Thursday, July 4, 2013

Crowdfunding & the show business wealthy

And there it is in my Facebook feed, and in the paid ads on the right hand side of the page. Ads for a new movie being pitched by comedian Adam Carolla. I'm being invited to be a backer of the project.

But I'm not can be a backer too. Anyone can. Carolla is perhaps best known for The Man Show and for his 10-year stint co-hosting the syndicated radio show Loveline with Dr. Drew. He then went on to land his own syndicated radio show, carried by CBS Radio. When that high profile gig got cancelled in 2009, rather than look for another radio job in the traditional industry, he immediately started podcasting, not missing a single day on the air. From day one Carolla's podcast has been receiving well over a million downloads per week and even broke a Guinness Record in 2011 for being the world's most downloaded podcast.  But Carolla, ever the self-deprecator says he's always just "3 podcasts away from failure."

Nonetheless, I clicked through on the ad that had popped up on Facebook to find about more about Carolla's project and got this screen:

Of course it occurred to me that Carolla doesn't 'need' the money. He has a reported net worth of approximately $15 million, owns multiple homes, and even has a collection of exotic vehicles. And then I started thinking about the shift occurring on crowdfunding sites. In the early days the lion's share of projects were humble, cottage-industry type projects. Kind of the Etsy of media production, with modest asks in the low tens of thousands of dollars, and from people who really needed the capital in order to pay for things like studio time, musicians, artists, and designers. A short few years later and now people with the funds to underwrite their own projects are also turning to the crowd for financial support. The ones that come to mind are high profile Hollywood types such as Zach Braff, who recently raised $3.1 million for an upcoming film project, and the team behind the feature based on the defunct television show Veronica Mars, who pulled together $5.7 million in public backing for the project.

In an earlier post I looked at some of the stats for the most popular crowdfunding site, Kickstarter, and we saw that while some projects bring in millions, the majority bring in $10,000 or less. That's a level of funding that is easier for us to make sense of. Where it gets counterintuitive in when those doing the asking are themselves those people are established, if not wealthy, entertainment industry insiders. Yet the donations continue. So what is going on here? Why is the public participating? For the smaller projects by do-it-yourself filmmakers, musicians, and producers the phenomenon is at least a little understandable (though, frankly, I would have never imagined it would succeed at the level it has).  Contributions to projects aren't even tax-deductible, many of the projects are not completed (hence the arrival of laws pertaining to crowdfunding), and the incentives offered to project backers have been referred to as 'laughable'.

And yet, crowdfunding as an activity has tripled in the past three years, and is now a billion dollar business in North America and Europe.

So what does this populist philanthropy provide us with? And why do people keep on pledging, and do so with even more zeal when it's for a project spearheaded by a celebrity? It seems to me that what we are seeing things that were once the function of private and public sector institutions being shifted to the public at large. Projects, big or small, risky propositions or not, now have funding options outside of business, government, and family and friends...and industrial structures. And to take things one step further, when industry makes its investments in creative projects it has the chance, albeit slim, of making a return on the investment, whereas when the public opens its wallets, this is currently not the case or the expectation. I say currently because in the US, at least, the SEC is in the process of creating rules and requirements for equity crowdfunders.

One way to think about this phenomenon is through the framework of what most of us were previously prevented from doing, i.e. activities such as media production and investment. That was the domain of a privileged elite. Now most of us do a version of these things every day, via our participation on Twitter, Instagram, Yelp, TripAdvisor, Facebook, YouTube, SoundCloud, and the like. We have gone from being excluded from the economies of information and production to being radically included in them. And based on the billions of tweets, status updates, and sound and image files we post daily we seem to prefer the inclusion over the exclusion. We are more than willing to exchange actual currency for social currency and cultural currency and in the process we are reconfiguring the nature of those increasingly amorphous things, the media and entertainment industries.

In the nascent days of crowdfunding a common rationale provided for public donations to people's creative projects was that it was a manifestation of the gift economy, moved to the the digital world. I would argue that earlier on, when projects were small and had a definite cottage industry feel to them, that this was the case. I know that I put a few payments through in those days and that's definitely what it felt like. I was happy to 'gift' a small amount to someone whose work I admired, someone who I was pretty sure could not do their project otherwise, and my expectation in return was nothing more than the pleasure of seeing the work completed. But things have changed since then. For one thing Kickstarter fatigue has kicked in for me.  It's no longer a novelty when dozens of people you know are hitting you up for dollars for their short films, albums, and performance art projects. And the larger question, which is the topic of this blog post, is: why are people donating funds to those who, unlike most of those in our personal circles, don't really need the money?

The answer may be found in the quasi-political action that crowdfunding has become; a way for large groups of people who don't know each other to band together and effectively buck the system. It is a way for ordinary people to simultaneously cast their vote for the person and against the industry which may have once supported that person. In the case of an Adam Carolla movie those making financial contributions know that by supporting Adam directly the project can get completed without studio or producer interference, and that's the kind of Adam Carolla project they prefer to see. "The man", in such cases, is the movie studio, or the music label, or any other sort of gatekeeper that holds reins of power and has rules attached to its cash. The crowd, however, works outside the system.

While our knee-jerk reaction is to think of celebrities hitting up common folk for financial support as somehow sullying the system, the unexpected result is that as the base of contributors becomes even larger, there could be more to go around for everyone. It's the argument that says a bigger overall pie provides more pieces for everyone, even if some of those pieces are small. So when Adam Carolla or Zach Braff look to the people of the Internet for financial support for their projects, the overall base of contributors becomes much larger than it otherwise would have been, and the practice of crowdfunding moves from marginal to more mainstream activity. While it is too soon to say if this is a blip in time or something that will have a long-term effect on the way creative production is done, for now this blog watches with great interest as the principles of DIY/do-it-yourself production are applied across large swaths of the landscape and an entire industry develops around it.