Crowdfunding

Threshold Pledge System
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, but the money at first either remains with the pledgers or is
held in escrow.
When the threshold is reached, the pledges are called in (or transferred from the escrow fund)
and a contract is formed so that the collective good is supplied; a variant is that the money is
collected when the good is actually delivered. If the threshold is not reached by a certain date
(or perhaps if no contract is ever signed, etc.), the pledges are either never collected or, if held
in escrow, are simply returned to the pledgers. In economics, this type of model is known as
an assurance contract.
This system is most often applied to creative works, both for financing new productions and
for buying out existing works; in the latter cases, it is sometimes known as ransom publishing
model or Street Performer Protocol (SPP).
Street Performer Protocol
Street Performer Protocol is an early description of a type of threshold pledge system. SPP is
the threshold pledge system encouraging the creation of creative works in the public
domain or copylefted, described by Steven Schear[3] and separately by cryptographers John
Kelsey and Bruce Schneier. 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 Street Performer Protocol, 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 serve only as an escrow agent and not care about the quality of the
works (like a vanity press).
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