AYWR: (in)Equity
by Lucas McNelly
The big news in the crowdfunding world is the U.S. House passing the Entrepreneur Access to Capital Act. It was a rather overwhelming vote, which means that somehow Congress has found something Democrats and Republicans agree on. All by itself this is shocking. What the bill effectively does is open crowdfunding up to equity investments. Almost everyone thinks this is a fantastic thing.
Everyone except me.
SEC regulations aren't even remotely my thing, so I'm not going to pretend I fully understand what the bill means. Other people, smarter than me, can do that for you. They can tell you about what the new regulations would do, what extra paperwork it would inevitably involve. They can tell you more about that worrisome part where the individual states get involved. But I do have some idea how the film world works and some idea how crowdfunding works.
Let's assume for a minute that the bill allows you to sell equity stakes in your film via Kickstarter and IndieGoGo. That seems to be what everyone thinks it means. On the surface, this seems like a pretty good deal. As it stands now, people back projects for a variety of reasons, but essentially they do it to support an artist in his or her quest to create something. They don't expect anything in return, other than the promised perks. But imagine if they could make money on it. Wouldn't they be willing to give more? If there was a chance that they could get behind the next PARANORMAL ACTIVITY, logic dictates it would make it much easier to raise those funds. No one doubts that.
And really, that's kind of the problem.
People see dollar signs and their brain just shuts off. People need money to make their films and anything that makes that easier is automatically viewed as a good thing. I understand that. Money is a great motivator. But there's more to it than that.
The relationship between a backer and a creator is a unique one. The backers collectively give an artist the ability to create something on their own terms. The filmmaker then delivers that film and the strength or weakness of it determines whether or not the backers would be willing to support them again. Make a good film and the relationship continues. Make a shitty film and it probably won't. At the end of the day, it's the work that matters.
Contrary to what some people will have you believe, this relationship can theoretically go on forever. If the filmmaker keeps delivering the work and keeps engaging with those backers in a meaningful way, it stands to reason that the backer pool will get deeper over time. Someone with a track record attracts a bigger audience. You could have a director make an entire career's worth of films, all of them crowdfunded, completely free of any studio system or any interference from people concerned with how their film will fare in a marketplace.
That's never before been possible. And now it is. It's the hope that there's an actual future where indie filmmakers can sustain themselves with their work.
That's a really big deal.
Now add a profit motivation to that.
Money changes everything. Tell people they can make money off something and it becomes all they can think of. Instead of giving a filmmaker $50 and then watching from afar as they make the work, people take a more active approach to following the progress. After all, that's their $50, maybe their $100, maybe more. The entire expectation changes. They go from being benefactors to investors. And investors vote with their wallet.
Let's say your film has 500 backers. You now have 500 investors to keep track of. 500 people who, on some level, want your film to turn a profit. 500 people who all have different ideas about how to do that. In short, you're just like a studio filmmaker, only you have to answer to a lot more people and you have a lot less money to work with.
But in good news, it'll be easier to convince the guy you went to grade school with to give you $50. So that's something.
Really, I don't imagine for a second that Congress has any idea what the hell they're doing. And I'm sure the law will be littered with loopholes designed to help the 1% continue fucking us all over. I'm skeptical that this reform isn't more trouble than it's worth, and I don't really see the upside. Seems to me we're just tearing down the best opportunity to create a system for filmmaker sustainability in our lifetime. And for what?
One of the discussions Kieran Roberts and I have every so often about UP COUNTRY is how to best finish the movie. It's a common discussion that every film has. Our approach is simple. Since we have no investors and no one to pay back, we can do whatever we think is best for the film. We have final cut. It's 100% up to us. We have some interesting things in the film that we can do simply because of the creative freedom given by our Kickstarter backers. Or, as I say to Kieran, "if we can't do this on a $4,000 Kickstarter film, we'll never be able to." It's really a liberating feeling. It's not something I want to give up.
And maybe if those 108 backers were investors, that wouldn't change. I'm pretty stubborn, after all. But my gut tells me it would. I know it would muddy up the water quite a bit. I see meetings and large votes on stuff like the font of the title sequence and what festivals (if any) to submit the film to and really a bunch of nonsense that has nothing to do with making films. It's middle management. I used to work in middle management. It's neither fun nor productive.
Filmmakers don't need that sort of group think mentality telling them how to do their jobs. Not when the system in place has so much potential for greatness.
