Philosophers have talked by turns about both the “wisdom” and the “madness” of crowds.

 

How wise are crowds when it comes to art? And how does their wisdom compare to that of art experts? HBS associate professor Romana Nanda sought to answer those questions in his recent study, which compared the funding decisions of art-loving masses on crowdfunding website Kickstarter to evaluations by experts in the field.

 

Crowdfunding platforms represent a major shift in the way art projects seek support and find success. Since its founding in 2009, Kickstarter has raised more than $1.5 billion for over 80,000 art projects and has opened doors and lifted curtains for many projects that couldn’t or wouldn’t otherwise have gotten off the ground and onto the stage. In fact, Kickstarter now raises more money for artistic projects each year than the National Endowment for the Arts (NEA), a government-run agency established in 1966, which also funds artistic endeavors, albeit through very different means. Where the NEA has a nearly fifty-year history of art market-making, with vetted mechanisms for ensuring artistic quality and value, Kickstarter offers almost the opposite— it makes funding more into a matter of marketing savvy and mouse clicks. Hence Nanda’s curiosity about the artistic merit therein.

 

“Crowdfunding has enabled a democratization of access,” Nanda said in a recent interview in his office at the Rock Center for Entrepreneurship at Harvard Business School. “That could be both potentially positive and negative. There is a lot of critically-acclaimed artwork that could be systematically overlooked by crowds. On the other hand, you could imagine that experts aren’t always good at keeping in touch with where consumers want to go.”

 

"CROWDFUNDING HAS ENABLED A DEMOCRATIZATION OF ACCESS."

 

To better understand the gaps and overlaps between crowds and experts, Nanda and co-author Ethan Mollick began their study with a full set of applications for theater projects from Kickstarter and stripped them of their outcome information. They then distributed a set of three project successes and three failures to a group of individuals that had previously judged for organizations like the NEA and other funding bodies.

 

“The idea was quite simple: to render the projects the way the crowd saw them on Kickstarter, without outcome information, and have the judges look at them and judge them on things like artistic merit, feasibility, furthering cultural dialogue, and some sense of commercial viability,” Nanda said.

 

There were two broad sets of results. The first was a “positive and statistically significant” correlation between the scores judges assigned and the outcomes of the crowd, suggesting that on average the two groups saw projects similarly based on the above criteria. The second set of findings was on divergent projects, which Nanda and Mollick were especially interested in. What did the crowd like that the experts did not and vice-versa?

 

“First, it’s important to consider that there’s a bit of an art to raising money from the crowd,” Nanda said. “Sometimes the judges liked projects for which the artists hadn’t quite figured that part out. That said, most of the disagreements were on projects that the crowd liked but that the judges would potentially have given less money to or not have funded at all. Those particular crowd favorites showed more variance. They were more likely to be breakout hits, but also included one flop that judges might potentially have been able to stop.”

 

"IT'S IMPORTANT TO CONSIDER THAT THERE'S A BIT OF AN ART TO RAISING MONEY FROM THE CROWD."

 

Nanda continued that crowd aggregation allowed the funding of many projects that were slightly outside the purview of what judges focused on, suggesting that Kickstarter’s democratization enables a greater breadth of artistic production. At the same time, the study recognized that Kickstarter supporters weren’t always applying the same kind of discipline and rigor in their analysis of projects. They simply liked a project and supported it, or didn’t.

 

“Overall, the general sense is that the projects that found success on Kickstarter were by no means crazy,” Nanda said. “Quite the opposite. The average size of the project in our sample was similar to the average size of a project funded by the NEA. And yet, you can imagine that the kinds of projects people put on Kickstarter and the kind they submit to the NEA are quite different in composition and style, which is why we can’t definitively say whether crowdfunding is a substitute to grant-making bodies such as the NEA.”

 

There are a number of extensions of the study Nanda said would be especially interesting and revealing if pursued. Those include looking at projects that applied to both Kickstarter and the NEA, where the discrepancies in funding would better show what succeeds where and why. But the overall lesson for artists and entrepreneurs remains a valuable one— their commitment to funding, whether cleverly accomplished through crowdfunding or more technically done through grant writing, often requires as much dedication as the artistic process itself.

 

“Democratizing access for art funding is a good thing,” Nanda said. “In that sense, crowdfunding is best seen as a complement to governmental support. There’s no question that many projects being funded on Kickstarter would have been too small or too unconventional for many foundations, and we found they were still of critical quality and substance.

 

In that sense, we found that we can’t reject the wisdom of crowds.”

 

Christian Camerota is assistant director of communications at Harvard Business School