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Crowdfunding is 2 for 2

by Jeff Steele

I was (and remain) skeptical of crowd funding’s  place within the traditional film funding model, but have been pleasantly surprised to see it  recently perform adequately for two film related raises — both of which were to pay for lawyers.  It’s always reassuring to see film making axioms play-out: in this case it’s that the only people who make money from every film are the attorneys.

The first one was to raise money for a securities attorney to petition the SEC to modify the accredited investors laws to allow crowd funding for films (something that I fear will be so fraught with fraud that  producers will long for the respectable days of pre-crowdfunding film investment.)  The raiswase  successful and the fight is now on.

The second is posted at Kickstarter.com and was brought to my attention by Robert Redford’s article in the Huffington Post (which syndicates my posts as well.)  In this instance, documentary filmmaker Joe Berlinger is raising a legal defense fund for his fight against Chevron, who subpoenaed his 600 hours of footage for its defense against 30,000 Ecuadorians who are suing Chevron for destroying and poisoning their lands and people.  It would seem that this footage and the people who confided to the filmmakers, would be a slam dunk 1st Amendment defense, but the courts seem to feel otherwise.

Having made a social issue documentary (“Who Killed the Electric Car?”) that was also a David vs. Corporate Goliath story, I vividly recall the production being threatened with potential litigation, as well as disinformation campaigns brought about by a publicity firm hired by GM.

Redford makes a valid point that if people don’t feel they can have some modicum of constitutional protection by whistle-blowing or speaking candidly with documentary filmmakers, then our society will lose one of its greatest civil protectorates: passionate, self-righteous, bullheaded filmmakers.

Independent filmmakers need all the help they can get, so even if Kickstarter and the other crowd funding resources aren’t able to fulfill the promise of film funding, perhaps they can find comfort as a vehicle for film protecting.

21 Responses leave one →
  1. Scott Hillman permalink
    June 7, 2010

    24,000 to fight a subpeona?

    I know the traditional response to most discovery requests is to fight them tooth and nail, but usally the simpilest and best response is to simply give in. You don’t gain anything from fighting them, and the time and expense never equals out. People spend millions of dollars and 1000s of hours doing these kind of things in the law-but at some level it has to be reciprical. They still get to make the documentary, all they have to do is give them dvd copies of all the footage. Chevron has to pay for the DVDS.

    This isn’t a first amendment issue-journilistic shield laws are state laws. Either Ecuador has a variation of it, or it doesn’t. And if it doesn’t your not going to get anywhere. None of the articles state whether it does or doesn’t.

    I would state that my heart does go out to the ecuadourians, and i wish them every sucess in there court case. I do however belive that court fights like this are a giant waste of time and effort.

    If you told me that Chevron wanted them to spend 24,000 more then they wanted the tapes i would belive you. The Goliaths of the world get a wepion to threaten people with-but there really just paper tigers. Stupid Discovery requests are one of the leading causes of the belief that people have that it takes millions of dollars to fight big corporations, and that court is a giant expensive war.

    The fact that the filmmaker has chosen to take the bait ,and that his fellow citizens have helped him is their right and I don’t begrudge them that. However i am just for the record going to say there is nothing “feel good” for me about this story.

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    • June 7, 2010

      I believe the act of whistle-blowing or speaking out candidly comes with a modicum of responsibility; think about the scenario of a irresponsibly produced (and distributed) documentary, and the recourse of those ‘falsly accused’ or ‘slandered’. I suppose that Mr. Redford would argue that laws exist on the books (in Ecuador and other film industry friendly countries) for those seeking recourse — thus the argument in favor of handing over all docs during ‘discovery’. And especially during countless ‘interrogatories’. Protection cuts both ways — be prepared to fight it out in the courts.

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  2. Jeff Steele permalink
    June 7, 2010

    If it was just 600 hours of talking head interviews, then I would agree that there is no reason not to turn them over; however, if there are people who have agreed to go on tape, who did not necessarily agree to go on film for fear of reprocutions, then that is something worth fighting for.

