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Online funding draws a crowd

How much impact can crowdfunding sites have on the $22bn global investment business? Colin Brown taps into the key sites

Among the 15 documentary features shortlisted for the Oscars are two that received some of their financing through online crowdfunding. Battle For Brooklyn and The Loving Story both raised finishing funds through Kickstarter, one of as many as 250 platforms that offer filmmakers and other creatives a chance to pitch for small donations from friends and strangers alike via personal videos.

These online appeals are posted on the website alongside a description of the project and an escalating list of rewards that come with different pledge levels: a T-shirt, a DVD, a digital download, an invitation to the festival premiere and so on.

Battle For Brooklyn received $25,506, which was then enhanced with a matching grant. The Loving Story, which needed cash to meet the costs of a hefty licensing tab for archive footage and music, secured $15,383 towards post-production; most of its backers opted to pledge $25 in return for a ‘thank you’ credit and regular e-newsletter updates.

There have been more than 4,000 successfully funded film and video projects on Kickstarter since it was founded by Charles Adler, Perry Chen and Yancey Strickler in 2009. Those projects have raised more $41m in combined pledges. That figure breaks down as follows: $13m for narrative features including a direct-to-DVD release of Hal Hartley’s Meanwhile; $16m for documentaries; $8m for shorts; $2m for web series; and $2m for animation.

“Kickstarter is really the latest iteration in the long history of arts patronage,” says the site’s communications director Justin Kazmark.

As Shooting People’s Ingrid Kopp points out, the value of crowdfunding extends well beyond the dollar amounts. “A lot of film-makers have realised that a successful Kickstarter campaign is not just about the money raised but also about the supporters you bring to your project going forward. I personally feel very invested in all the crowdfunding campaigns I have contributed to and would be far more likely to pay money to see them in a cinema or give other kinds of promotional support down the line.”

For all the attention garnered by New York-based Kickstarter, its donations require a US bank account. There are no such geographic limitations for its San Francisco rival IndieGoGo, the leading global platform for crowdfunding projects of all kinds, including charitable causes, that has also distributed millions of dollars since launching in 2008.

“We have hosted over 50,000 campaigns,” says CEO Slava Rubin. “As long as you have a bank account, there are no restrictions on locations for project owners or funders. We are open to 200 countries.”

IndieGoGo’s 4% cut of money raised is lower than Kickstarter’s 5% and it also allows campaigns to receive all the money pledged, whether or not the initial funding goal has been reached.

‘A successful Kickstarter campaign is not just about the money raised but also about the supporters you bring to your project’

Ingrid Kopp, Shooting People

“Campaigns on average will get 20% from strangers,” explains Rubin. “Some campaigns will get 90% from strangers and some won’t get a dollar at all. To get exposure from IndieGoGo and stranger dollars, you want to have a high GoGoFactor — a custom algorithm which tracks how active every campaign is based on comments, funder updates, promotions etc. Based on the 50,000 campaigns on IndieGoGo, the typical tipping point to start getting stranger dollars is when the campaign has reached 30%-40% of the funding goal.”

IndieGoGo counts among its successes this year’s audience award winner at the Tribeca Film Festival, Give Up Tomorrow, as well as international productions such as UK documentary You’ve Been Trumped and Japan’s Hafu.

A partnership with the UK’s Sheffield Doc/Fest means the site also hosts a whole day of live crowdfunding pitch sessions staged during the festival.

How much of a dent will this all make in the $22bn annual film investment marketplace? That depends on the scale of production. “For the independent film-maker, disruption is already happening,” suggests Shooting People co-founder Cath Le Couteur.

But for larger films, crowdfunding’s future may pivot on the Entrepreneur Access to Capital Act, HR 2930, now under review in the US Senate. If approved, the law would allow crowdfunding to include equity investments in projects, and not just donations. Projects could raise up to $2m, in no more than $10,000 increments.

“The good news — and the bad news — is that no restrictions have been placed on what types of companies can raise capital in this manner,” observes film-finance expert Jeff Steele, who spearheads Film Closings. “So it’s a wide open field for innovation — and corruption.

“Gifting sites like Kickstarter and IndieGoGo have gone out of their way to steer clear of selling securities,” Steele continues. “Nevertheless, they have the infrastructure to segue into a post HR 2930 world as a securities brokerage. But, speaking as somebody who also advises media technology companies, they would be wise to wait for the IRS to finalise the rules and regulations spelling out who can or can’t participate and what the brokerage requirements are.”

Steele believes far greater potential lies in innovative micro-licensing sites such as SoKap.com that allow producers, authors, musicians and game developers to raise project funding by pre-licensing their distribution rights on a hyper-local level. For example, a film-maker could license the rights to market and distribute a film in just Santa Monica or across all platforms in California from which they will receive an off-the-top distribution fee on sales.

“This allows fans, merchants, early-adopters and taste-makers to monetise their social networks and participate in the value chain of the products they support,” Steele suggests. “Traditional prints and advertising costs, which are prohibitively expensive, will become much more coveted word-of-mouth campaigns, the onus of which falls to the local distributors, not the producer.”

Welcome to the film industry’s Facebook era.

Online film festivals

There are dozens of consumer-focused web-streaming sites that cater to all manner of niche and mainstream markets. There is the ad-supported Babelgum platform, for example and there is also MUBI (formerly The Auteurs) that proudly points out “our film library is brimming with visionary films that wouldn’t fill a single cinema in Belgium for a week — not a single day”.

And, of course, every major festival now comes equipped with online screening rooms. Some, such as Tribeca, even try to mimic their real-life avatars by introducing an element of exclusivity: users are asked to reserve their free tickets to films that have only three to five screening windows each. A limit is put on the number of virtual seats per window.

Now comes an online talent-spotting showcase that has its own window in the festival calendar, but no actual allegiance to any physical event. MyFrenchFilmFestival.com is a partnership between Unifrance, the munificent French film promotion association, and the online Paris film directory AlloCiné. According to Unifrance general director Régine Hatchondo, this is “the first online festival accessible all over the world”.

The second edition, which will run from January 12 to February 1, will premiere 11 features and 11 shorts from emerging French-language directors — as well as one French cinema classic. Widening the definition of French cinema, that menu includes two titles from Quebec.

This is not simply a promotional exercise, however. French film fans must pay for the privilege. In the US, the first showcase this January had the following rate-card: $2.60 for a feature, $1.30 for a short, or the entire slate for $18.40. For next year’s event, SnagFilms will have the exclusive US distribution rights for VoD to cable, satellite and telco video providers.

Naturally, there is a competition element too, not to mention the usual complement of exclusive interviews with the film-making talents.

Six prizes are awarded at the end of the festival (three for the feature films, three for the shorts): the internet users prize, the foreign bloggers prize and the international press prize. There are no cash prizes at stake. However, the audience-award winner will be featured on SnagFilms after the event. And all three of this year’s feature films category winners — Qu’Un Seul Tienne Et Les Autres Suivront, Tout Ce Qui Brille and Espion(s) — were screened on board all Air France planes for six to nine months.

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