The perils of covering crowdfunded audio products

  • Crowdfunding is becoming an increasingly attractive option to the audio hardware manufacturer wanting to bring a new product to market with minimal financial risk. An exposition of function supported by a computer-generated 3D render of approximate form laid out on either Kickstarter or Indiegogo and our would-be manufacturer is good to go with fund solicitation.

    For would be backers, the upside is the potential to save big on (projected) retail pricing. Early adopters are rewarded with hefty discounts. A notable example is Neil Young’s PonoPlayer: the earliest of birds caught their worms for US$199, a full 50% saving on the in-store price.

    On Kickstarter, a backer’s credit card isn’t billed until campaign end. No charge if the funding target isn’t met. Over at Indiegogo, credit cards are charged immediately with a refund issued if the campaign fails to make target.

    It’s a win-win for both our would-be manufacturer and his backers.

    Where’s the beef?

    With funding target met and funds committed, our backer finds himself at the mercy of production delays as well as the related issue of the backer changing home address between order- and shipping- dates (as I did with Pono).

    Of greater concern are possible changes to form and function. The end product might look nothing like that offered in the original funding campaign. It might behave differently too. And with with no way of auditioning before signing on the dotted line there’s zero guarantee that what you are buying (backing) will sound any good.

    An example of this switcheroo was LH Labs’ GeekWave. Initially an add-on for your existing smartphone, the campaign was ‘rebooted’ (LH Labs’ words) several weeks later as something entirely different: GeekWave was now a fully-fledged digital audio player. LH Labs jumped from one to the other without ever tooling a production line.

    The GeekWave is a more extreme example of a manufacturer’s ability to jump around. It brings a lack of certainty to the consumer and it imbues hi-fi publication coverage with risk. For publishers, announcing crowdfunded products in one’s news section is a world a way from doing the same with products that journey from boardroom meeting to factory floor BEFORE the customer is asked to part with money or press-releases get sent.

    Then comes the issue of the journalist being played as a promo tool, tacitly backing the crowd-funding campaign with news coverage. Now our would-be manufacturer has ‘product’ and promotion nailed down with minimal financial outlay.

    It isn’t always plain sailing. Forums threads are the first to light up with complaints if something goes awry after funds have been collected. With sufficient hot air fanning those flames a journalist’s reputation gets singed; guilt by association.

    Any hi-fi magazine worth its salt must consider how its editorial policy treats this new way of bringing products to market. At one extreme, a well-known US-based publication refuses point blank to commit any ink or pixels to crowd-funded audio gear. At the other extreme, several ‘zines can be seen running stories on little more than the whiff of a press release.

    Pragmatists seeking a middle ground must navigate a potentially perilous land marked ‘Contradiction’.

    I’ve been pondering this for a while. How can DAR cover interesting products coming to market via the crowdfunded model whilst simultaneously minimising its exposure to issues arising from the seemingly easy-come-easy-go nature of design and production? Which campaigns should see coverage? And how will they be covered?

    Since letting the Voxtok Capsule through to the ‘keeper last June, I’ve been trialling a firmer policy.

    Firstly, coverage relating to changes in the campaign structure runs dangerously close to the journalist being worked as the manufacturer’s puppet. For example, an Indiegogo-fuelled product being switched up to ‘Forever Funding’ isn’t newsworthy. It’s the same product being sold through the same channel but with the campaign expiry date removed so that it can run indefinitely.

    Secondly, Kickstarter- or Indiegogo-funded products now require proof of life from their manufacturer before I’ll put fingers to keyboard. I need to see something beyond a CAD render or empty chassis, which translates to some form of hands-on qualification of the product at hand.

    A prototype sighted/heard at audio shows will suffice. That was the case with CEntrance’s Skÿn at CES 2015 and the PS Audio Sprout at the Munich High-End Show in 2014…and it will continue to be the case for a forthcoming post about a new line of products from the aforementioned LH Labs. (Although, as is my news announcing wont these days, that particular article will be more than simple press release dissemination).

