Network+Economy

= Network Economy & Kickstarter = toc

**Network Economy**
Kickstarter has harnessed the evolution of web technologies, tapping into the value within network economy to have greater potential socially, politically and economically. Allowing democratic and participatory potential which affords peer to peer and community interaction within the development and start up process of innovation, music, art and technologies.

When we change the way we communicate “and since communication is the basis of culture” (Kelly, 1997) we open ourselves to opportunities that are not solely defined by hierarchical commercial institutions and medias. Within this network economy, “significance precedes momentum; in technology the tipping point is much lower than… word of mouth” (Kelly, 1997) and Kickstarter is a great economic example of utilising the brokerage system to economise and connect the network. The political nature of this system, crowdfunding and the 'harnessing of the power of crowds" ( Leszczynski, 2012 ) has been the redistribution of the way innovation and creative arts happen. These networks allow users to tap into and utilise the "intangible capital" (Flew, 2008, p.196) of knowledge that resides within people and allow it to manifest through mediums such as Kickstarter contributing to the new formation of the political, economical and societal structures of the Technological Age.



What Kickstarter does beautifully as Kelly outlined as the potential of networks creates ‘the ideal environment for cultivating the unknown is to nurture the supreme agility and nimbleness of networks’ (Kelly, 1997) within the effects of the long tail of network economy. This graph reflects the culture that Chen, Adler and Stickler wish to encourage, and the culture of their network allows it to be a perfect platform for those inventions and creations to connect with supporters and users that align themselves within the culture they foster.

As the law of plentitude pointed out by Kelly outlines the "mathematicians have proven that the sum of a network increase as the square of the number of members" (Kelly, 1997). Kickstarters digital community afford this rule of plenty, especially as the success of launched products make it to other medias as an example of another success or failure story. In the world of network economy, more gives more. This is seen in effect when projects in Kickstarter exceeded their initial project goal as it reflects the social good or desire for the project pitched in Kickstarter as seen by the image above. Due to the rich interactivity and plasticity of network economy, you have to adapt, be innovative and stay on top in case another entrepreneur kicks you from the king of the mountain. (Kelly, 1997) So as any economy reflects there are the strong projects that exceed expectations of funding within the network economy and then others that fail to inspire and capture attention within this network and therefore fail to launch.

Prior to Kickstarter entrepreneur's relied on the start up funding from their immediate social and family pool, “crowdfunding is to tap and motivate a large audience, with each individual member of the crowd contributing only little, but with a high combined impact” (Lehner, 2013, p.4) this spread of interest and contribution allows the risk and potential of any project to be distributed. As the organic spread of network economy has effect in this platform, ‘wealth flows to innovation, not optimisation’ (Kelly, 1997) and Kickstarter is the platform of innovation, as “each project attracted 1700 crowdfunders on average” (Belleflamme, et.al.,2013, p.7) launching the entrepreneurs to access capital and socially acknowledgement not only to launch their project but to see it develop beyond seed idea. Through “peer effects and recommendations, not network externalities are driving the success of crowdfunded projects” (Sorensen, 2012, p.729) as most entrepreneurs with a project within Kickstarter, have brought with them their own network and what Kickstarter has allowed them is social credibility for their project and a trust in backing them. (Chafkin, 2013) As the network economy within Kickstarter defines "it is not only the material capital, but very much also the cultural capital that a project is able to accumulate” (Sorensen, 2012, p.741) determining whether the project gets off the ground and fundamentally succeeds.

The political aspect of crowdfunding is within it moving innovation previously restricted by hierarchical funding institutions, with still some degree of gatekeeping within publishing and promoting companies, to allow ideas to fully flourish in society. Though political and social changes to Senate Bill 1970 was adjusted to cover crowdfunding to include a “the new crowdfunding exemption is conditioned on mandated disclosures that gives investors the opportunity to evaluate the merits of investments” (Hazen, 2012, p.1769) and the and JOBS Act 2012, to allow investors stocks in Kickstarter launched projects. (Chafkin, 2013) But network economy and the economics of the internet means that it is easier not only for innovators but end users, proprietors have a built economy to harness that makes the possibility for success to be determined through the networks gathered online. Network economy is changing how success is determined within innovation and also through other medias.