microPledge: Funding Software by Pledging to Donate Money

[mouser]

Interesting idea.. More formal version of the kind of thing we do in our Coding Snacks section.

Have an idea? Just need funding? Want to join with others to support to an idea? This site is for you.

They also have an interesting fee system that encourages open source software development, and seems like a reasonable approach to me.

http://micropledge.com/

How much do I have to pledge?
As much as you like. On projects with a proprietary license, the developer may set a minimum.

Is microPledge really free?
Yes, our service itself is free for open source projects: we don’t take a cut. Plus, any open source product that is produced is free to the world. This is because we want to encourage others to give stuff away free, too. However, for closed source projects we do charge a small fee. Unfortunately, the bank charges a small fee for processing your credit card that we simply can’t avoid. We charge this straight to you without adding our own margin. For more detail, see our fees.

Can I get my money back?
You’ve only pledged the money. It remains yours until all the pledgers agree by vote to pay the developer. If the developer doesn’t do anything, the pledgers won’t agree to pay. You can get your pledge back when the developer’s quote expires or before he’s started developing. Do this on your profile page under your current pledges.

How does payment work?
As a pledger, you have a say in the project. When the developer completes all or part of the project, he will post an estimate of his progress. Now you get a chance to review his work and vote on whether you agree with his estimate. You will be emailed to say that the developer has posted evidence of his estimate on the project website (unless you chose not to be emailed on your profile page).

After the vote, if the majority of pledgers agreed that the project is done, then the developer will be paid your full pledge. If the pledgers vote that the project is only partly done then you will have to pay for that part.

SUMMARY:
Open source license: Free.
Closed source license: 3% of each progress payment.
Proprietary license: 6% of each progress payment.
Quitting a project early: 10% of your earnings so far; microPledge will pledge the fee to the project so it can be earned by any subsequent developer.
Refunds: Unless you are doing open source, you must refund all your earnings back to pledgers if you don’t finish the project. Either that or you must release your source.
Incubator: $20 basic fee. Challenges cost $60 per hour of arbitration after the first hour.

They also make some interesting points about donations vs. pledges which is worth thinking about for people at donationcoder, especially for larger projects:

Why does pledging work better than donations?
    * You either get the software or your money back.
    * Software completion time is estimated by the developer.
    * The developer has the assurance the funds are available – as long as he does the job.

They seem to have thought out the system quite well and there is a fair bit of documentation and explanation for how everything works (developers see this page).


from http://www.readwriteweb.com/

[Deozaan]

Did Microsoft make us forget what "Micro" means? It means small. Tiny. Itty Bitty. MicroTransactions (Xbox 360) aren't that small, and these MicroPledge amounts don't seem very "Micro" to me, either.

 

[Lashiec]

That quote of yours is making my head spin. It's like I'm dealing with a bank, with all the commissions and cuts they take.

[berwyn]

The quote is making your head spin?  It's very simple: users need a target.  How long will a developer will take?

As for our fees, we didn't really intend them to be used as an advertising blurb like they have been here - they're more for an exhaustive reference.  Actually, the upload cap fee doesn't exist right now and we've now removed it from our help due to this post.  However, the other fees are very simple.  For most people they will come down to just one fee:

• If you are a developer hoping to make commercial use of the software, we take a simple cut.  If you are doing open source software, it's free.

The only thing left is if you take your users' money & then quit the job, we'll take an annoyance fee and give it to the users you have annoyed.  As for the $20 Incubator, it is an optional add-on service so we don't mind charging.

[mouser]

Welcome to the site berwyn 

I should say that generally speaking I think the pricing scheme looks quite reasonable to me.  I particularly like the idea that the open source licensed software is free, and i like how you seem to have thought out the issues involving canceled projects, etc.

With such services and sites my focus is always on the "incentives" of the system -- do the rules of a system motivate people to behave well or behave badly?  Does it motivate them to create stuff that helps everyone involved? Or game the system to take as much as they can and give as little as possible?

And it seems to be that microPledge has set up a nice system where the incentives will lead to good stuff being produced in a fair way, with everyone benefiting.  I hope the project succeeds.  Our own experience with donations suggests it may be a hard uphill climb, but a fulfilling and interesting one.

It will be interesting to see how the thing about leaving a project early or not continuing work on a project works out.. i can see that it might be difficult to say when a program is "done", and i can see differences in opinion coming apart regarding how to decide when someone should be able to receive the money pledged vs. ensuring someone doesn't stop working on a project while there are still deadly bugs in it.  Of course that dilemna is found in all such contract programming projects and is not in any way unique to your system (in fact you may be able to work our a more democratic way to mediate such decisions and thus avoid the worst case scenarios where one rogue employer insists the program is never finished").

I hope you'll drop in and tell give us an update every once in a while

-mouser

[berwyn]

We do indeed have a democratic mechanism of determining when a project is done.

• The developer releases and says "I'm, say, 85% done."  Then negotiation begins.
• The pledgers vote if they want (a non-vote means they agree to the 85%)
• If the pledgers' average vote is lower than 85%, say 50%, the developer can either accept payment for 50% and keep working
• Or he can provide better evidence of 85% completion
• Or he can put pressure back on the pledgers by stalling the project until they cave in or get more pledgers

This is described in more detail in our help at http://micropledge.com/help/dev#estimate.

[mouser]

I think this is fascinating stuff and I really like the thought you've given this stuff.  It's actually probably a good subject for a dissertation in game theory and it will be fun to see how projects develop.

I know it's important to keep things as simple as possible, but i wonder if it might be interesting to consider a kind of sliding scale where you related percent complete to percent of pledge money available non-linearly, to really encourage completeion.. For example:

• At 50% completion the developer is entitled to 10% of the pledges
• At 70% complete they are entitled to 20% of pledges
• At 80% complete, they are entitled to 30% of pledges
• At 90% complete, they are entitled to 50% of pledges
• at 95% complete, they are entitled to 75% of pledges
• at 98% complete, they are entitled to 90% of pledges
• at 100% complete, they are entitled to 100% of pledges

I think you'll see my point -- it expresses the fact that a 50% complete program is not half as valuable as a 100% complete program, and strongly incentivizes finishing the program.

[mouser]

ps. on another note, one theoretical issue i have struggled with and haven't come up with a good solution for, and which i think is a really important issue to solve in the open source funding world, is how to divide up donations fairly to multiple de-centralized developers on a project.  This is a really tough academic problem and i'd love to see someone tackle it seriously.

[berwyn]

Yes, that is a hard one.  We already have it on our features list as "Support multiple developers for one project".

We have worked around this for now with our sub-project thing.  Essentially, you make separate projects for each sub-task and they can be pledged to individually (one developer per sub-task). See http://micropledge.c...elp/dev#sub-projects

However, for a proper solution, my thinking so far is that it requires measuring the effort of each developer - which can't be done by computer.  So the development team would need a team leader who was responsible for distributing funds.  This puts a lot of responsibility on him.  Probably too much.  maybe the sub-project way is the best after all, because it lets the users decide what effort is worth the most.

[mouser]

micropledge has announced that they are closing up their current services:

We’re sorry, but we’ve decided to halt microPledge.com. The complete site is still viewable, but everything is disabled. We’re very sorry to have to halt the system, but we just didn’t have the user support we needed to continue. Please contact us if you’d like more information.

It's awfully hard to make such a system work and they were one of the better ones with some impressive solutions and well thought out ideas.

They are a resourceful team, i wouldn't be surprised if we didn't see micropledge reborn in some form or another in the future.