    Another way for our would-be manufacturer to move from online abstraction to real life tangibility is a product loaner, sent via a return ticket to DAR HQ in Sydney. A pre-production model is fine.

    The latter method of qualification kicked a little harder in the other direction some weeks ago when a manufacturer bringing his headphone amplifier to market via Indiegogo contacted DAR regarding possible news coverage of the funding campaign. Understanding that I required (even the most basic of) hands-on time with the product he agreed to send a unit my way. Alas, the loaner never materialised (presumed unshipped) and therefore coverage from yours truly maintained its absence.

    None of this inures backers to changes that take place beyond the prototype or pre-production stages but it is a definite step removed from publishing news items on everything and anything that seeks cash from the crowd.

    Further information: Kickstarter Basics | Indiegogo Basics

    John Darko

    Written by John Darko

    John currently lives in Berlin where creates videos and podcasts and pens written pieces for Darko.Audio. He has also contributed to 6moons, TONEAudio, AudioStream and Stereophile.

    Darko.Audio is a member of EISA.

    Follow John on YouTube or Instagram


    1. I think it’s great that you are establishing a policy on how you cover – and implicitly validate – a concept that is potentially vaporware, or if it does indeed make it to market, what could be utterly different or an abject failure. Cheers, Junker

    2. When you talk to LH Labs, could you ask them where my Geek Pulse is? They’re really good at collecting money in advance for new products. How about delivering some of them?

      My last crowd-funded audio product.

      • Hi Phil – sorry to hear of your woes but liaising between disgruntled consumer and manufacturer is well beyond my remit. That said, I *have* mentioned to Gavin Fish on more than one occasion that LH are still (potentially) dealing with a good number of punters unhappy with the wait time between order placement and delivery. I gave mention to this in the article.

        • I didn’t mean it literally to ask. A rhetorical flourish to make the point that it’s frustrating to get solicitations for new products from them when they have customers who paid them years ago, and haven’t received the goods.

            • My original order was Oct. 31, 2013. 15 months and counting. I believe it was promised in 6.

              They did manage to upsell me several times. My original $250 bargain is now about $1000. Like someone else posted here I did receive the LPS.

              Actually, I have confidence that I will eventually receive my product. I’ll say the over/under is 18 months.

    3. On the other hand, what about consumers bit by fly-by-nighters such as the Pono? All hype and no substance once released. At least they released the darn thing. It has failed to convince the market. Arguably, I’ll state it has damaged the Audiophile “industry” in-so-far-as it has drawn attention to itself by upselling hi-res and not engaging the buying public about better recordings and mastering. Turns out they are selling a container and not the food. The container might be flash, but if the contents are rotten, well you get the idea.

      You may have been bit by the pre market hype, us consumers are bit once everyone has left town.

      Turns out Pono is now a “branding” and no longer a physical thang. Dang it. Thanks very much Neil, you’ve sent us back a decade in terms of the public being more concerned with “audio quality”.

      No more crowd funded shiite fo rme either, well atleast I’ll be waiting for market acceptance before laying down cash on a hair brained idea in the future.

      Thanks again, Neil.

      • I think the PonoPlayer is excellent but it was a risk for all concerned. No one had any idea up front how good it would sound. Thankfully, I think it delivers terrific SQ AND it shipped bang on schedule.

        As you rightly point out though, all this endless talk of hi-res is damaging to the broader perception of audiophiles. Recordings and better mastering are conversations are worth having but what the man in the street wants is something that makes his *existing* music collection – be that CD rips or streaming – sound better. For me, THAT’s what the conversation between the audiophile niche and the mainstream should be about.

