

That's not at all relevant to the viability of Kickstarter as a funding mechanism. How the money is spent is up to the artists, and whether or not they are successful is ultimately down to what kind of business they're running, if they've budgeted properly, etc. You can't blame Kickstarter for the inevitable failures.

Originally Posted by rack gear

not one label, but certainly way more than that as a community... there were 75,000 album releases in 2010, the majority of those on indie labels as the majors are dramatically scaling back new releases.

My point is that in just its first couple of years of existence, Kickstarter has already had the impact of a couple of medium-to-large indie labels combined. It's not going to replace the entire label system but that doesn't mean it's useless. It's not "the new model" but it's not a "casino" either. Those types of false dichotomies are not helpful at all.

[John Eppstein]

Originally Posted by initialsBB

Why $1 million? I don't think that's a typical budget for an independent label is it?



223 musical projects received more than $20,000 in funding through Kickstarter since 2009. There are 929 musical projects up there, so about a quarter of them have broken the $20k mark. Just by browsing through, I would guess that maybe 10% of them are people I recognize as former major label artists. Out of those 223, only two of them are from the end of 2009, so for the past 2.5 years that's an average of 88 projects a year that raise more than $20k. Show me an independent label that puts out 88 releases each year.

Although to be honest, the actual number is probably a little lower than that. The thing about Kickstarter's all-or-nothing system is that it encourages a kind of mild fraud. If you ask for $20,000 and people have pledged $15,000 with only a day or two to go, you might as well have a "friend" donate $5000 so that you cross the 100% threshold and get the other $15k. Otherwise you get nothing. So I would be skeptical of all of the projects that have 105% or 101% funding, which is quite a few of them.

While one independent label probably won't put out 88 albums in a year, the total number of albums released by "serious" indie labels (those that are real businesses, not simply self-releasing artists) is certainly much larger. Vastly so, in fact.

So comparing Kickstarter as a model to the indie label system is, well, shall we say somewhat spurious?

[John Eppstein]

Originally Posted by grawk

An important thing to note is that Amanda's last "real" record was on Roadrunner, produced by Ben Folds, and she netted either $0 or close to $0 on the record. So Kickstarter does seem to be a viable alternative for mid-level artists who were getting screwed over in the label system.

Really?

Says who?

What do you mean "netted?

Do you mean royalties paid? What about her advance? Did part of the advance pay for her living expenses during that period? If so, she definitely netted more than $0. Did it cover her touring costs? It costs quite a bit of money up front to put on a real tour. You need to have your expenses covered in advance and have enough cash on hand to cover emergencies.

[kennybro]

Good for her. A nice tool for artists who made a name on the major dime, and now want to bust out and control the whole pie.

Pretty much a dead end for people who are not previously well-known.

Not much different than starting your own record company, but asking the public to provide the initial investment instead of the company.

The process feels like a public television pledge-a-thon. "Time's running short! We need a million by midnight, or we're off the air!!"

Same story, different process. Everyone needs money before they can do anything substantial.

[initialsBB]

Originally Posted by John Eppstein

So comparing Kickstarter as a model to the indie label system is, well, shall we say somewhat spurious?

LOL, agreed.

Originally Posted by John Eppstein

While one independent label probably won't put out 88 albums in a year, the total number of albums released by "serious" indie labels (those that are real businesses, not simply self-releasing artists) is certainly much larger. Vastly so, in fact.

Doh!

[bgrotto]

Originally Posted by grawk

An important thing to note is that Amanda's last "real" record was on Roadrunner, produced by Ben Folds, and she netted either $0 or close to $0 on the record. So Kickstarter does seem to be a viable alternative for mid-level artists who were getting screwed over in the label system.

Then you get folks like Natalie Dawn, Kim Boekbinder, and Sxip Shirey who are using kickstarter for smaller scale projects. Between kickstarter and similar ways to raise funding, and bandcamp and similar ways to distribute music, it's getting to be more possible to produce music that you continue to own, and earn a reasonable living doing so.

This is the future, at least a good part of it.

It's good to hear you mention Kim! As it happens, I recorded and mixed a full length for which she raised something like $15k (can't remember the exact number, to be honest, but it was near there).