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    • Scott Hillman permalink
      June 7, 2010

      I would agree with you. However if Ecuador doesn’t have a journilistic shield law(which i honestly don’t know whether it does or not-the articles never site it) then to represent that something like this won’t happen would be dishonest on the filmmakers part. This is a very simple yes or no fact-most legal case despite what ever passion they create boil down to that.

      I guess my point is something that you stress over constantly in this blog-the need for prospective producers and investors to be honest , realistic and upfront with what they are selling and have realistic expectations-whether there going to foriegn buyers for a movie or crowdsourcing for charity.

      I don’t think that this necessairly qualifies for that.

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      • Scott Hillman permalink
        June 7, 2010

        Ahh but to much consistency is the hobgoblins of little minds with Charity. There is virtue in just helping others when they need it. Good luck to them.

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    • June 9, 2010

      The chilling effect on the First Amendment would be catastrophic for documentary filmmakers.

      I’m surprised a non-profit 1st Amendment organization hasn’t stepped forward.

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  3. Pierre Lapointe permalink
    June 7, 2010

    Is it a coincidence that Chevron is attempting to curtail any bad PR in the wake of the Gulf disaster and the catastrophe that is British Petroleum?

    Finally people will realize with full force the absolute control and power these corporations wield and will hopefully cry out for alternatives before more oceans, wildlife and people are fatally affected.

    Perhaps crowdfunding will be a catalyst, not just for filmmaking but to raise awareness to certain causes as well.

    I too am skeptical of crowdfunding as a means of raising required funds for films, but I am willing to give it time to see if it can evolve into something that is more tangible. Can it be used to gather minimal development funds (mostly to pay those legal fees) instead of using expensive bridge loans? But what’s the donor’s motivation? Are t-shirts, posters, DVDs and other trinkets enough of a payback 12 months or more down the line? The novelty might work at first, but I suspect would wear out pretty quickly.

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  4. June 7, 2010

    I would argue the purpose of being a filmmaker, let alone a documentary filmmaker that tackles social/political/environmental issues is to inform its audience versus take on the establishment. Information can bring about change in people, inspiring the capacity for good. Taking on the corporate entity itself does not unless their bottom dollar is effected.

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  5. June 7, 2010

    Consequences and precedents.

    This battle is important on its own, but we who are concerned about such things as freedom of the press must fight it because everything at this level is about consequences and precedents. Capitulating on this issue means the next issue (oh, let’s see, what could be “the next issue?”….perhaps some bigger oil company that spends more on PR and litigation than it does on plugging its hole in the Gulf??) will fold under the weight of a pragmatic, easy-out choice now.

    Abdication is destructive to our society.

    Thanks, Jeff, for wandering into this controversial issue.

    And, yes, to bring the point back home to your blog’s main focus, crowdfunding has great promise, but who knows where it will go?

    You make an interesting point about the lawyers being the ones to benefit so far, but here’s my observation (and you know I’m wary of the model): a couple months ago when I assessed crowdfunding as having the potential to generate a “normal” maximum of, say, $5,000 if one spent all their time on it, it now seems to have leapt forward to the potential “normal” maximum of $15,000 to $20,000. This is merely observation, but those are the numbers I now see.

    And it’s just as susceptible to “catching lightning in a bottle” as indie movies are: look at the quarter million raised by DIASPORA* because of the timing of their crowdfunding at the same time the public was going ape-shit over Facebook’s privacy fiasco.

    People WANT crowdfunding.

    I’m beginning to think the moribund, inadequate, bureaucratic nightmare that is the SEC is going to be forced out of the picture, like it or not. The mass is forming behind crowdfunding, and the bureaucrats, as defines them, don’t even see it coming.

    The SEC is quickly becoming anachronistic, an annoying ante-bastion only for the uber-level of professionals who still dwell in studio slate financing (whatever that is). Madoff is proving to be the gravestone for the crippled,…

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    • Pierre Lapointe permalink
      June 7, 2010

      Well, I would venture to say that the SEC does serve a viable purpose. They may have veered off course and need to re-align their objectives, but as long as you have entities who will take advantage of others for huge financial gains, there will be a need to regulate and monitor such activities. Madoff is a perfect example of that!

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      • June 7, 2010

        I agree that all of us need protection, both the investor and the requester. The SEC establishes fairness rules. You can’t sue me for no reason at all, and I can’t run off with your money. That’s fair.

        But the SEC has failed at protection over and over again. It usually only reacts to the post-mortems of actions taken by aggrieved investors themselves. It is a glacier of public bureaucracy, giving the illusion of safety because of its sheer bulk. Yes, it moves! An inch a year.

        Worse, nothing can protect investors from themselves. Over and over again, investors are proven to ignore the realistic pitches of honest people and instead flock to the outrageous promises of crooks (Madoff being the most egregious, but only one of many that get reported in the news each year).

        I sense that crowdfunding is so transparent and straight-forward that common folks flock to it because of its refreshing promise: Open and Transparent Community. That’s the way to build an investor class!

        The SEC is so last-millennial and, I believe, incapable of adjusting to the real world of what citizen investors want. It’s comfortable for the professional investor class, just as smoking jackets and large exclusive clubs are, but it belongs, IMHO, on a library shelf; take it down, blow off the dust, confirm an old procedure, then put it back.

        Crowdfunding is, it appears, the future.

        But I could be wrong.

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        • Pierre Lapointe permalink
          June 7, 2010

          I think it’s a mistake to consider crowdfunding a type of ‘investment’ though that may evolve at some later stage. Rather, it is a means of pre-payment for the promise of a service or product. That cost must be taken into account by the filmmaker. This is also the reason I consider this platform challenging to raising any significant funds in terms of film production.

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          • Pierre Lapointe permalink
            June 7, 2010

            I wanted to add that I think the appeal of crowdfunding to filmmakers in particular is the idea (probably subconcious) that there is a lack of accountability or the “I just want the money to make my film then we’ll see” syndrome which in my opinion is dangerous.

            Frankly, I have not been impressed by the majority of these sites, one even seemed to be a blatant pyramid scheme with a pretty cool named framework.

            The idea of a citizen-investor class is nice and even utopian but more often than not, the citizen-investor in his/her zeal to make a quick buck without understanding the fundamentals is the one left holding the bag. Crowdfunding might be the ultimate where the citizen investor gets hoisted by his/her own petard!

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          • June 7, 2010

            Yes, there are costs and energies, but a LOT less, than the cost and energies to launch a Reg D PPM.

            I agree that the potential for “dumb money” is the open question, and have warned that the real drawback to crowdfunding is not yet known: that is, what will happen when the films get made, and one of them (ok, maybe more than one–but not likely) is successful? I believe crowdfund “investors” will petition courts to have the sites’ complex boilerplate clickable terms and conditions tossed out, and to have the “investors” classified by the courts as just that: investors, owners of equity, due profit participation.

            The SEC will have no participation in that, IMHO. They will be flummoxed and incapable of response. Their only participation will be as the repository of legal references to long-dormant, ancient rules and regs of the SEC, which operate in the legal field even if the SEC were dead.

            The SEC did not stop Madoff. They were instrumental in his punishment after others exposed him as a criminal only by reference to the long-standing rules and regs that would exist even without the SEC today.

            I worry that the SEC will be motivated to justify their existence by making stupid bureaucratic motions now to prove their might by attacking, unreasonably, crowdfunding.

            But the most important take-away, to me, is the vibrancy and acceptance of the concept. It proves that there IS a latent investor-class for indie films, that citizens want a simple, transparent, community-approved opportunity to participate in the movie making process.

            And everything indicates we are approaching the tipping point where it will soon become possible to raise the entire budget of a low-budget indie feature film (~$1 million?) via an energized, socially-active new investor class.