        • I think, for the most part, existing 16/44 is fine, and the man in the street is not craving more. To make it sound better, invest in some modest equipment. One doesn’t have to spend large coin. Modern electronics have evolved to the point where crazy good fidelity is available at extremely cheap prices. Sell good loudspeakers and headphones to the masses and stop peddling hi-res, uber DAC’s and USB cables to people who are not easily fooled. But I digress. I lament an opportunity lost – to really engage the man in the street on hi fidelity. That opportunity was lost on selling a container of existing sound. Same music, different bucket…. and as a result sent the masses back to where they came – in MP3 land where they were actually quite happy already. As I said earlier, it set the industry back a decade or more.

          What did the audio review section at large do mostly? Go along for the ride, excited that just maybe, true high fidelity was craved by all and ignored the real issues. Meanwhile, Joe Blo who already thought the audiophiles where one step lower than Scientologists, reformed their view and went back to their caves from where they emerged.

          Back on topic – crowd funding has some very real opportunities – to bring good product to the market that would otherwise be ignored by boardroom product developers. Products that could very well change the way we live, or at least listen to and enjoy music.

          Yes, some projects will flounder, some will leave a bad taste. It’s the 5% that make it is what feels me with excitement. Yes I was burned with the Pono, but I’m wiser now and really look forward to the future.

          Its ok to give a little airtime to vaporware. If *you* think the idea has merit, spread the word! What’s the worst that can happen? Good ideas are worth sharing.

          It could change the world, and it doesn’t have to be Steve Jobs who does!

          • Nothing wrong with reporting on an idea that has merit but by the very nature of the crowdfunding model one is effectively assisting someone in making money from that idea.

    4. I think LH Labs is a text book case of how not to crowd fund and yes I’m also still waiting for the Pulse to arrive. They have the infuriating habit of starting new crowd funding campaigns and swear that running parallel projects does not extend deliver timeframes. As if! They also have so many options that I don’t think anyone truly understands what they are getting. So, even though I’ll continue to patronise Kickstarter & Indiegogo, I think Massdrop is far better option.

      • I concur the number of options are bewildering. Perhaps the crowd-sourced demand for these is the cause of the protracted delays?

        • If you follow (non-venture capital backed) start-ups, this is a classic example of a sales driven organization making promises it can’t deliver on.

      • I am in the same situation as Ian. I was one of the first to fund the Pulse project. They sent me the LPS power supply couple of weeks ago (even though I ordered it a couple of weeks AFTER the Pulse. And now, they tell us that the Pulse’s shipping will be done by the end of next month (it was originally planned for January). In the meantime, they kept adding newer and newer “perks” (read: “bait”), so obviously, the original product was put on hold.

        I think that Gavin Fish and his crew were unprepared for the original enthusiastic response to the campaign and then they immediately started to think, how to milk this cow, as much as they possibly could.

        I am enthusiastic about the crowd funding as an idea, especially the way it appeared to be planned in early stages of LH Labs’ Pulse campaign, but companies that use crowdfunding need to learn a lot about this novel way of doing business. Otherwise, the customer will become distrustful and angry (like people who expressed their displeasure here, above) and the crowd funding will become yet another failure, fast.

        Now, back to the topic. I think that there is no harm for journalists to announce those campaigns that they feel might produce some interesting and high quality results. And then, wait with further mentioning of those products until they are actually shipping. Otherwise, the manufacturers will start treating the articles as free advertisements for their products that did not even materialize yet.

    5. For these and related reasons, we no longer run any crowd-funding announcements. I prefer to focus on products people can buy today (or in a few weeks when formal production hits the dealers) rather than act as a fund raiser for products the manufacturer would like to build if enough people commit upfront.

      And it’s not as though this eliminated coverage of interesting products. As you said, all we need is a review loaner sample to talk about it. But even here I want it to be ‘done’, not a straggling proof of concept unit that’s meant to stoke further fundraising before it becomes a real production item.

      • I agree this is the safest policy though I can’t see a problem reporting possible future products and developments as simply that, possible! Leave the speculation to the gutter press.

