Crowdfunding

Last year, my media class attended the ASFF (Aesthetica Short Film Festival) in York. It was extremely beneficial for us when it came to our research and planning for our final project, and so we are attending it again this year.

While we are attending the 'A-Z of Producing Music Videos' master class, ran by Craig MCNeil, which will be very helpful for us when it comes to filming and editing our final piece, a master class I wish I could attend is that of 'Crowdfunding'. So, as I'm not able to go to the master class, I've researched a lot into Crowdfunding and below is what I have found...

"Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet." - Wikipedia definition

Crowdfunding is becoming increasingly popular, moreso in the film industry than that of music videos, but I have no doubt that it will be in the future.
In 2013, the crowdfunding industry grew to be over $5.1 billion worldwide, generating the financial backing for features such as 'Iron Sky: The Coming Race' and 'Palo Alto Stories' by James Franco.

According to WordSpy.com, the earliest recorded use of the word 'crowdfunding' was by Michael Sullivan in August 2006 with the launch of fundavlog.

Crowdfunding gained traction in the United States after the launch of ArtistShare, the first online platform for crowdfunding, in 2003.

Crowdfunding websites helped companies and individuals worldwide to raise $89 million from members of the public in 2010, $1.47 billion in 2011, and $2.66 billion in 2012. And, in 2012, more than one million individual campaigns were established globally.

A May 2014 report, released by the UK-based 'The Crowdfunding Centre', titled "The State of the Crowdfunding Nation", presented data showing that, during the month of March 2014, more than $60,000 dollars were raised on an hourly basis via global crowdfunding initiatives. Also during this time period, 442 crowdfunding campaigns were launched globally on a daily basis.

The report identified the existence of two primary types of crowdfunding:

1. Reward-based crowdfunding: entrepreneurs pre-sell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.
2. Equity-based crowdfunding: the backer receives unlisted shares of a company, usually in its early stages, in exchange for the money pledged. The company's success is determined by how successfully it can demonstrate its viability.

 'Abundance Generation' was the first debt crowdfunding platform in the UK to be regulated by the Financial Services Authority (Financial Conduct Authority). It was approved in July 2011 and was launched to the public in 2012, and provides democratic finance to UK-based renewable energy developers.
Also, in August 2012, Richard Branson announced his support for crowdfunding

The highest reported funding by a crowdfunded project to date is 'Star Citizen'; an online space trading and combat video game being developed by Chris Roberts and Cloud Imperium Games. Which, as of 10 March 2014^[update], had rasied $40 million.

Benefits of crowdfunding for the creator(s):

Crowdfunding campaigns provide producers with a number of benefits, beyond the strict financial gains. The following are non-financial benefits of crowdfunding:

• Profile – A compelling project can raise a producer's profile and provide a boost to their reputation, especially on social networking sites.
• Marketing – Project initiators can show there is an audience and market for their project, and they can market to them directly.
• Audience engagement – Crowdfunding creates a forum where project initiators can engage with their audiences. Audience can engage in the production process by following progress through updates from the creators and sharing feedback via comment features on the project's crowdfunding page.
• Feedback – Offering pre-release access to content or the opportunity to beta-test content to project backers as a part of the funding incentives provides the project initiators with instant access to good market testing feedback. In the case of an unsuccessful campaign, it provides good market feedback.

Crowdfunding also comes with a number of potential risks or barriers:

• Reputation – Failure to meet campaign goals or to generate interest result in a public 'failure'.
• IP protection – Many Interactive Digital Media developers and content producers are reluctant to publicly announce the details of a project before production due to concerns about idea theft and protecting their IP from plagiarism.
• Donour exhaustion – There is a risk that if the same network of supporters is reached out to multiple times, that network will eventually cease to supply necessary support.
• Public fear of abuse – Concern among supporters that without a regulatory framework, the likelihood of a scam of abuse of funds is high.

Crowdfunding has, so far, been extremely successful, and I think its appeal will definitely be on the rise, especially because of the increase in social media and online platforms used in the marketing and distributions of films and music videos.