She's quite an awesome lady.

[rack gear]

Originally Posted by initialsBB

My point is that in just its first couple of years of existence, Kickstarter has already had the impact of a couple of medium-to-large indie labels combined. It's not going to replace the entire label system but that doesn't mean it's useless. It's not "the new model" but it's not a "casino" either. Those types of false dichotomies are not helpful at all.

I'm all for people getting paid, so one more time, I have no problem with Kickstarter in principal, I would just advise caution in predicting the future, because the result of every other prediction for musicians regarding the internet has resulted in a net loss of professional musicians...

[grawk]

Pretty sure the predictions didn't put anyone out of work. So the reality of the world has to be dealt with.

[initialsBB]

Originally Posted by rack gear

I'm all for people getting paid, so one more time, I have no problem with Kickstarter in principal, I would just advise caution in predicting the future, because the result of every other prediction for musicians regarding the internet has resulted in a net loss of professional musicians...

That's a ridiculous claim. So all of these websites and services like Kickstarter, Facebook, CDbaby, etc. that you seem to dislike are to blame for the loss of professional musicians? Not that other thing that we're not supposed to talk about? Just because that bad thing exists on the internet doesn't mean that every other aspect of the internet is guilty by association.

At any rate, I'm not trying to predict the future, I'm looking at Kickstarter's past performance. You say you have no problem with Kickstarter "in principle" although you label the people who have succeeded there as "casino wins", implying that they just got lucky and don't have a genuine fan base. Forget "princple", the reality is that there are almost 400 musical projects that have received over $15,000 in funding over the past 2.5 years. Set aside how they attracted that many donations, what they're going to spend the money on, or how their project will pan out in the future, the simple fact is that's a lot of money going directly to musicians to fund their musical projects. How can you possibly spin that as a bad thing?

If I had to make a prediction, I think it's fairly safe to assume that those numbers will continue to grow as these projects gain more publicity and more artists try to use the service. The odds of success may become more remote as more artists try it, but the overall numbers will almost certainly rise.

There may be some kinks in the system. If enough projects fail to complete and ship what they promised their fans, then a backlash against Kickstarter may start to gain traction. But it seems to me like that's a solvable problem. I think the basic concept of fan-funding is promising enough that even if Kickstarter fails, competitors will fill the void. I looked through the huge list of "Kickstarter Sucks" posts that you googled and posted upthread and I honestly didn't find any of them very convincing. I'm also not sure why you would be looking for all of that anti-Kickstarter sentiment anyway if you don't have a problem with the site.

[rack gear]

Originally Posted by initialsBB

That's a ridiculous claim. So all of these websites and services like Kickstarter, Facebook, CDbaby, etc. that you seem to dislike are to blame for the loss of professional musicians? Not that other thing that we're not supposed to talk about? Just because that bad thing exists on the internet doesn't mean that every other aspect of the internet is guilty by association.

Fair enough, but I never said as much anyway. I'd be happy to see how effective the good is without the bad... the good isn't helping to offset the bad, which is what I think most people are trying to claim.

Originally Posted by initialsBB

At any rate, I'm not trying to predict the future, I'm looking at Kickstarter's past performance. You say you have no problem with Kickstarter "in principle" although you label the people who have succeeded there as "casino wins", implying that they just got lucky and don't have a genuine fan base. Forget "princple", the reality is that there are almost 400 musical projects that have received over $15,000 in funding over the past 2.5 years. Set aside how they attracted that many donations, what they're going to spend the money on, or how their project will pan out in the future, the simple fact is that's a lot of money going directly to musicians to fund their musical projects. How can you possibly spin that as a bad thing?

I don't think it's bad thing if people are getting paid. I just don't think the "model" has been thought through completely, nor do I think it's solution for every artist or a cure all. I certainly am interested in researching more case studies and long term effects.

Originally Posted by initialsBB

If I had to make a prediction, I think it's fairly safe to assume that those numbers will continue to grow as these projects gain more publicity and more artists try to use the service. The odds of success may become more remote as more artists try it, but the overall numbers will almost certainly rise.

