Creative new way to fund a movie
lobsterback.com
lobsterback.com
Distribution copies are expensive, about $1200 per reel copy if you are really lucky (multiply with about at least 1200 screens for a moderate indie flick (about $1.5 mil).
If you think targeting digital distribution sites is another option - think again. You still pay print copy equivalent expense, but not to the print service company, but to the actual screen venue. This is a ploy George Lucas "invented" and pushed onto screening venues in order to push the cost of digital screens to the distribution companies instead of the screening venues. This will last for at least 5 years from when the venue bought digital screening platform.
Then, there is a marketing cost. In A+ budget titles it is in the order of $30-40+ mil. So when you hear about, I don't know, Spiderman 4 having a budget of $200 mil., it means about 60% of that is marketing and distribution cost.
Now, let's turn focus on actual production costs.
SAG, WGA, DGA - all have a different perspective of what low budget means. There are different categories of low budget titles, and based upon those categories there is a minimum wage you have to pay to actors, screenwriters (treatment, script, whatnot), director, etc... What this means, if you live in some area of USA where those guilds operate is that you are illegal production if you don't pay those minimum wages based on your budget. I have somewhere those scales, if anyone is interesting I can follow up my post and present them.
tl;dr; $250k budget is not realistic. Too many people have worked on this problem already and smallest realistic budget for a visible project is in the order of $2-5 mil.
if they're shooting it on 16mm with a small crew (union or not) and their actors are working indie sag, $250,000 doesn't sound unreasonable at all for a film looking for a festival run + talking to potential distributors.
However, that wont bring your movie nowhere. You can seek a distributor, which get tons of proposals and probably wont even look at your film (NDAs and lots of proposals mostly). Think of distributors as VC companies and each movie as a startup, because it is. Distributor has enough money to market the film.
Another option, which almost every indie production takes is festival run. Festivals are great because if you win an award, distributor hears about you, distributor might see you there with your movie and there are usually market palces associated with festivals where distributors and TV houses shop for movies and series (I work in animation and biggest is Annecy in France).
Some of you might think, why not go viral with the movie? Why not let it go on the internet, market it around reddit, digg, whatnot - it could be a festival like cycle, no? Well, no. You see, I would be the first one to do so, but if you want your flick to be eligible for any kind of festival award (from Annecy to Sundance to Oscars) it works in a funny kind of way. In order to make your flick run in a festival, requirements to do so usually mean that it had to already run on several festivals (Oscar eligibility for example) and almost always there is a strict rule that your film is not publicly available (online or distribution), which gives festivals a sort of premiere in their region.
Movie business is a strict business with a lot of rules and even more egos. Each and every movie is run exactly like a startup that operates on milestones and further funding.
There are plenty of horror and no-budget festivals, so if your film is not total crap then you have a good chance in being selected for one. That'll help you get more money from the distributor, but if you don't succeed it's not too much of a loss.
The union doesn't matter too much. The lower your production budget, the less likely they are to bother you. SAG (actors) has a very cool deal for no-budget films that lets the actors work for free or minimum wage. Writer's guild just does not care below 6 figures. Ditto for the crew and camera unions. Of course the less you have to spend the less you can get in the way of experienced people, but if you have a few enthusiastic key people who are willing to shepherd some enthusiastic amateurs, you'll be fine.
RED One is an amazing camera, but I wouldn't use it for this kind of project. It's still pricey, and says that you have money but you're not willing to spend it on the crew. For the dirt-poor filmmaker, what you want is a Panasonic HVX or similar that shoots 24/5P and which can put out or be converted to something that looks fairly decent at 720p. And a friendly producer.
If you turn in a film that does not completely suck for under $50,000, you can probably sell it for enough to get your production costs back.
A lot of films with budget below 1 mil. (although some of them are very old and you have to take inflation into account)
Many indie producers lack a proper distribution strategy or fail to budget properly for post, mastering, or marketing - which can mean marketing to distributors as well as the general public. but if you have a good post crew and you have budgeted for your deliverables, then $25k of the $250 for marketing may be enough to get it sold, assuming a great script and the approval of the film gods.
Of course, the likelihood of the investors making any actual profit on such a deal is very small, since the makers have now exposed their production budget and the distributor thus has no incentive to pay more than that unless the film is awesome and a bidding war ensues (you might as well buy a lottery ticket as count on that, of course). Equally, it's very unlikely they'll be able to negotiate a percentage of gross and it will be a long time before they see any net. On the upside, the marketing method is already generating buzz for the film at almost no cost, simply by virtue of us discussing it.
You can make a film for very little and go straight to DVD. DVD is where the real money is: the theatrical run is unprofitable for a great many films, but it validates the film as a Real Movie in the eyes of the public, and there's a very good chance people will rent a film later even if they're too lazy/cheap to go watch it in the theater.
Without a theatrical release or prominent festival entry it's much harder, but not impossible, to make money by releasing on DVD. A $250k film can break even after 3-5 years if it's of middling quality; the distributor may pay $75k up front and then royalties.
If you have the required craziness to make a sub-$50k film that isn't irredeemably crap, they'll probably buy it outright - and as a producer or director, it's better to have something out there with your name on it, even if it is mediocre. It's a lot easier to get money for the second film, when you can truthfully say 'my debut film, derivative horror flick, is distributed by Lion's Gate'.
IF YOU INVEST $50, AND THE FILM IS...
SOLD FOR $250,000 = YOU GET $50 (100% RETURN)
SOLD FOR $500,000 = YOU GET $75 (150% RETURN)
SOLD FOR $1,000,000 = YOU GET $88 (175% RETURN)
I don't think traditional investors count like that.. I presume the investors won't get paid back their initial investment, so if the film sells for 250k and each investor gets his $50 back, that's a return of zero. A return of 100% implies a doubling of your initial investment..
Please correct me if I'm wrong, but I think the way it's phrased here is quite misleading (otherwise great idea though).
1. how is lobsterback going to make money? OR are they planning for no profit and no loss endeavor?
2. Is there any contract paperwork done? and can an investor see that beforehand?
3. How lobsterback is committed for ROI when you're investing in "Natalie queen of stock - LLC"?
4. Personally I want to know how SEC won't object to such financing? as investors are also shareholders!!??!! Because if this can be done (legally) then angel investing (thru crowdsourcing) can go off the roof to help so many different kind of startups. So if you know a trick/loop-hole/idea/grey-area of how one can arrange this kind of financing then reply here right away.
I TRULY SEE THIS IDEA A REVOLUTIONARY !!! I'm saying this because i know people who have done research (on this kind of financing) and spoke to several lawyers but with no help ...
Edit: well I guess their lawyers are sure of what they're at. I hope they write about or open source their process, as I'd far rather raiser cash in micro-amounts based on the strength of the script etc. than sit in investor meetings.
EDIT: Oh, there's a spreadsheet at the bottom with potential return information.
In the event that any of the principals is reading this, read clause J again. That is the least of the things wrong with it.
I gave them $50 because I liked the way they asked. I certainly don't expect to see it again :-)