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| 11|Jul|10 |
| Crowd Funding. Hope or Hype? |
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Crowd-sourced funding, crowd funding, fan funding - different names, same idea. You get friends, fans and followers to invest small amounts in your project until you have enough money to make all, or part of it.
MediaWave featured an item on Australia's first crowd-funded feature, The Tunnel last week.
Essentially, it's a bit like a charity drive. Remember the old "thermometer" outside the church hall? Once it got to the top, they rebuilt the knave or vestibule or whatever they rebuild in churches.
Except that churches are charities and content creators aren't. More of that later.
And then came that great big enabler of everything, the Interwebs, making the gathering money online a lot easier than rattling tins on street corners.
The first crowd-funded film is attributed to French producers Guillaume Colboc and Benjamin Pommeraud who raised $50,000 to make their film Waiting for Yesterday in 2004.
The phenomenon took off in the US in 2009, where Kickstarter provided a clean and easy shopfront for crowd-funding. Australians can use Kickstarter, but it involves getting someone with a US bank account to work with you.
Others have followed (IndieGoGo), but the model is essentially the same.
In the absence of any government funding, you can see why US content creators have enthusiastically embraced crowd funding.
Australians are blessed with a plethora of funding options, but the Producer Offset has cut the sub-$1m project adrift in a drive to push budgets upwards. This could make crowd funding more attractive.
An Australian crowd funding shopfront Fundbreak has opened up recently.
Crowd Funding sized up.
The Good
Crowd funding is an exciting new frontier for entrepreneurial content creators and as such will drag a lot of people along for the ride.
It puts the fate of a project squarely in the hands of the consumer. No dealing with the gate-keepers and project-prevention officers. No bias against genre product, no politically correct filtering.
You will know early on if a project will work or not.
It's blue sky. Although it's not a crowd funded in a cash sense, Ridley Scott's feature project "Life in a Day" is a stunning application of crowd-sourced support.
It can be fast. Waiting for Yesterday raised its (admittedly modest) budget in three weeks.
It works well for "cause" projects like docos about social issues, where producers can tap into an established audience.
A committed crowd of supporters has a value beyond dollars. Generating buzz and word-of-mouth becomes an order of magnitude easier when you have a ready-made fan base.
The Bad
There is a bit of stigma attached to crowd-funded projects at the moment. There is a sense that a project isn't real if you have to pass around the hat to get it made.
There could be a limit on the budget levels. The Tunnel, for instance is looking for $135,000. This is definitely one of the higher budget crowd-funded projects.
The Ugly
There are questions about the legality of taking money from "investors" without offering any of the security demanded by legitimate investment schemes. At least Kickstarter has a failsafe. It holds funds in an escrow account.If the nominated target isn't reached, all funds are returned to investors. But you can imagine the risks implicit in free-range crowd funding.
Investors are given something for their money - so in a legal sense, they have paid for and received something.
The Tunnel is selling frames of film for one dollar each.
Pioneer One gives you the theme music or a special edition download.
Does this kind of transaction legitimise crowd funding?
Do investors really care what happens to their money or are they in it for "psychic income".
Is Crowd Funding for You?
Crowd funding will work if you connect with an audience that really wants to see your film get made. The feeling is that hard edged, high concept, out there, geeky, genre-based or cause-based projects have the best chance.
Do you have a personality-based project? Joss Whedon, for example, has been very well supported by his fans through his later troubled projects. David Lynch is crowd-funding a documentary about himself. Called
LynchThreesupporters put in $50 to bankroll the production and get a limited edition print in exchange.
Kevin Smith is thinking about crowdfunding a project and has some reservations about the legalities.
Can you mount a sustained campaign?
It will require a sustained online effort to keep your investors rolling in. This means constant social media campaigns, thinking up new ways to reach potential investors.
Do you have a project that can be staged? Pioneer One started by raising $6k for the first ep through Kickstarter. You can download it for free using BitTorrent. They are now aiming to raise $30k for the next ep. They raised $20k in one and a half weeks.
An Opera funding strategy -" buy a character"
Here's a report from the UK, where a struggling opera company decided to ask it's patrons to "sponsor a character" with great results. Could sponsoring characters in a film work?
