Wattpad, the Toronto-based social network based on writing and reading, has just announced a new crowdfunding platform called “Fan Funding” which offers authors on its network the chance to leverage their huge followings for raising capital towards creative works. It’s like a Wattpad-housed Kickstarter for creative projects, but there’s good reason Wattpad users would use it over the more established alternatives.
“For us, we are one of the first if not the first creative social networks that’s utilizing crowdfunding as one of our business models,” Wattpad founder and CEO Allen Lau said in an interview. “The reason that we’re different than Kickstarter is that if you want to start a project on Kickstarter, you basically ask your relatives, neighbors and friends to fund you, and then expect strangers to chip in. In our case, because we’re a social network ourselves, the writes that are participating in Fan Funding most likely have fairly sizeable fanbases already.”
Wattpad has a very active community, with over 16 million unique monthly views and around 4 billion minutes spent on site per month by users, according to the most recent numbers from Lau. And authors on the site have amassed considerable readerships: user MercyRose (Tara Sampson), for instance, who is one of the pilot users of the Fan Funding platform, has 55,316 followers, and managed to fully fund her project already, before the site has even had a public launch.
Fan Funding projects work on an all-or-nothing funding basis, and run for a standard 30 day term. Wattpad members pledge to the projects, and the story that is funded will always be made available for free on the Wattpad platform, so the core identify of the network as a place for the sharing of free stories remains intact.
“In our case, the product doesn’t necessarily have to be e-books or paper books that result,” Lau said, explaining how the platform might lead to other things as well. “It could be a movie script that you’re funding, and the end product could be a movie.”
Lau says that Wattpad has been considering a crowdfunding model for a while now, and the startup will take a 5 percent fee for every successfully funded project in revenue, after payments partner Stripe takes a 2.9 percent fee, plus $0.30 per transaction for each pledge made. It may be Wattpad’s first foray into earning revenue, but Lau says it won’t be the last, and there are other options the company is considering alongside Fan Funding.
So far, Wattpad has launched campaigns with three authors, including two currently in progress. For self-publishers, it’s a great way to fund projects without having to essentially “cold call” the way you often would on Kickstarter, and for the huge existing Wattpad user base, it’s a natural next step towards earning money from what might be a hobby or occasional pursuit. Rarely are late-stage revenue models such a natural fit, but we’ll see if the community is willing to pay.