I think it's interesting that you think the odds of success will decrease as the amount of people that try it increases. That's kind of the typical Web 2.0 pyramid scheme. I hope that's not the case. But I just can't help but think that the net effect of Kickstarter really won't be much different than the net effect of Tunecore, or even Etsy...

What I really do like about Kickstarter is that it's very Darwinian... the bar to entry is definitely higher than say the $50 a year to put an album out through Tunecore. So there's certainly something to be said for that...

Originally Posted by initialsBB

There may be some kinks in the system. If enough projects fail to complete and ship what they promised their fans, then a backlash against Kickstarter may start to gain traction. But it seems to me like that's a solvable problem. I think the basic concept of fan-funding is promising enough that even if Kickstarter fails, competitors will fill the void. I looked through the huge list of "Kickstarter Sucks" posts that you googled and posted upthread and I honestly didn't find any of them very convincing. I'm also not sure why you would be looking for all of that anti-Kickstarter sentiment anyway if you don't have a problem with the site.

I really don't... I'm just being realistic about it.

Those bands who raised $20k each which is an entry level indie label deal still have to pay for the all the other things a label would provide after they make the album... like promotion, marketing, PR, tour support, etc... That's where I think the numbers become deceiving. I think kickstarter could work well with the revenue from recorded music sales, but I don't see it as a substitute/replacement for recorded music sales, and I think that's there the greatest misunderstanding is about how to use it.

How many people are going to pay the band on Kickstarter AND buy the album? A band has to sell 2,857 albums @ 7.00 each to make $20k. I'm just curious of what the three year arc of a Kickstarter band is...


http://www.nextbigsound.com/7498/sta...lmer#7498-fans

http://www.nextbigsound.com/7498/sta...-316588---fans

http://www.nextbigsound.com/charts

[rack gear]

Originally Posted by grawk

Pretty sure the predictions didn't put anyone out of work. So the reality of the world has to be dealt with.

that can be disputed:
If the Internet is working for Musicians, Why aren’t more Musicians Working Professionally? | The Trichordist

[John Eppstein]

Originally Posted by initialsBB

That's a ridiculous claim. So all of these websites and services like Kickstarter, Facebook, CDbaby, etc. that you seem to dislike are to blame for the loss of professional musicians? Not that other thing that we're not supposed to talk about? Just because that bad thing exists on the internet doesn't mean that every other aspect of the internet is guilty by association.

WHOA THERE, Big Feller!

I haven't seen anywhere that anyone, Rack or otherwise, has claimed that either Kickstarter or CDBaby has had anything to do with putting musicians out of work. Or Facebook, either.*

What has been suggested is that they are probably not a viable solution to the problem.

That's a lot different than being the cause of it.


* - The Facebook IPO may very well be the cause of a lot of people losing a good chunk of their savings, but that doesn't have a lot to do with musicians.

[chrisso]

Originally Posted by grawk

So the reality of the world has to be dealt with.

And one great way of dealing with realities is by speaking out. Standing up for yourself, and your rights.

[grawk]

Originally Posted by chrisso

And one great way of dealing with realities is by speaking out. Standing up for yourself, and your rights.

Kickstarter isn't the pirate bay. It's a way to raise money without going hat in hand to the music labels. It's not for everyone, but at least you have some idea where the money goes, and get to pick your own accountants. Piracy affects everyone, so artists need to connect with their fans and get them to want to pay for their music. Suing your fans damn sure won't do that.

[grawk]

Originally Posted by rack gear

that can be disputed:
If the Internet is working for Musicians, Why aren’t more Musicians Working Professionally? | The Trichordist

How does that dispute what I said? The predictions didn't change the industry. The industry changed. A new way to succeed has to be found.

[chrisso]

Originally Posted by grawk

Kickstarter isn't the pirate bay.

I'm not against Kickstarter.

[John Eppstein]

Originally Posted by grawk

Kickstarter isn't the pirate bay. It's a way to raise money without going hat in hand to the music labels. It's not for everyone, but at least you have some idea where the money goes, and get to pick your own accountants. Piracy affects everyone, so artists need to connect with their fans and get them to want to pay for their music. Suing your fans damn sure won't do that.

Whatever are you talking about? Nobody mentioned anything like that. The two have nothing to do with each other - except for the possibility that using Kickstarter may cause fans to not want to pay for music on the grounds that it's already been paid for.

That's not kickstarter's fault, but some people will use anything, no matter how flimsy, as an excuse to justify bad behavior.

Kickstarter is an interesting avenue for indie funding, provided you have a high enough profile in your market to take advantage of it.

[John Eppstein]

Originally Posted by grawk

How does that dispute what I said? The predictions didn't change the industry. The industry changed. A new way to succeed has to be found.

Actually, no. The only thing that changed was an uncontrolled outbreak of rampant thievery when the government was looking the other way.

But we can't discuss that here now.

A change in delivery medium does not equate to a basic change in the industry.

A proliferation in amateur output doesn't either because the majority of consumers simply aren't interested in that. And this isn't intended to mock or put down anybody, it a simple statement of plain fact. Occasionally an exemplary artist or act will rise out of the great mass of average players but that's no different than it's ever been, except that it's more difficult now.

The way to succeed is essentially the same as ever - hard work.

[initialsBB]

Originally Posted by John Eppstein

I haven't seen anywhere that anyone, Rack or otherwise, has claimed that either Kickstarter or CDBaby has had anything to do with putting musicians out of work. Or Facebook, either.*

RG said "the result of every other prediction for musicians regarding the internet has resulted in a net loss of professional musicians." Wouldn't some of those predictions include things like: artists can communicate to fans more easily and directly through social media platforms; artists can fund their recordings directly from fans through pre-orders via sites like Kickstarter; or independent artists can easily distribute their music inexpensively to a worldwide audience using the internet.

Those tools and opportunities are all net positives for musicians. I don't care if they don't replace the label system entirely. If they only result in one great artist being exposed to a larger audience then they will be worthwhile in my opinion. But none of these things can be said to have put musicians out of work!

I think it makes sense to be cautious when it comes to optimistic predictions about the future. But I think it also makes sense not to worry too much about every stupid claim made by bloggers or forum trolls. Just because some idiot might claim that "Kickstarter will put all labels out of business!!!" doesn't mean that Kickstarter themselves believe that or promote themselves in that way, or that everyone who uses the site or defends the site believes that to be true.

There is no grand unified tech conspiracy where all of these sites are working together to dupe hobbyist musicians and undermine copyright law. And yet any time any website or service is mentioned in the music business forum you can bet that some people will just immediately, reactively state that it's useless and try to measure it against the successes of major entertainment conglomerates.

[John Eppstein]

Originally Posted by initialsBB

RG said "the result of every other prediction for musicians regarding the internet has resulted in a net loss of professional musicians." Wouldn't some of those predictions include things like: artists can communicate to fans more easily and directly through social media platforms; artists can fund their recordings directly from fans through pre-orders via sites like Kickstarter; or independent artists can easily distribute their music inexpensively to a worldwide audience using the internet.

Those tools and opportunities are all net positives for musicians. I don't care if they don't replace the label system entirely. If they only result in one great artist being exposed to a larger audience then they will be worthwhile in my opinion. But none of these things can be said to have put musicians out of work!

I think it makes sense to be cautious when it comes to optimistic predictions about the future. But I think it also makes sense not to worry too much about every stupid claim made by bloggers or forum trolls. Just because some idiot might claim that "Kickstarter will put all labels out of business!!!" doesn't mean that Kickstarter themselves believe that or promote themselves in that way, or that everyone who uses the site or defends the site believes that to be true.

There is no grand unified tech conspiracy where all of these sites are working together to dupe hobbyist musicians and undermine copyright law. And yet any time any website or service is mentioned in the music business forum you can bet that some people will just immediately, reactively state that it's useless and try to measure it against the successes of major entertainment conglomerates.

I think you're misinterpreting what he said.

What he said was that those things have failed as mechanisms for compensating for the loss of jobs and revenue. He didn't say they caused the losses.

Those are not the entities we're talking about when we talk about the tech industries causing the losses - those things are barely part of the tech industries at all.