      • Don’t you think that just sometimes, a great idea is worth drumming up some excitement over? Even if it is vaporware? What are you afraid of?

        By all means, stick to real products – you show them! You just may be missing out on something we all want, but don’t know it yet.

        Remember the little thing called the personal computer? It was vaporware once too.

    6. IMO LHLabs is deliberately using crowd-funding specifically Indiegogo for the wrong purposes. Which is depriving you of any recourse or refund. They will do or say anything to get your money. Then they change the product so they can try to get more of your money. Their customer service is non-existant. Why? because they already have your money and there’s nothing you can do about it.

      This shouldn’t be allowed. Indiegogo doesn’t care because they make lots of money too. They don’t use Kickstarter because Kickstarter allows you to change your perks until the campaign ends.

      • You’re indeed reflecting the concern expressed in the article: “With funding target met and funds committed, our backer finds himself at the mercy of production delays…”. Are you not able to seek a refund from LH?

    7. Another point on the delay in shipping: Part of what tempted me in in the first place was the prospect of getting some cutting edge technology at a better price than was available at the time. With the delays, I don’t think I’m buying a bargain anymore. Other manufacturers have improved their offerings, and new ones are actually in the market. What appeared to be a good deal compared to the offerings then, is less good compared to the offerings now.
      I’m just praying it will be good enough to justify the price.

      • That’s an interesting point Phil, that a production delay can diminish a product’s competitiveness.

        • As a VERY happy Geek Out 1000 backer, I’m torn over posting criticism of their other campaigns (I’m also a pulse backer) so I’ll just share a concern that I have both about the crowd funding model and feedback such as this. Product development is almost always frought with delays and disappointment. Usually, however, this isn’t public knowledge and has no real customer impact. Because of my extensive pulse contributions, I’m fearful that customer satisfaction decisions lean too firmly towards mass customization and fast delivery. I think enthusiast audio is about moving away from the disposable technology that sits in our cell phones, computers, TVs, and home theater systems. I will wait longer and sacrifice features for some equipment with a soul… And toss something buggy and temperamental within short order.

          • A fair point. Though I’ve been bitching here about the delay, I’d rather they get it right than get it quick.

            What’s galling is not the delays, so much as I’m sick of being pitched upgrades and new products, when they not only haven’t delivered, they haven’t put the resources into the customer service and communication that would make the delays more palatable.

          • “Equipment with a soul”… You mean like ‘vinyl’ and retro record-players?
            Or amplifiers with orange valves on the top?
            Right. I’ve noticed the music is warmer and betterer too…

    8. What a fiasco. I’ve been waiting for two products now and can’t get a fix on when I will get either of them. Instead, I get weekly emails advising us about new products.

      It would be nice to know when they will be able to deliver on their commitments.

      • LH Labs currently have zero credibility with me for the reasons expressed above. I will await delivery of the one item that I have supported before supporting anything else but my limited dealings with LH Labs have left a sour taste already. Lots of spam about other products, nothing about what I’ve supported, difficulty in getting off the spam mailing lists with LH Lab s dishonestly blaming indiegogo. I have just made the mistake of providing requested feedback and I am now getting every single response in my inbox. The operation seems not to be geared to producing products but to hype to gain financial support. This is a flawed model in my view. I want products which are the result of a designers vision and careful thought, not populist “feedback” which can change the product launched and “justify” delays in shipping.

    9. Something not yet openly mentioned about this topic…

      The traditional role of the audio press has been to alert readers to the existence of new product (news page) and report on the performance of select products (reviews) plus provide tech exposés, trending and show coverage. First reviews could have newer brands *get made*, i.e. they were suddenly on the map where before they had been complete unknowns. Advertising (and magazine sales) generated operational revenues for the press to provide these services whilst the same advertising created ongoing visibility and *branding* for its ad sponsors.

