Hollywood Babble On & On #1131: Got Money? Make Movies?

Just about anyone with an internet connection knows that folks like crowd funding movies, and we all more or less have a sense of how that works.

A filmmaker puts out a call for money, and in exchange for your donations you get prizes, like DVDs of the film in question, autographs, scripts, props, and/or other related-memorabilia, all depending on how much you kick into the kitty.

You're essentially pre-buying stuff related to a movie before it gets made, but you're not expecting to own a piece of the film's profits.

However, that might change.

Junction Investments is a new website set up to connect accredited investors with a way to purchase a piece of independently financed films from major independent financiers.

Now if you don't know what an accredited investor is, well they sort of look like this…

Get my point?

You gotta be rich to play this game.

Anyway, let's take a moment to look at THE PROS AND CONS!

PROS:

1. SPREADING OF RISK: The more people paying into a project, the less risk each individual investor has to face. Pretty simple really.

2. WIDENING OF INVESTOR POOL: The movie business needs more people willing to invest in movies, and, by succeeding at turning a profit, hopefully improve the image of the financial side of the movie business. Which will attract more investors… etc… etc...

CONS:

1. STUDIO BOOKKEEPING: The article says that some packages will be offering shares of the net profits.

Wanna see a picture of some Hollywood net profits?

Well sorry, but net profits haven't been seen in Hollywood since Disney released Splash about 30 years ago, so all I can show is something you're more likely to see.

Now I'm bringing this up because a lot of these projects will be either already set to be distributed by a major studio, or could potentially be released by a major studio. That means they will be subject to the bookkeeping of a major movie company. If studio bookkeeping were on a medieval map, it would be labelled under "Here be where madness doth lye."

Studios are black holes for net profits, and that is a bad pairing with this inevitability of movies...

2. SIMPLE RISK: Every movie is a crap shoot. You could have the biggest stars, the best director, and the greatest screenplay ever written on the most widely appealing subject matter and you could still drop a turkey.

It's just how things happen in the movie biz. Bombs happen, and there's no way to stop them from happening or predict which films will bomb and which will be blockbusters. If there was, filmmakers would only make hits, but there isn't, and that's that.

However, if you couple this simple inevitable risk with studio bookkeeping and you're going to attract...

3. LITIGATION: The bane of independent film. So many companies and investment schemes have been destroyed by rampant litigation. This litigation can be inspired by real outrage over shoddy or shady bookkeeping, or it can spring forth from a possibly innocent misunderstanding over the true nature and risks of their investment.

Usually these cases end up as a "guilty until proven innocent" situation if not always in court, then at least in the eyes of investors.

I wish the people behind Junction Investments luck, and I hope they have the ways and means to avoid the cons that I've discussed here.