Creative new way to fund a movie

http://www.lobsterback.com/wehavetofindaway/

by tialys • 17 years ago

24 23 17 years ago

I love the idea but I'm a little worried about how they keep calling it an investment. I don't know the details but the phrase "accredited investor" and the issues Prosper had come to mind. I sure hope they don't get into trouble for using the word "investment" without discussing the return.

EDIT: Oh, there's a spreadsheet at the bottom with potential return information.

tialys2• 17 years ago

Yeah, they raised over $19,000 the first day, panicked and called their lawyer, but they've determined it doesn't violate any SEC laws, so it's back up and moving.

falsestprophet• 17 years ago

The only way they could have accomplished this is by calling a lawyer that doesn't know anything about securities law.

TrevorJ• 17 years ago

This is a nice idea, I wish him well.

graphene• 17 years ago

From the pdf at the bottom of the page:

IF YOU INVEST $50, AND THE FILM IS...

SOLD FOR $250,000 = YOU GET $50 (100% RETURN)

SOLD FOR $500,000 = YOU GET $75 (150% RETURN)

SOLD FOR $1,000,000 = YOU GET $88 (175% RETURN)

I don't think traditional investors count like that.. I presume the investors won't get paid back their initial investment, so if the film sells for 250k and each investor gets his $50 back, that's a return of zero. A return of 100% implies a doubling of your initial investment..

Please correct me if I'm wrong, but I think the way it's phrased here is quite misleading (otherwise great idea though).

newacc• 17 years ago

good idea, no doubt about it ... crowdsourcing is the best way to go ... though i have few queries (especially the last one)if someone can answer:

1. how is lobsterback going to make money? OR are they planning for no profit and no loss endeavor?

2. Is there any contract paperwork done? and can an investor see that beforehand?

3. How lobsterback is committed for ROI when you're investing in "Natalie queen of stock - LLC"?

4. Personally I want to know how SEC won't object to such financing? as investors are also shareholders!!??!! Because if this can be done (legally) then angel investing (thru crowdsourcing) can go off the roof to help so many different kind of startups. So if you know a trick/loop-hole/idea/grey-area of how one can arrange this kind of financing then reply here right away.

I TRULY SEE THIS IDEA A REVOLUTIONARY !!! I'm saying this because i know people who have done research (on this kind of financing) and spoke to several lawyers but with no help ...

anigbrowl5• 17 years ago

That's quite true. I like the idea (since I'm in film myself and I hate begging people for money), but yes, it does seem like something the SEC would disapprove of, which is why most internet film fundraising requests non-refundable donations in exchange for collector's editions and stuff like that.

Edit: well I guess their lawyers are sure of what they're at. I hope they write about or open source their process, as I'd far rather raiser cash in micro-amounts based on the strength of the script etc. than sit in investor meetings.

anigbrowl5• 17 years ago

(Can't edit any more) after taking a bit more time to look through their offering, I retract my statement about the lawyers. Legally speaking, it's radioactive. The upside is that the sums solicited are so small it's probably not worth suing over.

WalterSear• 17 years ago

Not new.

tialys2• 17 years ago

I've never heard of anyone raising money for a feature film this way, but I'd love to hear more about anyone else who has. Can you give me an example?

pageman• 17 years ago

we've done this for http://leaudouce.com/seednotes.htm (raised 10% of budget in 30 days, budget at around 2M USD) - if anyone else is interested in raising the 90%, buzz me! :)

Keyframe3• 17 years ago

$250,000 is next to nothing for a movie budget. It can't be done. Here is why. Aside actual pre-production, production and post-production costs (which COULD be done for $250,000 - though more realistic budget is $2-3 mil), there is a print distribution cost which can get REALLY high.

Distribution copies are expensive, about $1200 per reel copy if you are really lucky (multiply with about at least 1200 screens for a moderate indie flick (about $1.5 mil).

If you think targeting digital distribution sites is another option - think again. You still pay print copy equivalent expense, but not to the print service company, but to the actual screen venue. This is a ploy George Lucas "invented" and pushed onto screening venues in order to push the cost of digital screens to the distribution companies instead of the screening venues. This will last for at least 5 years from when the venue bought digital screening platform.

Then, there is a marketing cost. In A+ budget titles it is in the order of $30-40+ mil. So when you hear about, I don't know, Spiderman 4 having a budget of $200 mil., it means about 60% of that is marketing and distribution cost.

Now, let's turn focus on actual production costs.

SAG, WGA, DGA - all have a different perspective of what low budget means. There are different categories of low budget titles, and based upon those categories there is a minimum wage you have to pay to actors, screenwriters (treatment, script, whatnot), director, etc... What this means, if you live in some area of USA where those guilds operate is that you are illegal production if you don't pay those minimum wages based on your budget. I have somewhere those scales, if anyone is interesting I can follow up my post and present them.

tl;dr; $250k budget is not realistic. Too many people have worked on this problem already and smallest realistic budget for a visible project is in the order of $2-5 mil.

taille• 17 years ago

rian johnson's "brick", which won an award at sundance, was made for $450,000 on 35mm. then it was sold to distribution companies which made all of the below costs you're talking about.

if they're shooting it on 16mm with a small crew (union or not) and their actors are working indie sag, $250,000 doesn't sound unreasonable at all for a film looking for a festival run + talking to potential distributors.

