Beyond Crowdsourced Funding

by markversus

Movie CameraLooking at the statistics for this site over the last year or so it appears that there is a lot of interest in the subject of crowdsourced funding, and in particular crowdsourced funding of film. The most popular post on this blog is by some margin [The crowdsourcing post link]. I can only agree with the figures given that it is the subject that caused me to write the most. Obviously it holds interest for me. Due to this popularity and following a number of conversations I have been having on the subject I think that it is time to weigh back in.

I feel obliged to state from the outset that these are opinions based on zero practical experience of raising finance for a film. Some might think that should invalidate what follows. I say that if there is anything to add to a debate then let’s hear it irrespective of the source. I can choose to disregard it after the fact. There may, however be something worth hearing. I hope so here.

I would also add that the basis for my lack of experience in financing a film in this manner is, in part, that until something new is added to the formula, the process simply does not work well enough to be a viable course of action. This statement is meant as no disrespect to those people who have worked or are attempting to work in this manner. On the contrary, I would wish to see them held up as the pioneers of whatever comes out of the flux that independent film finance is currently (but seems always to be) in. It would nonetheless be foolish of me to wait in a queue behind them to pick at the same fruitless tree. Instead I have the luxury of watching how their experiments play out and learning fro their successes ad failures. What exists as fact at the moment is that the crowdfunding model for film finance does not work. It is not refined enough, it is not efficient enough and it is not effective enough. If it was, everyone would be doing it. The truth is that the act of building and maintaining a community is itself a challenging enough prospect (particularly in the company of scammers and social media ‘consultants’ and ‘experts’). The labour of doing such a thing is Herculean and does not suit being placed alongside the similarly epic task of developing a film. When both tasks are undertaken by the same person it is no surprise that the process takes so long or loses its momentum before it has really begun.

That is not to say that you cannot make a film that has been crowd funded. I could not claim that. But the question needs to be asked (as it should be always) “Is there a better way?”. Rather that an old world attitude of “If it ‘aint broke dont fix it” those looking to make films should be asking “If it never worked to begin with why not accept that it is probably broken?”.

Crowdfunding is, in the most part, a means to an end. The end is a film of whatever description you care for. I would doubt that there are many, of any, filmmakers who attempted to crowdfund a film purely to see if it could be done. Instead, they are looking for a workable way to meet the costs of producing a script. To these people it doesn’t matter how the money is raised, just that it is raised. I would add that these people are, intentionally or otherwise, looking to operate outside of the standard systems of film finance and that any alternative to the crowdfunding model needs to meet this accessibility criteria. The rise in crowdsourcing generally is a byproduct of (as good as) free access to an audience and it is this or other benefits of the information age from which we are likely to find what we are looking for.

When crowdfunding doesn’t work

One of the reasons crowd funding is not (and never will be?) sustainable as a praactical method of independent film finance is efficiency. Any industrial process needs to strike a balance between energy put into the process measured against results. In it current incarnations the crowd funding model, exemplified by a directed Twitter campaign to followers, say, requesting money as a donation, contribution or investment requires a huge level of commitment in time and energy and offer a limited reward. This is and always be the case because it, as most attempts have done so to date, focuses on the wrong part of the (as yet unrecognised) word ‘crowdfunding’ and that is the funding. These enterprises, and forgive me if I am repeating myself, are spending all of their energy attempting to meet a financial target that is usually entirely urealistic for the size of the community from which they are attempting to extract it from.

There are a few numbers that need to be considered in the crowd funding of a project (and there os no reason this should be limited to film projects). The first is the budget of the project. What will it cost to make? The second number should be the size of the comunity that can be built around the project. Who will have sufficient interest to follow this project? How many people can we get ‘involved’ in some way or another? These two numbers will give you an average value of the contribution you will need from each member of the community. If you imagine this number is too high (and if you don’t want to guess you can always ask the community) you have two options 1) Reduce the budget; or 2) Increase the community. Under the circumstances of filmmaking nobody wants to do the first so it becoes a case of doing the second.

This is the key to all crowd funding efforts. It bears repeating over and over again. If you want to raise money from a crowd, the bigger te crowd the higher your success rate. Imagine a community of 2000 people who have each given £1 to a short about bees that has a budget of £4000. The financial goal is 50% met. In order to meet the second half of the budget will it be easier to get everyone to increase their contribution to £2 or to find 2000 more people who care enough about bees to join in and give their own £1? The answer may not seem obvious but it becomes so when you imagine that with every pound you take from the existing contributors you are reducing their capacity to give (assuming that money is a finite resource for these people) whereas with every new member you add to your community you are opening up the potential for further contribution. I am happy to admit that every project will have a limit to the size of the community it is possible to build around a project (bees movies are probably more niche that zombie movies). But if you ever hit the plateau of maximum capacity within your community then you are in a very special place, and if those people are not willing to stump up the amount you need, then you will have learned a sharp lesson in market value and you should probably reconsider your budget number.

If you observe the crowdfunding sites (Kickstarter etc.) that exist, you will see them performing two functions. The first is logistic – they reduce the technical requirements of money management (and offering some security on the part of the parties). The second is that they provide a platform for community management. They allow the project leaders to speak to the community simply and with focus. They are by no means a guarantee of success. I would argue that the value that they add in terms of community growth is almost negligible. Those projects that succeed via these sites are still the ones that have been able to build project awareness and community growth, generally through press. They take care of the management of the crowd and of the funding, but it remains up to you to bring that crowd in.

What alternatives are there?

What alternatives are there to the existing crowdfunding model? Personally, I would suggest filmmakers explore what benefits thay can gather from building the best possible community around their project. These need not be financial. In the current environment you could probably get away with allowing the fact that cash is an ultimate goal to be implied while you are building, developing and expanding the community. If people want to add to the coffers, allow them but do not let it become the focus of the campaign. It can a useful indicator of the average value a contributor is willing to give, letting you know how large the community needs to be before you start directly raising finance.

A community relishes engagement, with the project and each other. If there are skills or knowledge that can be a contributor to the project purely for the benefit of the community then you are effectively crowdfunding against specific hard costs in kind. Consider the Shaun of the Dead team reducing the cost of their supporting artist budget by drawing their horde of zobies from the engaged and excited Spaced web community. This method is not always going to be appropriate to a project, but it is always worth looking to see what the community can offer. Their simplest and most valuable role is to act as ambassadors and evangelists for the project and as good community members. It is via them that you most likely to reach new members.

As an example of an alternative model, creating a community around a broad theme rather than a specific project is a potential method of funding film. If a membership was built around the common idea of horror films, documentaries or some wider thematic model where there was an understanding the when an appropriate project emerged the community would be called upon to finance the film it would be possible to engage the comminty in the wider development process. The fundability of any film could be effectively judged based on the amount of support the community had at any one time.

I think at this point I will save the topic of increasing efficiency within the filmmaking process for another post. I hope that there is something in this post that add positively to the conversation around crowd funding and film. As with most things that have found their place on the internet it is a very fast moving area and the more it gets discussed the better it will develop. Please leave comments with any thoughts that you have. Also, I am looking into promoting a wider discussion on this and other independent finacing issues by way of some kind of a conference or roundtable. Let me know in the comments of there is an appetite for this.

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