Monday, September 29, 2014

How is Crowdfunding Changing the Media Production Industry?

Here is the final draft of my research paper on crowdfunding and the traditional media industry:


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For the past 60 or so years, our movies have come from large production companies, such as MGM, Paramount, and other companies associated with Hollywood or the MPAA (Motion Picture Assc. of America). Traditionally, future producers would pitch their ideas to the production studios and investors. With the advent of crowdfunding in the last few years, movies can be produced at professional quality, independent of a large studio. Crowdfunding gives the creators complete control over their project and allows them to keep editorial rights. Crowdfunding doesn’t take away the movie pitching: the creator now pitches his movie to a broader audience. Also, crowdfunding can’t generate as much funding as traditional funding, as is pointed out in, “Why Kickstarter Can’t Usurp the Hollywood Entertainment-Industrial Complex,” from Wired.com. So the question we ask is not, “will crowdfunding replace traditional studio funding?” but, “how is crowdfunding changing the media production industry?”


Crowdfunding isn’t that new of an idea. In Hamilton’s paper, he traces it back to Athens, where the earliest form of consumer can be found. Hamilton believes that the decline of crowdfunding in its original form came in the mid-18th century. But in the late 20th century, he says that consumer production in the form of crowdfunding reappeared, meaning, “users are free to choose whether and how to produce through financing.” (Hamilton 2014, p. 498) According to Hamilton, the development of modern crowdfunding “requires the participation of users,” (Hamilton 2014, p. 500) rather than a separate entity producing for the users with feedback only after the product has been produced, as in MPAA studio films. The popular definition of crowdfunding today is essentially internet funding through a site like Kickstarter or IndieGoGo. Crowdfunding connects future producers to their audience in a way that production companies can’t.


Traditional studio films may not be in direct contact with their audience, but, like crowdfunding, the audience can talk through their money. How well or poorly a movie does in the box office can be a large determining factor for future movies produced. In this case, however, if a movie is a ‘flop’ (box office revenue <$1M), the investors lose capital. The studio can try to prevent a ‘flop’ through surveys and research like the demographic research in the MPAA’s Theatrical Market Statistics. On crowdsourcing sites like Kickstarter, the producer can see that a movie is a ‘flop’ if it doesn’t reach the funding goal. One such ‘flop’ was “Darci’s Walk of Shame,” a movie that actress Melissa Joan Hart attempted to fund via Kickstarter. It only made 2% of its pledge goal before Hart cancelled the project. The article by PhDs and PhD candidates from the University of La Mancha, Spain, (Martinez-Canas, et. al. 2012) asserts that crowdsourcing can test the interest in a project before any capital is lost. It can help the artist change the focus of their project to better suit the needs or desires of the funders, who become the audience, without going through a middleman funder, as in MPAA studio films. A traditional studio produced movie may have a higher risk of losing capital from a film, but the movies will have a budget that is difficult to get through crowdfunding.


Films produced by studios in the MPAA generally have a larger budget than independent films produced through crowdfunding. With a smaller budget, crowdfunded films might have a harder time making films with believable visual effects, experienced and talented actors, or compelling stories. This is almost certainly why many of the films produced on Kickstarter are documentaries. It is not impossible, however, which can be seen from the reviews of “Veronica Mars.” In The Wrap (Gilman 2014), Gilman quotes critics who thought highly of the film. Duralde of The Wrap is quoted: “The ensemble cast is generally fast and funny … even Mars newcomers will find themselves welcome in their company.” Gilman also quotes Sharkey of the LA Times, who shares a similar opinion and glowing review of the movie. The reviews praise Bell, the leading lady, for her performance and the story. But while this movie was produced independently, its fanbase was built through traditional media outlets.


“Veronica Mars” had a strong fanbase and the well-known producer Rob Thomas helping to make it a successfully funded movie, something that many indie films don’t have. This suggests that while Hollywood may not be a perfect system, those that come from it are more likely to be successful with crowdfunding. In the case of “Veronica Mars,” Thomas pitched it to various production studios, but was turned down. Since the fanbase had already been built up, Thomas was able to take his movie concept to the fans. And because he got funding from the fans, he had complete control over the production of the film.


Sørensen, a PhD with research interests in digitization, says that online funding “gives editorial and creative freedom to the filmmaker. This can be difficult to maintain when a project is fully financed by and contractually tied to a broadcaster, because the broadcaster’s commissioning editor will typically also act as an executive producer and potentially have significant say in the editorial of the film.” (Sørensen 2012 p.737) Sørensen also says that online funding leaves the rights to the film in the creator’s hands so that he can continue to shop his film around to secondary markets, such as DVD rental and streaming sites. The concept behind crowdfunding is an attractive alternative to many producers who might otherwise be unable to create their movies.





Figure 1. MPAA & Kickstarter Movies Produced by Year. Sources: The Year in Kickstarter (2011): https://www.kickstarter.com/year/2011 and Theatrical Market Statistics (2013): http://www.mpaa.org/wp-content/uploads/2014/03/MPAA-Theatrical-Market-Statistics-2013_032514-v2.pdf


Since it’s creation in 2009, Kickstarter has helped thousands of movies get funding. In Figure 1., the amount of Kickstarter movies produced are compared to ones produced through MPAA members and non-MPAA members. While most of the movies produced through Kickstarter should more appropriately be called documentaries, they are not likely to have been produced without Kickstarter. Kickstarter films may also have been produced independently, but still be accounted for by the MPAA. The Theatrical Market Statistics numbers for non-MPAA films could also include Kickstarter films. While many Kickstarter films may fit into the MPAA or non-MPAA category, many more do not, but all of them were tailored to suit their audience. Even though MPAA movies may have global distribution, Kickstarter distributes to audiences the MPAA may never reach.


Crowdfunding won’t replace the traditional media industry, but it can strengthen it. Crowdfunded films are also strong enough to stand on their own, without the support of the film industry. Crowdfunded films can be produced at professional quality, receiving good reviews from both fans and critics. And the fans can talk with their money, telling the producers what they do and don’t want in a film. With the support of their audience and fans, producers can maintain creative and editorial control over their projects. But even if the films are made independently, they still benefit from the traditional media industry, whether by associating with an MPAA member or by building up a rep through the traditional industry.

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References


Gilman, Greg. (2014, Mar.). ‘Veronica Mars’ Reviews Agree It Is Kickstarter Money Well Spent. The Wrap. Retrieved from http://www.thewrap.com/veronica-mars-reviews-kickstarter-critics/

Hamilton, J. F. (2014). Historical forms of user production. Media, Culture & Society, 36(4), 491-507.

Luka, M.E. (2012, Oct). Media production in flux: crowdfunding to the rescue. Retrieved from http://wi.mobilities.ca/media-production-in-flux-crowdfunding-to-the-rescue/


Martinez-Canas, R., Ruiz-Palomino, P., & Pozo-Rubio, R. (2012). Crowdfunding and social networks in the music industry: Implications for entrepreneurship. The International Business & Economics Research Journal (Online), 11(13), 1471. Retrieved from http://ezproxy.nu.edu/login?url=http://search.proquest.com/docview/1418719648?accountid=25320

Mele, N. (2013, Apr). Why Kickstarter Can’t Usurp the Hollywood Entertainment-Industrial Complex. Retrieved from http://www.wired.com/2013/04/game-of-thrones-vs-veronica-mars-is-this-really-the-end-of-big/

Sørensen, I. (2012 Aug.). Crowdsourcing and outsourcing: The impact of online funding and distribution on the documentary film industry in the UK. Media, Culture & Society, (6), 726-743.

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