Keyframe3• 17 years ago

Yes, you are absolutely right. The best way to have a low budget production is to find a film and drama school in a place where there is no union. You can get a crew for next to nothing. They get screen credits which matter more than you think, and you can provide food. You can rent a cheap digital camera like Red One with lenses for about 600 Euros per day, a set of HMI lights and electricity for another 1,000 or so - clothes and props... you can make a movie for 50,000 Euro if you want (typical shooting schedule is about 20-25 days).

However, that wont bring your movie nowhere. You can seek a distributor, which get tons of proposals and probably wont even look at your film (NDAs and lots of proposals mostly). Think of distributors as VC companies and each movie as a startup, because it is. Distributor has enough money to market the film.

Another option, which almost every indie production takes is festival run. Festivals are great because if you win an award, distributor hears about you, distributor might see you there with your movie and there are usually market palces associated with festivals where distributors and TV houses shop for movies and series (I work in animation and biggest is Annecy in France).

Some of you might think, why not go viral with the movie? Why not let it go on the internet, market it around reddit, digg, whatnot - it could be a festival like cycle, no? Well, no. You see, I would be the first one to do so, but if you want your flick to be eligible for any kind of festival award (from Annecy to Sundance to Oscars) it works in a funny kind of way. In order to make your flick run in a festival, requirements to do so usually mean that it had to already run on several festivals (Oscar eligibility for example) and almost always there is a strict rule that your film is not publicly available (online or distribution), which gives festivals a sort of premiere in their region.

Movie business is a strict business with a lot of rules and even more egos. Each and every movie is run exactly like a startup that operates on milestones and further funding.

joshu• 17 years ago

This is a really great summary. I always love it when people shine a little light into businesses I know zero about.

tyn• 17 years ago

http://www.the-numbers.com/movies/records/allbudgets.php

A lot of films with budget below 1 mil. (although some of them are very old and you have to take inflation into account)

Keyframe3• 17 years ago

Production yes, can be done for "little" money - distribution (which most big budget titles account for) no.

anigbrowl5• 17 years ago

This is only true if you are the owner of or have a deal with the distribution pipeline ahead of production. The indie route, flawed as it is, is to produce the film (as in, end up with an answer print or digital master in a industry-standard format), take it to festivals and film markets, and sell it to distributor. The distributor will put up the money for P&A, and keep the lion's share of receipts.

Many indie producers lack a proper distribution strategy or fail to budget properly for post, mastering, or marketing - which can mean marketing to distributors as well as the general public. but if you have a good post crew and you have budgeted for your deliverables, then $25k of the $250 for marketing may be enough to get it sold, assuming a great script and the approval of the film gods.

Of course, the likelihood of the investors making any actual profit on such a deal is very small, since the makers have now exposed their production budget and the distributor thus has no incentive to pay more than that unless the film is awesome and a bidding war ensues (you might as well buy a lottery ticket as count on that, of course). Equally, it's very unlikely they'll be able to negotiate a percentage of gross and it will be a long time before they see any net. On the upside, the marketing method is already generating buzz for the film at almost no cost, simply by virtue of us discussing it.

You can make a film for very little and go straight to DVD. DVD is where the real money is: the theatrical run is unprofitable for a great many films, but it validates the film as a Real Movie in the eyes of the public, and there's a very good chance people will rent a film later even if they're too lazy/cheap to go watch it in the theater.

Without a theatrical release or prominent festival entry it's much harder, but not impossible, to make money by releasing on DVD. A $250k film can break even after 3-5 years if it's of middling quality; the distributor may pay $75k up front and then royalties.

If you have the required craziness to make a sub-$50k film that isn't irredeemably crap, they'll probably buy it outright - and as a producer or director, it's better to have something out there with your name on it, even if it is mediocre. It's a lot easier to get money for the second film, when you can truthfully say 'my debut film, derivative horror flick, is distributed by Lion's Gate'.

costan• 17 years ago

Can you have 5000 share-holders in an LLC?

frossie• 17 years ago

They are not called shareholders in an LLC, they are members, and there is no maximum number. [Disclaimer: IANAL]

I gave them $50 because I liked the way they asked. I certainly don't expect to see it again :-)

gogoslava• 17 years ago

IndieGoGo is helping to centralize the process of legally raising money online. We have almost 2000 films/projects on IndieGoGo and filmmakers have been able to raise $10s of thousand at a time. Including Sundance Award winners. Please email info [@] indiegogo with any questions.

Creative new way to fund a movie

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