Crowdfunding shows principles for disruptive business models

Self-publishing used to be called ‘vanity publishing’. But the arrival of the Internet, the ability to sell e-books, and the technology to cost-effectively produce small print-runs, made it increasingly popular.

Now an online publisher unbound.co.uk has taken the model one step further.

Interested readers can visit their website and review potential books being proposed. If they find one they are interested in they can register that interest by clicking, and using a sliding scale to pay, say, £10 for an electronic copy of the book, £20 for a hardback copy, and more to attend the launch party or meet the author over lunch.

Once the book is fully financed, publication goes ahead.

There are seven billion people in the world and this model allows small numbers of them who share an interest to get together to make a project happen. It also allows them to engage in the project to varying degrees, depending on their level of interest and enthusiasm.

As a publishing model it is likely to become more popular: partly because Unbound is promising to share a larger percentage of the profits (50:50) with the authors; and partly because it brings new value to customers that the existing models do not provide.

And it is, surely, also a model which could be applied to many industries, and allow not only to customers but also shareholders to participate more ‘intimately’ (subject to investment legislation). Other similar industries that spring immediately to mind are movies, television programmes and music. There was also a case study from a few years ago where a similar model was applied to beer — customers said what kind of beer they wanted, committed to buy a certain number of bottles. The brewer managed the customer-engagement process and then produced the beer.

Lessons to be learned from this story:

  • It is possible to make a profit from a smaller number of customers than has previously been thought profitable
  • The key lies in finding a group of people who are interested in a particular ‘project’
  • And allowing them to participate to differing levels of engagement
  • Delivery success skills for this kind of project include a more intimate kind of marketing — ‘community engagement’ rather than ‘customer management’
  • But the levels of value created per customer can be higher
  • And the value recognised by the creative individual can be higher too

How might you apply this in your industry?

How might your competitors go about applying it?

Crowdfunders turn another page in publishing,” Financial Times, 11 November 2011.

One thought on “Crowdfunding shows principles for disruptive business models

  1. Good stuff. I didn’t know about Unbound. Sort of a Lulu meets Ulule … Lulule? (Doesn’t work so nicely with Kickstarter) (Lickstarter??)

    There are so many fantastic online systems like this emerging, along the “hey wouldn’t it be brilliant if…” model. Simple ideas.

    Applied in architecture? One could imagine a progressive developer inviting people to pre-buy into an eco-housing development. Say 20 buyers for a similar house type. It could even be dispersed rather than on one site (this happens in Germany already, but there they are less tied to location and their Planning system doesn’t get in the way.)

    20 doesn’t sound like many but Harry Handelsman only needed 23 interested buyers and a bold vision to get Manhattan Loft Corporation off the ground. They’ve just redone the magnificent front of St Pancras station.

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