Threshold pledge system
Encyclopedia
The threshold pledge or fund and release system is a way of making a fundraising
pledge
as a group of individuals, often involving charitable
goals or financing the provision of a public good
. An amount of money is set as the goal or threshold to reach for the specified purpose and interested individuals will pitch in, keeping the donation in an escrow
fund. When the threshold is reached, the contributions are retired from the escrow fund and a contract is formed so that the collective good is supplied. This system is often applied to creative works, both for financing new productions and for buying out
existing works; in the latter cases, it's sometimes known as ransom publishing model or Street Performer Protocol (SPP).
Sometimes contributions are refunded to the donors if the threshold amount is not reached as of some expiration date, and no contract is signed: this variation is known as an assurance contract. Contributions to an assurance contract may also be collected as pledges which are only called-in when the threshold is reached.
When used to fund the creation of artistic works, the threshold pledge is quite dependent on the reputation
of the artist, so that the artist is known for producing valued works and that the artist will live up to the terms of the contractual agreement. It therefore assumes that the artists will have built up this reputation by previously released works, such as previous chapters in a serial.
or copyleft
ed, described by the cryptographers John Kelsey
and Bruce Schneier
(although the underlying idea is much older). This assumes that current forms of copyright
and business models of the creative industries will become increasingly inefficient or unworkable in the future, because of the ease of copying and distribution of digital information.
Under the SPP, the artist announces that when a certain amount of money is received in escrow
, the artist will release a work (book, music, software, etc.) into the public domain or under a free content
license. Interested donors make their donations to a publisher, who contracts with the artist for the work's creation and keeps the donations in escrow, identified by their donors, until the work is released. If the artist releases the work on time, the artist receives payment from the escrow fund. If not, the publisher repays the donors, possibly with interest. As detailed above, contributions may also be refunded if the threshold is not reached within a reasonable expiring date. The assessed threshold also includes a fee which compensates the publisher for costs and assumption of risks.
The publisher may act like a traditional publisher, by soliciting sample works and deciding which ones to support, or it may only serve as an escrow agent and not care about the quality of the works (like a vanity press
).
is a publishing model that applies the SPP to source code
(often involving existing proprietary software
) which is eventually released under an open source
or free software
license.
Mozart and Beethoven, among other composers, used subscriptions to premiere concerts and first print editions of their works. Unlike today's meaning of subscription, this meant that a fixed number of people had to sign up and pay some amount before the concert could take place or the printing press started.
However, there are a number of differences between this traditional model and the SPP. The most important difference is that traditionally, the subscribers would be among the first to get access, and would do so with the understanding that the work would likely always be a "rare" good; thus there was some status in owning a copy, as well as the prestige of being among the patrons. Additionally, subscriptions were generally sold at a set price, though some wealthy subscribers may have given more in order to be a patron. In the modern SPP, each funder chooses the amount they want to pay, and the work is released to the public and freely reproduced.
In 1970, Stephen Breyer
argued for the importance of this model in The Uneasy Case for Copyright
.
The Street Performer Protocol was successfully used to release the source code and brand name of the Blender 3D animation program. After NaN Technologies BV went bankrupt in 2002, the copyright and trademark rights to Blender went to the newly created NaN Holding BV. The newly created Blender Foundation
campaigned for donations to obtain the right to release the software as free
and open source software software under the GNU General Public License
. NaN Holding BV set the price tag at 100,000 Euros. More than 1,300 users became members and donated more than 50 Euros each, in addition to anonymous users, non-membership individual donations and companies. On October 13, 2002, Blender was released on the Internet as free/open source software.
Variations of the SPP include the Rational Street Performer Protocol and the Wall Street Performer Protocol.
Fundraising
Fundraising or fund raising is the process of soliciting and gathering voluntary contributions as money or other resources, by requesting donations from individuals, businesses, charitable foundations, or governmental agencies...
pledge
Promise
A promise is a commitment by someone to do or not do something.In the law of contract, an exchange of promises is usually held to be legally enforceable, according to the Latin maxim pacta sunt servanda.- Types :...
as a group of individuals, often involving charitable
Charity (practice)
The practice of charity means the voluntary giving of help to those in need who are not related to the giver.- Etymology :The word "charity" entered the English language through the Old French word "charité" which was derived from the Latin "caritas".Originally in Latin the word caritas meant...
goals or financing the provision of a public good
Public good
In economics, a public good is a good that is non-rival and non-excludable. Non-rivalry means that consumption of the good by one individual does not reduce availability of the good for consumption by others; and non-excludability means that no one can be effectively excluded from using the good...
. An amount of money is set as the goal or threshold to reach for the specified purpose and interested individuals will pitch in, keeping the donation in an escrow
Escrow
An escrow is:* an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfillment of...
fund. When the threshold is reached, the contributions are retired from the escrow fund and a contract is formed so that the collective good is supplied. This system is often applied to creative works, both for financing new productions and for buying out
Buyout
A buyout, in finance, is an investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquiror thereby "buys out" control of the target company....
existing works; in the latter cases, it's sometimes known as ransom publishing model or Street Performer Protocol (SPP).
