How Blockchain Can Benefit Indie Film Production

Diana Kolsky (UCB Theatre, Comedy Central, Nerve) and Murf Meyer (Broad City, Late Night w/ Seth Meyers, Friends from College) are comedians, writers and actors who’ve been working in the entertainment industry for over a decade. Their work has been recognized by Rolling Stone, Newsweek, The A.V. Club, Penthouse, and New York Magazine.

The real-life married couple created, wrote and starred in the IFC original series, Ménage à Trois, and they’re currently producing their dark comedy script for an independent feature film titled “Heyna?”, set to shoot on-location later this year.

BountyBase sat down with Kolsky and Meyer to discuss how blockchain could be utilized — and even improve the various stages of indie film production. The Arts may seem like an antithetical place to employ blockchain technology, but this application may be more apt than immediately meets the eye — especially when it comes to filmmaking.

Producing a feature film from soup to nuts entails an incredible amount of moving parts; a production of this size is document-intensive throughout, making it imperative that filmmakers and film producers are highly organized from the start.

Development

First off, if they ever hope to sell their film once it’s completed, the film’s producers must establish and maintain a “clean” chain of title. Chain of title refers to a collection of all documents related to the making of the film, including: copyright registration of the script, location releases, producer agreements, contracts for both cast and crew, music and art clearances, proof of insurance, and more, totaling hundreds of legal documents.

Everything must be signed and delivered to distributors interested in buying the movie before a filmmaker can sign off on the rights to release it.

Since coordinating all production paperwork is essential, blockchain could be a perfect tool to implement, as it immediately categorizes and keeps a log of every part of an applied process in real time, whether it’s cryptocurrency, imported produce, or yes, even independent film.

Fundraising

When offering individuals and groups the opportunity to invest in their project, filmmakers need to structure the investment vehicle with transparency, accountability, risk mitigation, and a clear path for investors’ ROI in mind.

“Independent filmmakers have to juggle their creative and business hats on a daily basis.” Meyer says. “When producing an independently funded feature film you’re basically running a small business for 4–5 years, and you need to hire an experienced team to keep operations moving as smoothly as possible.”

Kolsky adds, “As DIY filmmakers, you learn how to improvise when the situation calls for it — you have to brainstorm creative ways to get around the inevitable obstacles you’ll face on set. But when it comes to the business side of things, you shouldn’t cut corners. Bring on an experienced entertainment lawyer to handle the formation of your business entity and execute all contracts with investors, cast, crew, vendors, all that stuff.”

“We hired a certified accountant to run the books. They can generate reports for investors as needed to maintain transparency,” Meyer chimes in. “Once production is in full swing, tracking all the expenses can get hectic, so you want a full-time accountant who has experience with the specific cash flow demands of film production. And, when the time comes, they’ll set up payroll for everyone working on the film as employees of the LLC.”

That said, once their legal and accounting bases are covered, it’s up to the filmmakers to keep all other phases of filmmaking catalogued and in check, as well as bring all of these departments together. This includes executing the right tasks at the right time, and keeping impeccable records of it all. “We have multiple Google folders, files, and a huge binder,” laughs Kolsky, “it’s very tedious, but well worth it, since being organized is so important.”

Kolsky and Meyer formed a single-purpose LLC to handle all business transactions related to their film “Heyna?”, with the company’s Operating Agreement serving as a contract for private equity investors. They’re selling units to cover the film’s budget and offering equity investors priority return on investment plus a 20% premium, with the remaining net profit being split 50/50 between investors and the filmmakers.

Meyer adds, “accountability is incredibly important. One way we can ensure that we finish the film once we start actual production is ‘Minimum Capitalization’ — we have this built into our LLC’s operating agreement. It means that we can’t startfilm production until we have enough money to finish it. It protects us and our investors.”

Blockchain could not only help with systematic record-keeping, it could also serve as an escrow account attached to a smart contract between filmmakers and investors that automatically releases funds once specific terms are met, like minimum capitalization.

Production

With dozens of people working on a low-budget indie film, there are several areas that require the production team to securely circulate materials around to each department. To run an efficient production, key crew members need fast access to sensitive information, such as: credit cards, employee SSNs, actors’ sides from the script, and confidential production reports.

An indie film working under union guidelines requires payroll accounts be setup and insurance reports be filed, along with a full-time production accountant generating daily expense reports and filing with the state to qualify for any available tax incentives.

Kolsky explains, “We’re shooting “Heyna?” on-location in Pennsylvania, and the PA film office offers productions a 30% tax credit on all money spent in-state, so our accounting team will be sure our books are in order to take full advantage of those tax credits.”

Blockchain provides a secure peer-to-peer network so filmmakers can communicate and share materials via a one-time-use private key entry. Like a keyless entry to an Airbnb that will change once your stay is over. Read about private and public keys work here.

Additionally, the same technology could handle things like payroll accounts, insurance reports, and filing taxes on behalf of the production. “That kind of streamlining would be beautiful.” Meyer says.

Filmmakers can see how blockchain could help the industry, but it will take scaled solutions that are accessible to indie filmmakers who want to make a movie on a tight budget, and use as much money as possible to polish the actual film for the big screen.

Distribution and Sales

Once the film is completed, producers have to meticulously organize all deliverables for the film in one place and prepare them for festival screenings, so they can seamlessly pass everything along to sales agents and distribution companies while negotiating a deal.

Deliverables may pass through a few different channels during the 2–3 year process of making a movie. Instead of relying on outdated systems that can be compromised, a singular source that contains all production deliverables — from early development until post-production wraps — blockchain could keep all of the information more secure.

Lastly, blockchain can track residual funds from the company’s bank account, then cleanly divvy up all net profits received from the sale of the film among investors.

In Closing

Irresponsible filmmakers can maneuver around the current fundraising process because the current technology is antiquated, whereas responsible auteurs bear the heavy burden of laborious multi-faceted information management.

Blockchain technology would benefit the indie film industry by improving security, activating more transparency, and increasing accountability. It can also help with distribution, securing a long and profitable life for the film.

If you’re interested in learning more about the film, contact the filmmakers behind “Heyna?”, Diana Kolsky and Murf Meyer, here: heyna.motionpicture@gmail.com.

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