Crowdfunding's Next Bold Move? Allow the Fans to See Their Movies Before Anyone Else (Guest Column)

The process would change from one of charitable giving to one of commerce, exclusivity and audience bragging rights, as two attendees present at a meeting of filmmakers and industry execs to discuss the "democratic method" share their thoughts here on the future of film financing.

This story first appeared in the Sept. 11 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

In June, a group of forward-thinking film and web executives met at the offices of Ted Sarandos at Netflix in Beverly Hills to discuss how best to advance the finance oppor­tunities afforded by crowdfunding. Among the group of 25 were: Michael Barker, Sony Pictures Classics; Liesl Copland, WME; Nick Gonda, Tugg; Micah Green, CAA; Ted Hope, Amazon Studios; Robert Kyncl, YouTube; Franklin Leonard, The Black List; Keri Putnam, Sundance Institute; Slava Rubin, Indiegogo; and Brent Weinstein, UTA. In addition, filmmakers Morgan Spurlock, Alex Winter, Burnie Burns and Freddie Wong attended, as did crowdfunding consultant Ivan Askwith.

The following article by Professor Tim Wu of Columbia Law School and John Sloss of Cinetic Media came out of that discussion but is not necessarily representative of the views of the group.

We live in a golden age of fandom, a time where popular films and television shows seem to almost be inhabited by their adherents. That's why over the past decade, the great potential of crowdfunding for film and most other forms of storytelling has become evident. Companies like Kickstarter and Indiegogo have proved that the concept works, both for small-budget films and for bigger productions like Veronica Mars, Wish I Was Here, Super Troopers 2 and Lazer Team.

Yet despite these successes, crowdfunding remains a financing supplement for virtually no larger-budget films. Could crowdfunding be bigger — massively bigger?

The answer is yes. There has been emerging, slowly, a model with the potential to reshape film financing with an impact unrivaled since the heyday of off-balance-sheet financing in the 1990s, or perhaps even the end of the vertically integrated studios in the 1950s. But for scalable potential to be realized, serious barriers still must be overcome. A mixture of misconceptions and entrenched traditions and habits stand in the way of optimizing crowdfunding as a finance tool for movies.

Film crowdfunding, as it stands, has primarily relied on the sense that one is donating to a worthy cause. Helping out. Supporting the arts. Altruism is, to be sure, a powerful motive, and as a fundraising mechanism, its significance should not be understated; it will retain its importance, especially for smaller films. But as a tool for film finance, its limitations are very real. It is time to consider another traditional motivator of human behavior: consumer self-interest.

This new model would more explicitly envision film crowdfunding as a quid pro quo exchange of goods or services. The swap might center on the tried and true — merchandise, set visits, credits and other perks all are fair exchanges. But one particular and simple mechanism, if standardized, could change everything. That is the privileged delivery of the thing itself — the ability for the fan to "prebuy" a ticket and secure the right to see the film before everybody else. Put simply, the closed-circuit delivery of films to fans on a prerelease basis — in the "fan window," so to speak — has the potential to be the sleeping giant of film finance.

Imagine if Quentin Tarantino offered to his core fans, in exchange for buying a ticket today, the ability to see his next film for the usual price but before it goes into general release, along with some form of continued engagement during the production process. With a significant number of tickets sold, little or no investment from a financial backer would be necessary. It is interesting to speculate to what extent the film could be prefunded (and what that would mean for Tarantino's usual partner, Harvey Weinstein). Across the entertainment industry, prebuying of tickets or even products is the norm (think massive concert tours and theater presales). Film represents an exception — but that need not be the case.

Not everyone would buy in advance, of course, but not everyone is a hard-core fan. For this group, prebuying offers the opportunity to have a hand in the actual creation of content they support; be engaged on an ongoing basis throughout production; and finally, in exchange for their loyalty and participation in funding, the fans may indulge in the novelty and corresponding bragging rights that come with seeing the film before everyone else.

It's an idea with big potential. But making it work will mean overcoming certain assumptions and attitudes among filmmakers and distributors.

FILMMAKERS

When Zach Braff of Garden State fame crowdfunded Wish I Was Here, he attracted not just money but also critics in the press and on social media. At their most unfair, they asked why a rich actor was "asking his fans to pay for his movie." The perception that crowdfunding is a form of charity has done damage, perhaps unfairly, and created a potential drag on its growth. A tool meant to build a fan base, if managed incorrectly, could erode it. Filmmakers also may worry that, if they turn to crowdfunding, they will be understood as exploiting their fans in some way.

This notion needs to die a quick death, and the consumer-self-interest model may help. The idea that approaching fans to participate from the inception of a project is asking for charity is just wrong. Why do filmmakers make films if not for consumption by their fans and, if they are lucky, by other members of the general public? The decision to go and watch a movie always is a leap of faith, and under this plan, consumers wouldn't be asked to pay more, just early. It isn't so great a leap to ask hard-core fans to commit at the project's beginning for something they know they're going to watch anyway.

DISTRIBUTORS

Stereotypes sometimes are true, and film distributors, at least in the independent sector, tend to be control freaks whose disposition runs toward the pessimistic. Their attitude toward the benefits and burdens of crowdfunding is no exception. They are both afraid of the responsibility for "perk fulfillment" to those who invest and worried that presales to core audiences will cannibalize a film's ultimate performance. It is impor­tant to fight these attitudes.

Fulfillment obligation clearly is the responsibility of the film's producers. Crowdfunding is a rapidly evolving business, and there are highly skilled companies that oversee it without involving distributors. The same is true of prerelease streaming and theatrical screening fulfillment. Companies such as Vimeo and Tugg, respectively, are effective fulfillment partners in those areas.

The concern over cannibalizing the film's audience by showing it to the most commit­ted fans prior to release might be exactly backward. What actually can occur is a highly curated word-of-mouth program for the audience actually most disposed to spread positive buzz. In fact, exactly the same kind of pre­release screenings often are an essential part of a distributor's marketing plans. Could prere­lease fulfillment jeopardize potential Oscar qualification? The Academy itself appears to have put this concern to rest when it recently ruled that prerelease fulfillment streaming of the documentary Life Itself was a "private screening."

Moving forward is largely a matter of coordination, time and experience — establishment of standards and best practices. To that end, some of the leaders of the movement have, this year, founded the Crowdfunding Council, a body designed to try to work through some of these obstacles through meetings of the top crowdfunding portals, producers, websites and distributors.

We live in an age where the public wants to be a part of things, whether that's politics, technology or culture. Crowdfunding is an essentially democratic method by which the public gets a greater and more direct say by its involvement in the creation of something. As anyone who has tried joining a crowdfunded project knows, there is something fun and profound about being — even in a small way — a part of it all. And that's a feeling with a lot of potential for the future of film financing.