Opera Crowd Funding
One final thought.
Crowd funding is working but the problem for long-form projects is the budget level.
Could existing production companies, distributors or (this is radical) screen agencies in Australia get into crowd-funding matching deals? |
| More: Interview with the Co-Producers of The Tunnel |
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| David Court |
I was a skeptic about crowd funding until it dawned on me (belatedly) what a great tool it was for building awareness of a project, and getting validation of it to help persuade other, slower-moving funders.
I guess the big question still to be answered is, will crowds stick with it, or will they move on to something else?
There are also questions about what kinds of rewards should be offered, in particular, whether and how equity might be offered. So, interesting and promising, but jury still out. |
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| Simon Curry |
Much as the "crowd surfing" model appeals from many perspectives I fear that the potential reality will be far harder to deliver.
The creative side of content creation has enough difficulty today managing all "stakeholders" interests despite the fact that both the creative and commercial sides normally jointly engage on projects with a fair understanding of each others deliverables.
In complex productions, clear lines of responsibility are critical to both creative and commercial outcomes. Unless a clear formula is agreed upfront with all parties it seems to me that effective crowd funding must be a long shot at this juncture. |
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| Anthony Palmer |
Crowd Funding - show me the regulations!
Those considering "crowd funding" should be aware of the potential reach of the fundraising provisions of the Corporations Act 2001.
The exceptions to the general requirement to register a fundraising prospectus with ASIC in Australia are narrowly drafted and there are strict penalities which could apply to directors and officers of companies which fail to comply with those laws.
And while you might predict that ASIC will turn up fashionably late to the party, no one should be surprised when they burst in, guns blazing, when they do." |
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| Peter Herbert |
I don’t quite know why but, when I first read about the business of Crowd Funding, I thought of that wonderful quote from Henry Fielding:
“
A Lottery is a Taxation, Upon all the Fools in Creation”.
I guess I’d have to say I put lotteries and crowd funding in the same category, each depending upon a plentiful supply of fools.
Well, fools might be a bit harsh; a more charitable word might be ‘fans’. Indeed, I read recently with some amusement that the third film in a trilogy of documentaries about David Lynch is to be crowd-funded “through submissions from fans”*.
What do they get out of supporting the great man? A limited edition self-portrait! Oh, and regular newsletters. All square then? No, not really. Shame on you, David: why not try self-portrait plus self-promotion plus self-funding.
Yes, I can see the argument that crowd funding is bucking the so-called traditional system but, really, is this a way to test the merits or otherwise of making a particular film? No, it isn’t. It’s a con. Best left to fans and fools and that other great source of soft financing, family. |
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| Jon Silver |
Crowd funding is a really interesting strategy for low budget filmmakers and the good, bad and the ugly comments in the article certainly capture the big picture well but I'll comment on three aspects that you raise.
1) It forces filmmakers to think about developing projects that will satisfy an audience right from the start which can't be half bad and It is a fantastic way to build and engage a loyal audience because those who support the project have a psychic 'investment' in the film - analogous to diehard sports fans 'willing their team to win' and as such they are likely to become strong advocates and spread positive word of mouth that will help facilitate some brand equity when promoting the film.
2) However psychic investment is where the use of the terms investment or investor should probably begin and end because aspiring producers unfamiliar with laws relating to raising finance for films in the various jurisdictions could easily find themselves in a sticky situation.
3) Far better to pitch the fan-involvement in your film as exactly that - involvement. "The Tunnel" did this well. So did one of the best known Star Trek fan films "Of Gods and Men" when the producers pre-sold copies of the DVD and autographed photos of the stars of the film rather than selling shares to get that film made. And a really clever "out-of-box" strategy came from three British teenages wanting to make a film of "Clovis Dardentor" based on Jules Verne's little known novel.
Their target budget was to raise one million pounds. They have recruited financial support from the likes of Jude Law, Stephen Fry, Whoopi Goldberg, Rowan Atkinson, Jeremy Irons and hundreds of other non-celebrity supporters by selling them each a producers credit at the end of the film. People are donating anything from $30-$3,000 a pop.
Check it out at www.buyacredit.com and
Clovis Dardentor |
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