MediaShares offers twist on crowdfunding model for news
Earlier this week at the Founder Showcase, a Silicon Valley start-up pitch contest, I sat through a number of lukewarm ideas for new companies. But one that made me sit up was a presentation by Gene Massey, CEO of MediaShares.
The concept he was pitching also got the panel of judges excited, though it didn’t win the top prize that night. The concept is a bit more complex than the typical 2-minute presentation I typically hear at these things. But let me try to boil it down.
Massey has developed a new type of crowdfunding model that basically enables someone to sell direct shares in a single project through a legal initial public offering of stock.
He refers to the concept several different ways, such as “fan financing.” But in essence, someone can use MediaShares to sell stock in something like a film, documentary, a race car, or an album. Through MediaShares, you can sell as little as one share of stock to someone.
Some of the panelists worried that this seems to risk all sorts of legal problems. But what was impressive is that Massey not only has received a patent on the process, but claims that he also has the blessing of the U.S. Securities and Exchange Commission.
Massey is in the process of demonstrating how this would work by raising money to fund a film through CinemaShares.com:
CinemaShares.com is using a patented technology that allows the potential audience to invest in a movie, observe the filmmaking process, and get a free DVD copy of the movie when it is completed. Never before has an audience been offered the opportunity to purchase a copy of a movie in advance of production.
The pitches at the event were short, so there were lots of questions left unanswered. It’s not entirely clear what those shares entitle the holders to receive. Does it automatically mean they have some say in governance or decisions of some kind?
I wasn’t able to track Massey down afterward. I did manage to find Massey’s PowerPoint, which I’ve added at the end of this post.
But still, the idea sent my mind racing. We’ve seen some interesting innovation in community funding of journalism from Spot.us. MediaShares would seem to extend that.
Could an organization sell direct shares in a a costly investigative series? Or ongoing coverage of a topic?What incentives would they have to offer to get people to buy shares?
Or, could a new news organization sell shares directly to raise start-up and operating costs?
What do you think? Is this a twist on crowd funding that news organizations should explore?
Here’s Massey’s PowerPoint:
View more presentations from sjcobrien.
And here’s a video of Massey explaining the concept on Vator.Tv:
