Entrepreneurs using Internet to find donors

Howard Dean managed to fuel his 2004 presidential campaign by inviting small donors to send him contributions over the Internet.

Now, an array of filmmakers and entrepreneurs are exploring the same approach to raise a production budget for an indie pic.

The tactic’s been tried since the early days of the Internet, but a fresh crop of entrepreneurs thinks the time could finally be ripe.

In mid-March, Portland filmmakers Steve Herring and Rebecca Rodriguez started selling $10 “memberships” to a Web site that will track the progress of their feature film “Toast,” which has a budget of $600,000.

Production won’t go forward until 60,000 members have signed on. When the movie is complete, members will receive a free copy of the DVD by mail.

Then there’s filmmaker Stuart Ascher, who says he has raised more than $300,000 in donations on his Web site toward the $2 million budget of “Abducted,” a sci-fi buddy film. And a trio of California entrepreneurs is planning a summer launch for Project Keiyaku, in which visitors to a Web site will be able to decide which proposed movies should get made by ponying up real money and splitting any eventual profits.

But online fund-raising, well established by now in political circles, has a rocky history the film biz. Movieshares.com, which raised $620,000 in launch funding in 2000, never managed to shepherd a single film to opening night. Gene Massey, a Brentwood commercial director, has been working since 1998 on a business called CinemaShares.com. He holds a U.S. patent for selling shares in a movie production company online and giving shareholders a DVD as a stock dividend, but he has yet to make a feature.

The sole success so far has been Brave New Films founder Robert Greenwald, who last year raised more than $200,000 via his Web site from politically motivated donors to help him complete “Iraq for Sale,” his doc about alleged war profiteering. That movie had its homevideo release last September after a limited theatrical run.

There’s no shortage of creativity among filmmakers with few other funding options and entrepreneurs who want to explore the Internet’s potential for turning previously passive audience members into active participants.

Matt Hanson, a filmmaker in Brighton, England, last year launched the project “A Swarm of Angels,” which seeks to attract members who will help make creative decisions and contributions, like voting on which script to shoot or supplying a song for the film’s soundtrack. Hanson says nearly 1,000 members have signed on so far, shelling out about $48 each.

Backers who buy more than one membership at DrinkMePictures.com, the Web site promoting “Toast,” or who refer their friends to the site, may be able to earn points that they can redeem for autographed merchandise, a visit to the set or a walk-on role, says producer Steve Herring. He and Rodriguez developed the novel approach to financing after their first feature, “Coming up Easy,” played at several film festivals but didn’t secure distribution.

But filmmakers who hope to raise money in new ways inevitably run into barriers. Donations for film projects aren’t typically tax deductible, which can squelch donors’ generosity. Any investment with a financial upside is considered a security, which creates plenty of paperwork and racks up the attorney hours.

“People don’t understand this new kind of business model, and you run into all kinds of federal and state regulations if you’re trying to sell someone a product, like a DVD, that doesn’t yet exist,” says Herring. “That’s why we structured our project as a membership to a Web site, and one side benefit of that membership is that you get a copy of the DVD when we’re done.”

Daniel Riviera, a San Francisco entertainment attorney active in indie film production, says he can’t imagine experienced film investors entering their credit card numbers on Web sites to buy into a project, rather than signing the standard private placement memorandum.

“I don’t think any of the investors I work with would get involved,” he says.

It remains to be seen whether there are enough individuals interested in sending a sawbuck to help a movie get made.

“The public wants to feel like they’re part of the movie business,” says Massey, founder of CinemaShares.com. Herring acknowledges the potential for scams but says that if one filmmaker can successfully use Internet funding to bring a project to fruition, “I think others will give it a shot.”

Greenwald, the Culver City, Calif.-based documentarian, is already going back to the well, using his Web site to raise donations so that he can make a series of short political clips distributed on YouTube and focusing on the 2008 presidential campaign.

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