Buying shares in a film? Let's brainstorm!

Kirk Gillock

Kirk Gillock

Rebel with a cause
Not sure if this idea could work or not so I'm throwing it out to you all, the pros, to see if something could be done.

Finding money always seems to be a problem for filmmakers. So what if the money could find filmmakers instead? What if people who had money went looking for projects to invest in? What if average people, or movie fans, could invest in a film with just a click of the mouse?

Here's the Idea: (please don't steal it)
A production company has a website with a database of indie filmmakers and the stories they want to make. Each project has a summary of the plot (maybe the entire script), cast description, crew (online promo reel), and a budget estimate. In the project page there would also be a "Producer" link where anyone can open an online account and deposit money into the film's budget. If the film raises enough money to begin production then those who invested would become producers on the film (potentially thousands of people). So it's like buying stock in a film.

What's in it for the investors?
If the film is picked-up it is possible for the investors to get a return on their investment (their account would be credited). They will have a producers credit on a film. They will get updates on the films production (a BTS/Daileys Blog). They will help make a filmmakers dream come true. Most importantly, they will have a great pick-up line at bars.

What's in it for the production company?
Other than the usual benefits of producing a film there would also be the added benefit of being able to earn interest on the money that is deposited into a films online account.

Unfortunately, the system required for such a website would be massive. The website would need to be able to make credit card transactions, the money collected would need to sit in a high interest bank account, and users (producers) would need to be able to (virtually) move their money around from project to project. Also, the legal "fine print" would need to be extensive.

But imagine the possibilities. Anyone could invest $100 in a future blockbuster. :)

Ok, lets brainstorm!
 
There are already a few indie film websites/companies that have a business model like this (I'll have to dig around to find the links though) and, IIRC, a huge hurdle is all of the paper work you have to stay on top of to keep the operation legit in the eyes of the law (at least in the US).


-A
 
As with any investment model, the requirements of the securities laws would need to be analyzed, and selling interests to the public generally at low prices could trigger a bunch of requirements, as I understand it.
 
Paul Hogan (Crocodile Dundee) got a couple movies made by floating them on the stock market.
 
Depending on the structure of the production company you could run into a hurdle there too. LLCs for instance can only have a certain number of investors, so if everyone pictched in a dollar then you could max out your number of investors and have only raised $20.

It's an interesting idea, and feasible, but the red tape is tremendous. The model for raising money that I've liked the most so far is Prodigi Picture's model for A Lonely Place for Dying detailed in their thread on the user films section. I'm currently trying to make a slightly modified version of that system work for me.
 
I've actually got the prospectus to "Billy Dead" somewhere... interesting idea, but I don't know if it ever flew. IMDB doesn't show any "Billy Dead" film.
 
I have a friend that is part of an investors group that help fund major motion pictures. They are a closed group and you can only get asked to join by invitation. This is the lawyer that hadles the whole thing: http://gavinlawoffices.com/home.html

IF asked to join, the minimum investment is 50K (with most members kicking in upwards of 200K)! It's not cheap, but the returns are awesome (if the movie hits big). Risk & Reward....

I'm sure there are these groups to be found all over the country.
 
I think it is a great idea. Legal issues aside..the biggest thing I think would be to establish legitimicy. Once people see that it's legit the money will flow.
 
Perhaps a more feasible idea is to enable the public to pay a discounted fee for screening tickets or dvd copies in advance, while the movies are still in production? Speculators may buy many copies of such movies/tickets and then resell them at a higher price when the movie is finally released? Maybe through the same website?
 
I had a dot-com start-up which involved setting-up a bank overseas (offshore) to handle such partnerships without the governmental interference and BS (each investor was responsible for their own taxes, rather than the investment-vehicle).

Sadly the bubble-burst killed it. It would have been perfect for films.
 
I would go for it. I am in no position to comment on legal issues, but from a business perspective it would have a very good chance of producing wat would essentially be a "win-win" situation. Filmmakers get the money to make the piece investors (if all goes well) get a return. It's an adaption of the stock market to the film industry and I think it's brilliant. One issue I see right off the bat, however, is this: if I invest in a film that doesn't get enough money to be made, where does my money go? Do the producers get a nice Christmas bonus? If so, I don't get a return and I am out of that money all because enough people didn't invest. You see? Tere may have to be a stipulation that money gets returned in the event the film isn't made. The production company would keep the interest, so that's a plus for them.
 
I like the fresh take on the idea of individual investors being able to choose from a multitude of screenplays.

The issue, as I see it, are more often then not the screenplay is very low down on the list of what makes a film profitable. Top of that list tends to be who is casted. If you can get projects that have name actors attached then I would consider investing.

Another concept is package deals where one invests into several films; a short hedge fund approach to film investing. If your investment is going to partially fund several different films with different markets then there is a greater chance that one will break out and make enough profit to cover all the films.

Certainly there is something there in the concept of a website for film investing. I think ultimately the trick is generating enough publicity for the website. Branching off of a well-established site like here is a good place to start. Getting a starter film that demonstrates the possible profitablity to investors would be the next move.

Although with the economy is what it is I don't think now is the best time to try something like this. I can't speak for everywhere but around here the bottom has fallen out on investments for independent films. A few years ago there were moderately funded indy's being made year round; so far this year I have only seen two.

Cheers
 
Thanks for all the input, everyone. :thumbsup:

The logistics involved are definitely huge. (Too much for little ole me.) But I just thought it would be fun if everyone had a chance to own a piece of a movie (other than buying props off ebay).

If I could buy shares in "The Dark Knight" right now I would. That movie is going to be HUGE!!!!
 
A movie is not like a business; the value drops rapidly to zero over time and Hollywood accounting can make it impossible for investors to get anything back. Whereas a well managed company appreciates in value over time, indefinitely. Most of the people who invest in movies are companies capable of monetizing them - international distributors, exhibitors, etc. Etc.
 
The idea of a share system for a film is pretty much floating IndieGoGo at the moment, and the idea is in and of itself sound. Imagine what would have happened if they had done that sort of thing with Snakes On A Plane. All you'd need is a little hype and a lot of internet interest.

I know I'd like to raise $5000 for my current project but with no obvious funding routes left open. I'd consider setting up a donations page, but... I dunno.

Could a portal for projects with details of where to donate via paypal etc. perhaps be a better idea?
 
The british film "outlaw" (2007) did something like this. Memebrrs of the public could buy into the film on three different levels, the most £100, would give them an "Executive producers" credit on the DVD. Crap film, but really great idea.

- Tom
 
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