      With the rise of social media, the traditional press has gained competition. FaceBook, Twitter, forums like AudioCircle, HeadFi et al have become alternate media. Then crowd funding bypassed the dealer network (sales are direct) and the review process (significant sales are pre-booked before any reviews ever happen). So far so good. It’s a new model that wishes to do without the old ways which it perhaps deems defective or not effective enough for its purposes.

      If so, why should the crowd funders still involve the traditional press to provide free advertising by way of announcing their projects in the news sections? It seems to me that if one wishes to bypass the old system, one shouldn’t ride its coat tails. One ought to get ahead on one’s own steam and solely rely on the new media one champions.

      This is admittedly the view of someone economically involved in the old system -:)

    10. Not really sure what to think of this new crowd-sourcing thing. In regular industry, going the crowd-funding route is usually a last gasp bid to avoid going under.

      I’ve not backed anything so far, but from all the forum comments I’ve read, it does seem like LH are abusing the model by having many projects running concurrently. Perhaps it’s a good way of ensuring they have enough money to roll around, but it does sound a bit sneaky. Then again that’s exactly what goes on when you put money into one of those investment plans they offer at banks or insurance companies, so it’s not exactly a new practice.

      There should be some delivery-guarantee-or-your-money-back clause.

    11. When you contract with a builder, a plumber for repairs or any related job, it’s common to make a partial down payment to defray the parts costs the contractor incurs. But there’s also built-in motivation to finish the job in time because the remainder of the payment is held until then.

      Prepaying in full (even at a discount) for product that’s not even built yet removes that motivator. Builders are notoriously late finishing up jobs. How much later do we think they’d be if the new convention was to prepay them in full before they got started?

    12. Fact: there are no refunds from Indiegogo. This is policy. Once you’re in, you’re stuck.

      Fact: the LHL campaigns have been driven by some press engagement at first, but now seems more and more to be driven by paid referrals (they have referral rewards where you can get free stuff), or by fishing from the same pond (going back to their original “stuck” funders.)

      Fact: This is different than many “maximimizing the lifetime value of the user” campaigns in that it can promise rewards that do not exist yet. So, it’s promising vapor to move vapor.

      We still don’t know how this will end up. It may end up with good products and happy customers, albeit after significant delays.

      However, John, your setting a policy of “it’s gotta be real” is a good start in defining how to cover products like this. I’d suggest another rule, too, given the human tendency to rationalize what we’ve invested in: if a reviewer has put their own money down on a crowd-funded product, that fact should be revealed, as well as the amount. Someone who’s put $2,000 down on a future product they’re hoping will compete at the $5,000 level has a powerful psychological incentive to believe that it will be so.

      • I dropped $400 on a PonoPlayer and remain seriously impressed by how it sounds. However, the plastic case is somewhat agricultural.

    13. Call me ol’ fashioned but I wait till a product has been stacked on the shelves AND reviewed by a choice handful of on-line sites (Darko very much included) THEN I go to the retail outlet and play with said device (listen to it, shake it, tap it gently on a hard surface, grimace at it) and then and only then consider handing over some wonga when all pleas for a further discount have been exhausted.
      My late Scottish grandfather would have given me a sound clip (pun intended) over the ear if I’d bought it ANY other way…

    14. I would prefer to know about the campaigns as they are happening…product in hand or no. Crowd funding and caveat emptor are so bound together I am not even sure it needs an explanation. As an enthusiast, I like reading, seeing what people are offering through these campaigns and watching them unfold. But I also read the sixmoons articles/reviews on equipment I could never afford for the same enthusiast reasons.

      Perhaps you could add a column called Caveat Emptor where there no mistake about potential bumps in the crowdfunding road and a true lack of your personal “vouch” for any of the products but something that keeps us informed on what is happening.

      If you have a prototype in hand before a campaign, I would think 99.9% of the time that it would not reflect the final shipped product to the funders…not a great strategy either.

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