Sometimes contributions are refunded to the donors if the threshold amount is not reached as of some expiration date, and no contract is signed: this variation is known as an assurance contract. Contributions to an assurance contract may also be collected as pledges which are only called-in when the threshold is reached.
When used to fund the creation of artistic works, the threshold pledge is quite dependent on the reputation
Reputation
Reputation of a social entity is an opinion about that entity, typically a result of social evaluation on a set of criteria...
of the artist, so that the artist is known for producing valued works and that the artist will live up to the terms of the contractual agreement. It therefore assumes that the artists will have built up this reputation by previously released works, such as previous chapters in a serial.
Street Performer Protocol
Street Performer Protocol is the origin of the threshold pledge system. SPP is the threshold pledge system encouraging the creation of creative works in the public domainPublic domain
Works are in the public domain if the intellectual property rights have expired, if the intellectual property rights are forfeited, or if they are not covered by intellectual property rights at all...
or copyleft
Copyleft
Copyleft is a play on the word copyright to describe the practice of using copyright law to offer the right to distribute copies and modified versions of a work and requiring that the same rights be preserved in modified versions of the work...
ed, described by the cryptographers John Kelsey
John Kelsey (cryptanalyst)
John Kelsey is a cryptographer currently working at NIST. His research interests include cryptanalysis and design of symmetric cryptography primitives , analysis and design of cryptographic protocols, cryptographic random number generation, electronic voting, side-channel attacks on cryptography...
and Bruce Schneier
Bruce Schneier
Bruce Schneier is an American cryptographer, computer security specialist, and writer. He is the author of several books on general security topics, computer security and cryptography, and is the founder and chief technology officer of BT Managed Security Solutions, formerly Counterpane Internet...
(although the underlying idea is much older). This assumes that current forms of copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
and business models of the creative industries will become increasingly inefficient or unworkable in the future, because of the ease of copying and distribution of digital information.
Under the SPP, the artist announces that when a certain amount of money is received in escrow
Escrow
An escrow is:* an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party receives and disburses money and/or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfillment of...
, the artist will release a work (book, music, software, etc.) into the public domain or under a free content
Free content
Free content, or free information, is any kind of functional work, artwork, or other creative content that meets the definition of a free cultural work...
license. Interested donors make their donations to a publisher, who contracts with the artist for the work's creation and keeps the donations in escrow, identified by their donors, until the work is released. If the artist releases the work on time, the artist receives payment from the escrow fund. If not, the publisher repays the donors, possibly with interest. As detailed above, contributions may also be refunded if the threshold is not reached within a reasonable expiring date. The assessed threshold also includes a fee which compensates the publisher for costs and assumption of risks.
The publisher may act like a traditional publisher, by soliciting sample works and deciding which ones to support, or it may only serve as an escrow agent and not care about the quality of the works (like a vanity press
Vanity press
A vanity press or vanity publisher is a term describing a publishing house that publishes books at the author's expense. Publisher Johnathon Clifford claims to have coined the term in 1959. However, the term appears in mainstream U.S...
).
Ransom Model in Software
In software, source code escrowSource code escrow
Source code escrow or source code repository is the deposit of the source code of software with a third party escrow agent. Escrow is typically requested by a party licensing software , to ensure maintenance of the software...
is a publishing model that applies the SPP to source code
Source code
In computer science, source code is text written using the format and syntax of the programming language that it is being written in. Such a language is specially designed to facilitate the work of computer programmers, who specify the actions to be performed by a computer mostly by writing source...
(often involving existing proprietary software
Proprietary software
Proprietary software is computer software licensed under exclusive legal right of the copyright holder. The licensee is given the right to use the software under certain conditions, while restricted from other uses, such as modification, further distribution, or reverse engineering.Complementary...
) which is eventually released under an open source
Open source
The term open source describes practices in production and development that promote access to the end product's source materials. Some consider open source a philosophy, others consider it a pragmatic methodology...
or free software
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...
license.
History
The Street Performer Protocol is a natural extension of the much older idea of funding the production of written or creative works through agreements between groups of potential readers or users.Mozart and Beethoven, among other composers, used subscriptions to premiere concerts and first print editions of their works. Unlike today's meaning of subscription, this meant that a fixed number of people had to sign up and pay some amount before the concert could take place or the printing press started.
- "These three (piano) concertos K413-415 (...) formed an important milestone in his career, being the first in the series of great concertos that he wrote for Vienna, and the first to be published in a printed edition. Initially, however, he followed the usual practice of making them available in manuscript copies. Mozart advertised for subscribers in January 1783: "These three concertos, which can be performed with full orchestra including wind instruments, or only a quattro, that is with 2 violins, 1 viola and violoncello, will be available at the beginning of April to those who have subscribed for them (beautifully copied, and supervised by the composer himself)." Six months later, Mozart complained that it was taking a long time to secure enough subscribers. This was despite the fact that he had meanwhile scored a great success on two fronts:..."
