Monday, August 4, 2014

Kickstarter and Indiegogo: Are They Worth It?







For many upstart filmmakers, crowd-funding websites like Kickstarter are a great way to raise money for their projects since they have a way of reaching out to the masses and have an opportunity to thank those that have helped them accomplish their dreams.

While many filmmakers have found success on crowd-funding websites, they can be a slippery slope. Let's take a look at two popular websites, Kickstarter and Indiegogo.

Kickstarter

In the past few years, Kickstarter has become one of the biggest players in the crowd-funding space with tons of individuals looking to make movies, music, or new inventions. It uses Amazon Payments to process payments, so if you have an account with Amazon, it's pretty easy to get your money.

Lately, however, Kickstarter has made news, but not for innovative projects. Instead, celebrities are using the site to ask the masses to fund their projects (see Zach Braff, Spike Lee, James Franco, Melissa Joan Hart, Sylvester Stallone) and the more recent potato salad Kickstarter. This is not to say that Kickstarter is not a place for ordinary people, but it does seem fame is a major component of the website.

Kickstarter is also known for its-all-or-nothing approach to fundraising. If you raise your goal amount, you get your money, although both Kickstarter and Amazon Payments take a cut of your profits (5% from Kickstarter, 3-5% from Amazon Payments depending on the amount raised)

Indiegogo






http://www.underconsideration.com/brandnew/archives/indiegogo_logo_detail.png


While similar to Kickstarter, Indiegogo is not as strict when it comes to approving projects in comparison to Kickstarter. In fact, Indiegogo made news in 2012 for a campaign to give a bullied bus monitor featured on a YouTube video a vacation.  While not artistic by any means, it certainly made the bullied bus monitor feel better.

Using PayPal as its payments processor, Indiegogo has two  approaches when it comes to fundraising:

Flexible Funding
If you reach your goal amount, Indiegogo takes 4% of the profits.
If you don't reach your goal, Indiegogo takes 9% of the profits, but you still get the donated monies.

Fixed Funding
If you reach your goal amount, Indiegogo takes 4% of the profits.
If you don't reach your goal, Indiegogo takes 0% of the profits, but all your contributors get refunds.


My Thoughts


I'll be honest: I'm not a fan of crowd-funding websites. I certainly don't want to let my opinion sway you, but I don't like these sites largely because of the amounts these sites collect, as well as the level of fame that factors into donating. It may be great if your film gets featured, but consider the amount of projects being posted on the site.

Look at Kickstarter. Many film students lack the fame and press contacts these celebrity Kickstarters have. Obviously these celebrities wouldn't ask for public help if they had the money from other resources, but don't you think film financiers would be a bit more interested in financing if a big actor came to them? I know there are divided opinions about James Franco, but I would imagine he would have an easier time convincing film investors to in comparison to John Doe from XYZ Film School.

I do find it disappointing that people would rather donate to a potato salad Kickstarter than a film (and no, I'm not anti-potato salad).  but I believe a film has a lot more meaning and value and can lead to big changes in people's lives, such as documentaries that create change, or films that catch the attention of Hollywood. I love potato salad as much as the next guy, but I'd rather give money to something that has potential artistic value and can affect someone's future, rather than some random guy who is just going to make potato salad, period.

Also, consider your target demographic. If you're posting a crowd-funding campaign simply to get money from relatives, parents, and friends, is it really worth the effort to create a campaign and have these websites take out significant portions of your funding?


Alternatives

So after reading my article, you may be asking what's a person supposed to do since I seem to be so anti-crowd funding. Well, I do have two solutions:

1. Selfstarter.
After being rejected by Kickstarter, a company called Lockitron, which makes keyless entry systems, created a code that mimicked Kickstarter. While its Kickstarter goal was $150,000, Lockitron earned $1 million in preorders in just a few days.

2. Create your own website.
All you have to do is find a site that will let you create a free webpage, such as Wix.com, Weebly.com, and Webs.com. You can pay for premium features, but if you just need a place to park your project, this is a great strategy. All you need to do is create a great intro video and a link to a processing site like PayPal or Amazon Payments.

In both of theses cases you will still have to deal with processing fees from the likes of Amazon and PayPal, but you're going to get a bigger cut of your contributions.

3. Checks and bank transfers.
While this is an obvious solution, see if your backers can send you paper checks (that don't bounce when you cash them, obviously). You keep 100% of the profits and don't have to deal with payment processors.

Also, you may want to look at electronic person to person payment services (i.e. PayPal) which can send money between two people. Some services do charge fees, but many banks have their own offerings. My bank have free access to a service called Popmoney that can send money to people across the US free of charge (note that transfers through popmoney.com are not free), and others have ways to send money between bank customers (i.e. Chase, Bank of America).

Conclusion


With everything I've written here, take a moment to consider the best way to fundraise your project. There is not a real one-size-fits-all approach to fundraising, and for your purposes, it may be better to go with a site like Kickstarter.

Happy fundraising! :)

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