When we talk about tech causing the losses we mean the corporate behemoths like Google and Spotify, as well as those service providers that obliquely encourage <redacted> as a reason for consumers to purchase bandwidth. When an ISP tells you how many thousands of MP3s and hundreds of movies you can download in a month with their service it's pretty damn obvious they're not talking about legal usage.

[initialsBB]

Originally Posted by rack gear

I think it's interesting that you think the odds of success will decrease as the amount of people that try it increases. That's kind of the typical Web 2.0 pyramid scheme.

No, the same thing happens in any business or art form. It's basic supply and demand. If there are 10 restaurants in your town and only 5 of them are profitable, what will happen if suddenly 100 new restaurants open up? Will 50 of them be profitable? Unlikely.

That's not a pyramid scheme. I think some of you guys need to learn what a pyramid scheme is. Facebook is not a pyramid scheme either. I challenge you to find one single "web 2.0" business that can be accurately described as a pyramid scheme.

Originally Posted by rack gear

Those bands who raised $20k each which is an entry level indie label deal still have to pay for the all the other things a label would provide after they make the album... like promotion, marketing, PR, tour support, etc... That's where I think the numbers become deceiving.

It's quite possible that some of these artists really don't understand the finances involved and aren't prepared to run their own business. I could see a band not really realizing all of the things their label does for them, and then looking at the recording budget alone and trying to kickstarter their next album based on a number that's way too low and not factoring in manufacturing, shipping, publicity, etc.

Maybe a better version of something like Kickstarter would actually provide educational resources for the people submitting pitches so they're better prepared for what they're getting into. Maybe Kickstarter should require an actual business plan from the people submitting proposals. I think there are a lot of ways that the basic idea could be improved.

[initialsBB]

Originally Posted by John Eppstein

I think you're misinterpreting what he said.

I think I'm interpreting it pretty strictly and fairly: every prediction for musicians regarding the internet has resulted in a net loss of professional musicians. If that's not what he meant then he shouldn't have said it.

[John Eppstein]

Originally Posted by initialsBB

I think I'm interpreting it pretty strictly and fairly: every prediction for musicians regarding the internet has resulted in a net loss of professional musicians. If that's not what he meant then he shouldn't have said it.

No, there is ONE underlying factor that has caused the loss and we can't discuss it here.

All that other stuff has simply been unable to compensate for that overarching reality. The "new business models" have failed to perform as touted. That doesn't make them the cause, it simply means they're not the cure.

[grawk]

The cure would be to put out music people want to listen to, and give them a reason to pay for it. The big change is that the odds of winning the music lottery aren't as good today as they were in the 80s. If anything, it's easier for niche artists to connect with their fans now than ever before. Those people are doing better in today's world. It's less game theory now, and more reasonable reward for reasonable effort. Kickstarter, and cdbaby, and bandcamp all help that.

[John Eppstein]

Originally Posted by initialsBB

That's not a pyramid scheme. It think some of you guys need to learn what a pyramid scheme is. Facebook is not a pyramid scheme either. I challenge you to find one single "web 2.0" business that can be accurately described as a pyramid scheme.

Of course it's a pyramid scheme. The only thin that keeps the prices of many tech stocks high is an unending supply of suckers who think the prices will go even higher. Eventually the supply of suckers will run out and there will be a major stock market crash - and it really won't be pretty.

Facebook is an advertising pyramid - they have (at present) an unending stream of potential advertisers who see the rapidly growing numbers of FB users and don't understand that FB ads are singularly ineffective (because people don't go on FB to buy stuff.) They waste money on FB ads, the ads don't work, they tweak the ads and they still don't work after a year or two the stop advertising on FB. But as long as FB's membership continues to grow and as long as there are more companies that haven't blown a wad on FB ads the ad revenue will continue to grow. However, neither reservoir (members or advertisers) is infinite and as soon as one or both reach saturation the pyramid will collapse - unless FB has been able to transition their core source of revenue to something else which does not at present appear likely.

It's EXTREMELY TELLING that all the major insider stockholders of FB have registered intentions to sell major portions of their holdings in a relatively short time after the IPO. Much, much shorter than is normal in such situations and much, much larger percentages of their total holdings. This indicates that the top people in FB have no confidence in the long term viability of the company and they're getting out while the getting is good.