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Wednesday, June 20, 2012
Online crowdfunded tuition service entangled in controversy
By AKKY AKIMOTO
Crowdfunding, a method that enables projects to raise money over the Internet, has become one of the hottest trends in the world of Web-startups. The most successful of these is Kickstarter.com, which has hosted more than 45,000 projects.
Crowdfunding services host project details alongside the fundraising target and the deadline. Projects vary from site to site, from fundraising for charities and causes, to creative projects seeking investment — such as those on Kickstarter. For example, someone may have an idea for a product yet needs backing to start production. By using crowdfunding they can get an initial injection of funds to get the ball rolling. In return they set "rewards" based on the amount pledged to the project, such as giving the final product to those who pledge a substantial amount — but only if the project reaches its target. This process reduces the risk for both investors and developer, as a project will only advance once the required funds have been raised. Hosting sites generally only make money once a project has passed its goal.
As always with these things, new concepts from elsewhere are eventually copied in Japan. And there are currently more than 10 Japanese-language crowdfunding services like Kickstarter. Campfire (camp-fire.jp) and ReadyFor (readyfor.jp) are the leading two.
Some sites focus on a specific genre, such as independent movie-making or NPO support. However, there has recently been some controversy surrounding a specialized crowdfunding platform that seeks to raise funds to cover tuition fees for struggling students.
On May 17, Kazuma Ieiri, a well-known entrepreneur and Tatsuki Yoshinaga, a popular blogger, launched a new crowdsourced-tuition service called Studygift.net. The first student was Aya Sakaguchi, a female student from Waseda University in Tokyo, who was known as the "most followed" non-celebrity user on Google+, Google's social network. Because her Google+ popularity had previously been covered by the online news site nanapi.net, many people remembered that she gained followers internationally with her scenic morning photos. On Studygift.net she posted photos of herself and said that she needed about ¥1 million to continue her studies at Waseda, which she said would be possible if many people assisted her with "small" amounts — although the minimum was ¥5,000.
The agency behind Studygift.net is Liverty, which has at its center Yoshinaga and Ieiri, who took his first company public when he was just 29, started Campfire in 2011 and now also has several highclass cafes. The pair boasted that Studygift.net was developed in only a few days of hard work.
With the slogan "Save those poor students who are ineligible for standard scholarships!" the site attracted a lot of attention — raising ¥3 million from 195 individuals and 26 companies in only 55 hours.
However, since the moment of its launch — in parallel with the team and supporters' delight at the success of the first case — critics on Twitter and the anonymous bulletin board 2-channel flamed the site. People were particularly suspicious about several points that began to emerge:
• Sakaguchi claimed she was cut off from two scholarships because she was on Google+ too much. But, in fact, her scholarships were terminated due to bad grades prior to her fame on Google+.
• Sakaguchi asked for aid because she would have had to leave the university otherwise. However, it turned out that she had previously already been dismissed from Waseda University.
• It seems that at the time she was interviewed about her popularity as a Waseda student on Google+, she had already been expelled from Waseda.
• From her old tweets on Twitter, it was found that she was often absent from class.
• She turned out to be a member of the Studygift.net project team.
• She was living with the producer/blogger, Yoshinaga. Weeks later he said that they were simply roommates.
• Sakaguchi's popularity on Google+ was said to stem from her amateur photos, but some people claimed that she increased her followers with spam methods, and that she was not simply a girl who liked taking photos and that she had been getting advice from social-media expert Yoshinaga all along.
• There were no other students on the site, nor any place for other poor students to apply to be listed. The whole site looked like it was dedicated to this one female student (though Studynet later added a link to an application form after being criticized).
While these criticisms circulated, there were many unconfirmed rumors and personal attacks as well.
The Studygift.net team also updated the fund's purpose and Sakaguchi's background incrementally on the quiet, which made many people suspicious. The fact that Ieiri also condemned critics on Twitter and elsewhere also upset people.
After reports in the media, Studygift.net decided to return all money raised (¥3 million) if people applied for a refund. But Liverty declared it would not close down the site. This in turn made critics angrier.
Some people with Internet clout, such as freelance journalist Toshinao Sasaki, are still supporting the team and the service, believing that despite the controversy, their motives are good. The Nikkei Shimbun also weighed in on the issue by suggesting that critics of the site were simply jealous of people who were successful on the Net.
In Tokyo, many popular entrepreneurs, CEOs, bloggers and journalists have met each other at industry events and some of them are friends. When someone in this circle starts something, such as a new Web service, media project or new product, they first introduce it to their network and friends, who may distribute and recommend it without really checking things out — which is what has happened here. People simply saw that there were big names behind Studygift.net and gave it support, despite the fact that it was a poorly concieved and badly executed service. Whatever the creators' initial intention, to many it looked like a scam.
Personally, I think that the Internet-savvy people who initially recommended the site and spread the news have some responsibility for this failure.
If this had been done by anyone less well known, there would have been no buzz and it would have vanished. But the controversy has dragged on for weeks because many Tokyo Web notables were involved, were too positive and pushed it too hard. When people advocate things that should not be advocated, it produces a backlash.