The paradox of the crowd

With roots in arts patronage, online crowdfunding has been around since the 90s — but was first popularized by platforms like Kiva and Kickstarter.

(Fun fact: one of the first major online crowdfunding projects was a film called Foreign Correspondents, for which the director created a website in 1997 to raise finishing funds.)

These platforms make it easy for creators to turn to their most supportive fans for project funding. They’ve also helped advance countless film projects and careers (you can still see Kickstarter pages for Phoebe Waller-Bridge’s one-woman show Fleabag or Issa Rae’s hit web series The Misadventures of Awkward Black Girl).

But in most cases, the patrons typically haven’t participated in the upside of a project’s success. That’s not a bad thing, but it is something that’s starting to change.

Today, we’re seeing the category evolve beyond the “backing for product or perks” model. Newer platforms allow creators or founders to offer equity to early supporters—allowing them to share in the upside from successful projects, products or even companies. And web3 is making this possible in even more interesting ways, such as buying a share of music streaming royalties from artists you follow on Royal. In film, there are examples of both kinds. Slated allows any accredited investor to fund films, and Moviecoin allows anyone to invest in film via financing NFTs.

This ability to participate in the upside gives crowdfunding a far more powerful incentive structure for fans, patrons and casual investors.

But if these investments are made with the expectation of financial returns, the bar for delivering a happy outcome for backers is significantly higher than simply offering perks or experiences. And even more so for projects where broad commercial success is the primary means of realizing said returns.

Thus, crowdfunding with upside often faces something of a paradox:

• Broad commercial success almost always requires some form of distribution;
• Distributors have to believe in a project’s commercial potential;
• But projects financed by the “crowd” are generally seen as riskier—often as a vote of lower confidence in the marketability of the endeavor or the experience of the team;

So unless the project comes with a strong built-in audience, it will have a much higher risk profile—and, accordingly, will be less likely to pay off for creators or backers.

This dynamic is perhaps especially true in film, where distribution is really the only game in town — and is guarded by a notoriously small set of gatekeepers who decide what gets made and what gets seen. (And out on a limb here, but they probably believe they’re a little better than the crowd at handicapping project success, too.)

In film, the crowdfunding of commercial projects can be something of a self-defeating prophecy.

It will be interesting to see how the perceptions of equity crowdfunding change as more of the world gets used to the risk/reward ratio, or a greater number of “hits” are financed this way. But until that time, we believe there is better vehicle for filmmakers to leverage their talent and share in the upside with their backers.

It’s called short film, and it has the potential to make crowdfunding work within the rules of traditional distribution.

Here’s why:

• Short film is increasingly made as “proof of concept” for a feature or series;
• Its relatively modest production cost is being driven down by technology;
• It is rarely meant for wide distribution (so needn’t be sold as fully-baked);
• It is accessible to casual fans, film investors and crypto collectors alike;
• And it is far more compelling as “pitch material” than a treatment or script.

By combining deal-friendly IP with a collecting experience akin to art patronage, short film can make both film and TV investable by anyone. And it can do so without limiting the project’s upside —i.e. without hindering the chances of a larger derivative feature or series being green-lit by a major studio or distributor.

It’s no simple task to change the way this medium is used, but making short film an investable development medium for filmmakers, film patrons and crypto collectors is the most interesting challenge we’re tackling at Weirdo.