The movie Argo may have picked up the biggest prize in last week's
Academy Awards ceremony, but it was the Best Documentary Short winner
that had many on the Internet buzzing. Inocente, a film about a 15-year
old homeless girl who dreams of becoming an artist, took home the Oscar
and in the process became the first Internet crowdsource funded film to
win Hollywood's biggest award. Last year, the film raised $52,527 on
Kickstarter, a crowdsource funding website that has raised over US$100
million to support the creation of independent films.
My weekly technology law column (Toronto Star version, homepage version) notes that the emergence of crowdsource funding - or crowdfunding - points to the
power of the Internet as an important source of financial support for
independent creators, whether film makers, musicians, software
programmers, or authors. Crowdfunding enables creators to raise funds
through small contributions from the public by publicizing their project
using the Internet and social media sites. Crowdfunding success stories
encompass new products, companies, and community initiatives, but
movies have fared particularly well.
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Appeared in the Toronto Star on March 2, 2013 as How 'Crowdfunding' is Changing the Way Movies are Funded
The movie Argo may have picked up the biggest prize in last week's
Academy Awards ceremony, but it was the Best Documentary Short winner
that had many on the Internet buzzing. Inocente, a film about a 15-year
old homeless girl who dreams of becoming an artist, took home the Oscar
and in the process became the first Internet crowdsource funded film to
win Hollywood's biggest award. Last year, the film raised $52,527 on
Kickstarter, a crowdsource funding website that has raised over US$100
million to support the creation of independent films.
The emergence of crowdsource funding - or crowdfunding - points to the
power of the Internet as an important source of financial support for
independent creators, whether film makers, musicians, software
programmers, or authors. Crowdfunding enables creators to raise funds
through small contributions from the public by publicizing their project
using the Internet and social media sites. Crowdfunding success stories
encompass new products, companies, and community initiatives, but
movies have fared particularly well.
Kickstarter is the best-known crowdfunding site, having raised huge sums
of money and seen the films funded by its community enjoy commercial
and creative success. By the end of this year, over 100
Kickstarter-funded films will have been released theatrically in North
America. In 2012, three Kickstarter funded films ranked among the best
reviewed films of the year with six films - two documentaries, a live
action short, and three documentary shorts - garnering Oscar
nominations.
The live action short nominee, Buzkashi Boys, was the work of
Montreal-based filmmaker Ariel Nasr. Nasr turned to Kickstarter to help
complete his film about Afghanistan and the community responded with
over $27,000 in funding. After the film received its nomination,
Kickstarter users provided another $10,000 to cover travel costs for the
stars in the film to travel from Kabul to Hollywood.
While Kickstarter attracts the lion share of crowdfunding attention,
Canadians may face some challenges in using the platform due to payment
restrictions. A 2012 report commissioned by the Canada Media Fund points
to many homegrown alternatives, yet few have gained much traction. A
notable exception is DocIgnite, a site run by the Hot Docs festival in
Toronto that identifies works-in-progress that would benefit from
crowdfunding.
The barriers to Canadian crowdfunding extend beyond payment problems and
sparsely populated websites. Legal uncertainty about venturing into
crowdsourced investment has limited the ability of Canadian creators to
tap into their home market.
Canadian sites are typically based on a donation model in which there is
no expectation of financial return, though some creators offer
incentives and gifts in return for support. The United States has opened
the door to an investment model that would allow for crowdfunding
investments that could result in revenue sharing or the issuance of
stock in the project or company.
The Ontario Securities Commission just closed a consultation on the
issue with many potential safeguards being considered. These include
registration requirements, investment limits, disclosure obligations,
and "cooling off" periods that would allow investors to back out of an
investment.
The failure of Canadian crowdfunding sites to keep pace with sites such
as Kickstarter unsurprisingly means that creators are forced to look
south of the border for financial support. Given the many success
stories, Canadian funding agencies may soon begin to factor crowdsourced
support into their programs.
For example, agencies could shift some of their support toward a
matching funds approach that encourages creators to look beyond the
conventional funding mechanisms. By tapping into Kickstarter-style
initiatives, creators could benefit from greater financial assistance
just as the funding agencies use crowdfunding as an external review
process, leveraging the public's willingness to back a project with
their own support.
Michael Geist holds the Canada Research Chair in Internet and
E-commerce Law at the University of Ottawa, Faculty of Law. He can
reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.
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