Kickstarter isn't a scam. But it might be a bubble.

I recently expressed great skepticism over the massively funded "Ouya" video game project, which has grabbed more than $5 million in donations so far.

In my column, I said Kickstarter is a lousy way to pre-sell consumer technology products because the rate of failure in consumer tech overall is just way too high. The outcry from Kickstarter fans made me want to look much deeper into the issue.

The projects on Kickstarter seem awesome. I want to see these films. I want to play these games. I want to watch these shows. So I think it's critically relevant to ask whether the games, films, dances and shows actually get made.

I decided to put my research where my mouth is and studied 312 of Kickstarter's "most funded" projects so far, the 24 most funded projects in each one of Kickstarter's 13 categories. (Ouya isn't among them, because its Kickstarter hasn't ended yet.) 

Figuring out whether the projects have actually accomplished their goals is more difficult than it seems. Some creators stop providing updates on Kickstarter as soon as they get the money. In those cases, I read the Kickstarter comments for the project and did Web and shopping searches for products or events to see if they ever went on sale. I tried to stay strict on this: a project only counted as "delivered" if a final product was in a backer's hands (or a performance performed) by July 19th, 2012. Pre-orders and promises don't count.

In this I'm following up the excellent work done recently by AppsBlogger and Ethan Mollick from the University of Pennsylvania, who estimated together (in a must-read article full of compelling stats) that only 25 percent of design and technology projects delivered on time, although 75 percent would complete after an eight-month delay.

I wish I could make you guys an infographic, but I frankly have no idea how to make an infographic. I can, however, make extremely bad Excel charts, so that's what you get.

Here's what I've discovered.

The quick summary, because this is tl;dr

• Design, Games and Technology tend to have far bigger dollar amounts on their top projects than other Kickstarter categories
• A lot of that money just suddenly flooded in recently
• Older projects have a good record of success
• But the $500,000+ mega-projects are so much bigger than the average Kickstarter project that they seem like a completely different class of business
• These mega-projects don't have much of a track record yet

A few high-profile projects distort Kickstarter's funding curve

The vast majority of Kickstarter projects, even the most funded ones, are pretty modest. Among my 312 "most funded" projects, the median cash involved was $61,150. 

When we talk about Pebble's $10 million, Ouya's $5 million, and Double Fine Adventure's $3.3 million, we're talking about an entirely different class of project. All Kickstarter projects should come under the same amount of scrutiny - after all, if you're pledging $50, you're in for $50 no matter how much the company raises. But the skills needed to manage $10 million are different from the skills needed to manage $30,000.

The scale you need to work on is different, too. Once you get into the millions of dollars, you get beyond the point where you can hand-check every device and to the level where you need a reliable supply chain. Tech project Pen Type-A has had trouble delivering its 4,000 units. Ouya has more than 40,000 backers/pre-purchasers so far.

Furthermore, a huge individual project can really drive the public perception of Kickstarter. Of the 30,900 Google News hits for "kickstarter" in the past month, a third have mentioned Ouya. That puts Kickstarter's reputation on the line with these big gambles.

'Geek' projects involve a lot more money than others

Kickstarter's three "geek" categories - Games, Design, and Tech - attract a lot more money than the other categories. I'm just going to summarize this one as a chart.

AppsBlogger brings another useful data point: of the 33 large projects it found that received over 10 times its funding goal, all except one were in the geek categories. (That other one was an Amanda Palmer album, and she and her husband Neil Gaiman are epic online celebrities.)

Kickstarter is a mature funding source for art, but not yet for tech

Of the 24 most funded projects in Art, 16 were funded before 2012. Of the 24 most funded projects in Dance, it's 12. In Music, 12. Kickstarter has been used for a few years in these communities and it's been ramping up.

Of the 24 most funded projects in the tech-heavy Design category, 18 are from this year. Ditto for Technology. In Comics, it's 19. In video games, every single big-ticket project was funded this year. So it's no wonder projects in these categories haven't seen as much success as in other categories. They haven't had enough time.

That's what I mean by a "Kickstarter bubble." In certain project categories, there's been a sudden flood of money into the system before backers can see whether it's a functional way of producing products in that category.

Continue Reading: Do Kickstarter creators deliver?>