However, there are a number of differences between this traditional model and the SPP. The most important difference is that traditionally, the subscribers would be among the first to get access, and would do so with the understanding that the work would likely always be a "rare" good; thus there was some status in owning a copy, as well as the prestige of being among the patrons. Additionally, subscriptions were generally sold at a set price, though some wealthy subscribers may have given more in order to be a patron. In the modern SPP, each funder chooses the amount they want to pay, and the work is released to the public and freely reproduced.
In 1970, Stephen Breyer
Stephen Breyer
Stephen Gerald Breyer is an Associate Justice of the U.S. Supreme Court. Appointed by President Bill Clinton in 1994, and known for his pragmatic approach to constitutional law, Breyer is generally associated with the more liberal side of the Court....
argued for the importance of this model in The Uneasy Case for Copyright
The Uneasy Case for Copyright
"The Uneasy Case for Copyright: A Study of Copyright in Books, Photocopies, and Computer Programs" was an article in the Harvard Law Review by future United States Supreme Court Justice Stephen Breyer in 1970, while he was still a legal academic...
.
The Street Performer Protocol was successfully used to release the source code and brand name of the Blender 3D animation program. After NaN Technologies BV went bankrupt in 2002, the copyright and trademark rights to Blender went to the newly created NaN Holding BV. The newly created Blender Foundation
Blender Foundation
The Blender Foundation is a non-profit organization responsible for the development of Blender, an open source program for three-dimensional modeling....
campaigned for donations to obtain the right to release the software as free
Free software
Free software, software libre or libre software is software that can be used, studied, and modified without restriction, and which can be copied and redistributed in modified or unmodified form either without restriction, or with restrictions that only ensure that further recipients can also do...
and open source software software under the GNU General Public License
GNU General Public License
The GNU General Public License is the most widely used free software license, originally written by Richard Stallman for the GNU Project....
. NaN Holding BV set the price tag at 100,000 Euros. More than 1,300 users became members and donated more than 50 Euros each, in addition to anonymous users, non-membership individual donations and companies. On October 13, 2002, Blender was released on the Internet as free/open source software.
Variations of the SPP include the Rational Street Performer Protocol and the Wall Street Performer Protocol.
See also
- Assurance contract
- Contingency marketContingency marketContingency markets are markets where contracts are made to exchange funds contingent upon an event or combination of events or contingencies thereof.-Difference from prediction markets:...
- Copyright social conflict
- Crowdfunding
- PledgeBankPledgeBankPledgeBank is a website which runs pledges on all topics, of the form: "I will do x if y number of people agree to do the same." Such public commitments are a non-coercive way to solve problems of collective action, especially when the goal is a public good. PledgeBank was founded by mySociety and...
- An honor systemHonor systemAn honor system or honesty system is a philosophical way of running a variety of endeavors based on trust, honor, and honesty. Something that operates under the rule of the "honor system" is usually something that does not have strictly enforced rules governing its principles...
Fund and Release website - RocketHubRocketHubRocketHub is an online crowdfunding platform for creative projects. Creatives including musicians, filmmakers, photographers, theatre producers/directors, writers, entrepreneurs, fashion designers, etc. use RocketHub to raise funds and awareness for particular creative projects and...
- A international project-oriented pledge website - KickstarterKickstarterKickstarter is an online threshold pledge system for funding creative projects. Kickstarter has funded a diverse array of endeavors, ranging from indie film and music to journalism, solar energy technology and food-related projects.-Model:...
- A project-oriented threshold-pledge webpage - GlobalGivingGlobalGivingGlobalGiving is an online marketplace that connects donors with grassroots projects in the developing world. Potential donors can browse and select from a wide offering of projects, organized by geography or by themes such as health care, the environment, and education...
- A project-oriented threshold-pledge webpage - Tides - A project-oriented threshold-pledge webpage
- The Network for Social Change - A project-oriented threshold-pledge webpage
- PledgeMusicPledgemusicPledgeMusic is an online Direct-to-Fan / Fan-funded music platform utilising a Threshold Pledge System / Provision Point Mechanism, launched in August 2009, that facilitates musicians reaching out to their fan-base to financially contribute to upcoming recordings or other musical projects...
- A Direct-to-fan music funding website
Further reading
- Steven Schear, COPYLEFT: Rethinking Intellectual Property in the Digital Age, 2(16), 1998.
- John Kelsey and Bruce Schneier, The Street Performer Protocol and Digital Copyrights, First MondayFirst Monday (journal)First Monday is an open-access electronic peer-reviewed scientific journal for articles about the Internet.-Publication:First Monday is sponsored and hosted by the University of Illinois at Chicago...
4(6), 1999. - Crosbie Fitch, The Digital Art Auction - March 2001.
- Chris Rasch, The Wall Street Performer Protocol, First MondayFirst Monday (journal)First Monday is an open-access electronic peer-reviewed scientific journal for articles about the Internet.-Publication:First Monday is sponsored and hosted by the University of Illinois at Chicago...
6(6), 2001. (tROT) - Karl Fogel: The Promise of a Post-Copyright World - QuestionCopyright.org, October 2005