            I believe crowdfunding needs nurturing and honing, not attacks. It is proof the the existing system has left the citizens behind, and the citizens know it.

            That, to me, is GREAT news

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          • Pierre Lapointe permalink
            June 7, 2010

            Certainly you won’t get me to defend the SEC – they have been corrupted and lackadaisical and have dropped the ball on more than one occasion.

            I may not currently share your optimism for this platform – that may change over time, but I admire your passion and hope that things turn out that way. Best of luck with all your projects.

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  6. June 7, 2010

    (hmm…that post shouldn’t have been cut off… hah) The last sentence is:

    Madoff is proving to be the gravestone for the crippled, ineffective SEC, not merely an albatross.

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  7. Peter E. Jackson permalink
    October 4, 2010

    Jeff…

    Not sure if you saw this post about crowd funding. If not wanted to pass it along to you.

    SEC Insight into Film Crowdfunding Via a Public Securities Offering

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  8. February 5, 2011

    Crowdsourcing funding or peer-to-peer funding or “membership” funding pops up every year. Variety Magazine covered “membership” funding topic in 8/07 and gave it a thumbs-down. It essentially described $10 investors providing donations or confusing giving DVD copies as a stock dividend.

    If the crowdsourcing objective as described here was to pay attorney costs then a better/quicker option would have been to pursue ‘Legal Finance’. Crowdsourcing still entails the cost of “getting the word out”.

    Note that Crowdsourcing is also essentially a new take on ‘DPO Funding'; known as Direct Private offerings… which markets registered shares to firms own customers, employees, suppliers, & distributors. (a crowd)

    As for the recent discussion that PA funding is far and few; we’ve been promoting it for years. ‘Bartered Equity’ of PPM shares for P&A ranging typically $1-5M is offered by an affiliate on our website along with Legal Finance.

    Our syndicated blogfeed of 200 finance options is posted on our exclusive listing on the Nevada Film Commission’s online Production Directory.

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  9. November 3, 2011

    Its not always only the lawyers that make out in the end. Take for example, the documentary soccer film “Rise & Shine” (see link). This is a perfect example of Kickstarter can be an exceptionally important vehicle in a certain type of films financning.

    Rise and Shine is a film about the incredible journey of US Soccer start Jay DeMeri and his unlikely rise from the US into the UK football system and on to the US National team. The producers funded the actual film themselves, but then need over $200,000 to pay for the licensing for the footage they needed from the Engligh Premiere Leauge, etc.

    With an incredible social marketing campaign and an inherent built-in fan base, Kickstarter was the perfect vehicle to raise the necessary funds. No one (including, I must say, myself) thought that they could do it, but they raised close to $225,000 becoming the documentary with the largest raise ever.

    Because they were able to then procure the footage, the film eventually got actual distribution and is now opening (today) in theaters across the U.S.

    Without the kickstarter platform and all the donations (which included other U.S. National Soccer players and the lead singer of Weezer), this project never would have seen the light of day.

    This may be more the anomaly, but it shows how important crowdfunding can be for the right project and how, if used correctly and in tandem with a blitzkreig social marketing campagain, incredibly successful it can be.

    http://sportsillustrated.cnn.com/2011/writers/grant_wahl/11/03/rise.and.shine/index.html

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    • Jeff Steele permalink
      November 3, 2011

      Peter is correct that, when performed “in tandem with a blitzkreig social marketing campaign”, gifting sites like Kickstarter and IndieGoGo can be effective for raising six-figures. Fortunately of unfortunately, most filmmakers lack the resources to execute such high-profile, disciplined campaigns.

      It was also helpful that the film was pretty far along when they launched the campaign, so having film footage and marketing material to pull-from is a tremendous advantage over an upstart. So, it stands to reason that finishing funds are easier to procure than seed funding. i.e. Crowd-finishing vs. Crowd-seeding.

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