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Friday, April 25, 2008

Internet Film Financing: Evaluating the Options

Let’s have a look at the three sites that aim to help filmmakers raise money for their projects online, all of which are at a pretty early stage of development.

My only criteria was that they’re open to any filmmaker (I didn’t include sites that are raising money for one specific project, like I’m not endorsing any of these companies, just reporting on what they’re up to. If any of you CinemaTech readers have comments, or experiences with any of the companies, please post below.

1. IndieGoGo

In its first few months of operation, IndieGoGo has helped two films raise $10,000 each; in neither case was the $10,000 the film’s complete budget, but rather a “first round” of funding. Financial contributors may be rewarded with invites to wrap parties, DVD copies of the film, film credits, or signed memorabilia. Creating a project profile for a film is free, but once the financial goal is reached, IndieGoGo takes a nine percent cut. Filmmakers can post any material they like – some, like a budget or script, may be password-protected in a private area for certain potential contributors. Non-profit enterprises can use IndieGoGo to solicit tax-deductible donations, too.

2. ArtistShare

Used so far mostly by musicians, ArtistShare is allowing at least one filmmaker, Paul Devlin, to raise money on the site for his “science-adventure” doc ‘Blast.’ Donors can pre-purchase the DVD ($49.99) or, for $150,000 go out to dinner with the filmmaker and star of the movie, get a personal lecture from the star, and be listed as an Executive Producer. ArtistShare charges a set-up fee for all accounts, plus a monthly fee, in order to be able to raise funds through the site. Unclear how open they are to helping other film/video projects raise money. Rick Moranis has used ArtistShare, as have jazz guitarist Jim Hall, Phish co-founder Trey Anastasio, and Maria Schneider, who won a Grammy this year for “Best Instrumental Composition.”

3. IndieMaverick

IndieMaverick, based in the UK, is the only one of the three sites that hopes to offer investors in a film a positive financial return if the film does well. Filmmakers can raise as much as $1.5 million for a project, but if the budget is over $50,000, they need to meet with IndieMaverick employee in person “to ensure the filmmakers are not fraudulent and to assess if they can make the film for the budget they have requested,” according to the site. Filmmakers are responsible for their own distribution deals when they’re done, and they agree to split any profits with IndieMaverick investors, 30/70. (Filmmaker keeps 30 percent.) All investors also receive “limited-edition DVDs.” How does IndieMaverick make money? Through advertising on the Web site, interest on the funds invested, and uploading costs, they say. IndieMaverick also reserves the right to sell the completed film as an Internet download after the theatrical or DVD release has taken place. One feature, ‘Run With Me,’ has raised $232,000 on the site, and another, ‘Putnam County Law,’ has raised $32,000. But filmmakers are allowed to include previously-committed funds in their total.

Two other sites are worth a look, for smaller projects: HaveMoneyWillVlog (geared to video bloggers trying to raise $2000 to $3000 for a special project….but site is currently on hiatus) and Fundable.

Update: FilmRiot, based in Canada, and IndieShares, in Seattle, are also trying to get some momentum with online film financing.

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  • Hi Scott ... we're fairly quiet about this right now and we will have formal announcements coming over the next several months as projects are completed. However, since January 1, we have committed or paid out over $350,00; we have raised on behalf of filmmakers over $100,000; and the total value of projects in productions is just under $2mm. The IndiePix objective is to reorganize the economics of independent film, and that starts with the audience. But we include a new business model for filmmakers as well.

    By Blogger bob in ny, at 9:31 PM  

  • I am really happy to see that the advertising model of film financing is starting to become a reality. The whole concept is very liberating for filmmakers. My company Hotbed Media has launched our own site So far we've raised just over $15K for our feature Valley of the Sun. Its a great model because it spreads the risk of film financing across many organizations and the contributions those organizations make to the film start working for them immediately in the form of brand awareness. I really hope to see this model achieve widespread success.

    By Blogger Director, at 11:42 AM  

  • The best way to finance your movie? Is make it. Inch by inch. Frame by frame.

    If I had spent the first 2 years making my movie, instead of trying to raise money, I'd be about 15% closer to finishing by now!

    Right now we are about 50% done and financial support is starting to come in from all sides.

    Nobody can see the dream like you can. Once you make it undeniable, they'll get on board with their bags of gold and crowds of cheering yea sayers.

    By Blogger GBH, at 2:45 AM  

  • In support of the post from GBH: he's absolutely right. We favor finishing funds, but in order to do that we have to see something started. We're not alone in this; others are in the "finishing funds" slice of the financing pie as well. It's a good strategy.

    By Blogger bob in ny, at 8:49 AM  

  • Bob -

    It would be great if you'd explain what sort of financing is happening through IndiePix, and how...


    By Blogger Scott Kirsner, at 11:27 AM  

  • The key is to bridge between public securities and general solicitation vs. using active investors and this is tricky area

    also, making a film and hoping for finishing funds is usually a recipe for disaster

    Further, the whole 80's mentality of spreading risk is not warranted and would be better achieved with other risk minimization strategies such as CPPI and/or Section 181

    Yuri Rutman

    By Blogger Yuri Rutman, at 2:34 PM  

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