Coming to an Independent Film Near You: Crowdfunding and Sourcing

Funding for every type of cultural enterprise has gotten scarcer.

While Disney's $200 million loss on 'John Carter' may be unique to that company in terms of its scale, greater attention to budgetary detail is common across the board.

For independent film makers, the challenge of addressing risk and return is amplified by the (usual) lack of institutional support. But the flip side of that problem is that the size of the funding needed can actually be addressed by smaller contributions from less well-heeled contributors.

As the economy improves, interest in arts funding - both for a piece of the upside and for being close to the action - may increase as well. One other issue is that - depending on which country the producers reside - the legal and tax considerations may be different. Quite different. In the US, smaller investments of this type must still be registered with the Securities and Exchange Commission. There may be legislative relief, but that is not certain. However, film-making is a global enterprise and there is no reason why its financing should not be, as well. JL

The Economist reports:

IN 1945, as everyone knows, an elite group of Nazi officers abandoned the collapsing Third Reich and blasted off to the moon to establish the Fourth. In 2018, surprised when an American astronaut stumbles upon their swastika-shaped command base on the far side of the moon, they decide the time has come to attack the Earth.

For “Iron Sky”, a sci-fi black comedy by Timo Vuorensola, a Finnish director, which debuted at the SXSW festival in Austin, Texas, the budget was €7.5m, but Mr Vuorensola was still determined to involve his fans as much as possible. His website, wreckamovie.com—now open to other film-makers—allows people to request screenings in their area in advance, and sets tasks that they can help out with, such as recording snatches of background audio or doing bits of design work. He estimates that such contributions added up to roughly €100,000-worth of work on “Iron Sky” The movie is distinguished not so much by its absurd plot and wacky designs (German soldiers in 1940s stormtrooper-style space suits) as for the way it was made. Mr Vuorensola’s previous film, “Star Wreck”, another space spoof, was done over seven years on a budget of just €15,000 (now $20,000). It was shot largely in the living room of one of the producers (with space scenes and sets added digitally), and made with props, costumes and actors solicited from fans on the internet.

Crowdsourcing and funding helped create a fiercely loyal fan base. In addition, the site raised €1.2m from supporters.

Crowdsourcing and crowdfunding have been slowly on the rise for independent films over the past few years. Sites such as Kickstarter and Indiegogo handle fund-raising; OpenIndie, which has just relaunched after a stagnant period, helps find and build audiences. Where “Iron Sky” has broken ground, says Tero Kaukomaa, one of the film’s producers, is not just in getting fans to pitch in with the work, but in its funding model: most of the money raised via the website was in the form of equity investments, which will pay back if the film makes a profit.

That is allowed in Europe, but not yet in America, where any such investment must be filed with the Securities and Exchange Commission. A bill allowing investments of up to $10,000 per person without all the paperwork was passed by the House of Representatives last November but is currently stuck in the Senate. If it becomes law, however, it could give indie directors, who are suffering from the general squeeze in the industry, a promising new avenue for getting their films made.