Crowdfunding’s Big Week of Changes

on Friday, Mar. 27th

Just a few quick thoughts on a Friday.

As I write this the biggest Kickstarter ever—the Pebble Time, the successor to what is now the third biggest ever—is closing in on a final total of well over $20,000,000.

With numbers like that 2015 is already feeling like its going to be the biggest year in crowdfunding yet, and not in the lame, limping way that 2014 was bigger than 2013. No, something feels like it changed at the beginning of the year. Something in the zeitgeist where people stopped worrying about crowdfunding and learned to accept its bumps and bruises.

While the cultural temperature is shifting there are also structural changes afoot. One of them will only strengthen the community building model at the heart of crowdfunding while the other big change could blow up half a decade of good will in pursuit of the almighty dollar.

Let’s start with a small change first.

Earlier this week Kickstarter announced that successfully completed projects are now able to convert their project pages into “Spotlight” pages. This gives project creators the ability to communicate with people who are “late to the party” of backing their project. This is a significant change because successful Kickstarter campaigns stick around in the form of links to the project, and that traffic has been a dead end for years.

Instead people who are encountering a successful campaign after the fact will be able to find out what all the fuss was about and, if it’s possible, join in. Take the Spotlight page for Terence Nance’s An Oversimplification of Her Beauty, a film that I loved at Sundance years ago, and that had a good run in the early days of film crowdfunding. Now when someone digs out that Kickstarter link in an old article in the deep web they’re going to find themselves one click away from getting the film on iTunes.

It’s one of those things that feels overdue, but instead of griping I’m just thankful that we have the option.

There’s another thing that’s overdue, and that one I’m not all that pleased with. At least, not with how it’s being viewed.

The Security and Exchange Commission has finally set the rules for a key provision of the JOBS Act which governs the investment side of crowdfunding. This is a change that financiers and other Wall Street types have been salivating over: a chance to get small dollar investors into the pool with the sharks.

For tech start-up crowdfunding the risk/reward ratio is going to be some kind of crazy casino action. Heck, I will probably get down to gambling on a few inventions myself at some point— and no, I won’t allow myself to write about the ones that I do, or put anything on a project with a return on investment that I have written about—just on the off chance that I’ll be able to retire someday. Not early, mind you, just retire period.

The idea that this kind of crowd investing, and I do want to make the distinction here nomenclature-wise, is going to be a godsend for filmmakers is worse that laughable. It’s a red herring even Hitchcock couldn’t love.

Let me be clear: there is a chance—a chance—that some people will be able to get very rich, or at least see a return on investment for financing a slate of filmed entertainment content via crowd investing. But “filmed entertainment content” has the same relationship to films that “processed cheese food” has to cheese. The investment model puts the emphasis back on the ability of a movie to turn a profit, as if that were the only metric that mattered.

If you’re a multi-billion dollar entertainment conglomerate it is the only thing that matters. If you’re a fan of good films and fun movies with unique voices you probably care more about seeing the filmmakers you like be happy and successful on their own terms. You’ve probably already given to a crowdfunding campaign in the hopes of seeing something you never thought you’d get to see.

You joined a community of likeminded individuals who helped bring about something that otherwise wouldn’t exist. That experience was your return on investment. That and you have a goofy t-shirt to remember it by.

Those who invest in filmed entertainment content that then goes and bombs—and oh, man so much of it is going to bomb—won’t even have a t-shirt to clean up all the spilled milk they’ll be crying over. They’ll just have a big fat share of nothing.

Because if you haven’t paid attention there’s one thing that studio and would-be studio accounts are very, very good at: making sure that a movie never makes money on paper.

So that’s the choice facing small dollar film funders: take home a do-dad or a promise.

You know which one I’d pick.


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