As this year’s Envision Conference approaches, the IFP is excited to screen Steve Hoover’s Sundance-winning documentary Blood Brothers at the DGA on opening night on April 10th. The film follows Rocky Braat, a former graphic designer who moved to India after meeting a group of HIV/AIDS orphans. Not only are …]]>

As this year’s Envision Conference approaches, the IFP is excited to screen Steve Hoover’s Sundance-winning documentary� Blood Brothers at the DGA on opening night on April 10th. The film follows Rocky Braat, a former graphic designer who moved to India after meeting a group of HIV/AIDS orphans. Not only are the humanitarian aspects of the film compelling, but Hoover’s portrait of his friend shows a compassionate man with a need to give. Check out this in-depth post from Steve Hoover at Filmmaker Magazine, where he discusses the shooting process and Kickstarter campaign to post-production and partnerships.

Read the article here.

As important as …]]>
The Jumpstart Our Business Startups Act (the “JOBS Act”) was enacted on April 5, 2012. It allows small businesses to enter into equity-based crowdfunding for raising up to one million dollars, without the usual burdensome requirements currently in place. These rules should be in place by early 2013.

As important as the crowdfunding provisions, the JOBS Act also amended Rule 506 of Regulation D, thus permitting general solicitation or general advertising, provided that all purchasers are accredited investors. Currently, it is unlawful for a filmmaker to send out email blasts to strangers, or advertise on the internet to attract investors. To comply with the existing law you should only approach persons you have a pre-existing relationship with. This rule will change with the implementation of the JOBS Act.

People may be accredited investors based on their net worth or annual income, as follows:

1) a natural person whose individual net worth, or joint net worth with that person’s spouse, exceeds $1 million, excluding the value of the person’s primary residence (the “net worth test”);

or

2) a natural person who had an individual income in excess of $200,000 in each of the two most recent years, or joint income with that person’s spouse in excess of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year (the “income test”).

The shorthand description of accredited investors is simply “wealthy people.” General solicitation could be described as advertising or any method for approaching people you do not currently know.

The Securities and Exchange Commission (SEC) was given 90 days to implement this rule change and missed the deadline. However, the SEC has proposed draft rules that, if adopted, will make it easier to raise capital. Essentially, the proposed rules state that if you want to advertise or approach strangers for capital you will have to: 1) take reasonable steps to verify that all of the purchasers are accredited investors; 2) reasonably believe that all of the purchasers are accredited investors; and 3) check a box on the Form D confirming that you are acting under the rules which allow general solicitation.

The SEC did not specify exactly what steps must be taken to verify that a person is an accredited investor, but states that it depends on the circumstances. Most filmmakers do not have access to detailed financial records of potential investors, and a potential investor may not want to disclose their tax returns or other documents to prove that they are accredited. The SEC gives as an example:  “An issuer that solicits new investors through a website accessible to the general public or through a widely disseminated email or social media solicitation would likely be obligated to take greater measures to verify accredited investor status than an issuer that solicits new investors from a database of pre-screened accredited investors created and maintained by a reasonably reliable third party, such as a registered broker-dealer.”

In other words, if you are indiscriminately sending out solicitations through social media, merely requiring a potential investor to check a box that they are accredited, it is not likely to be deemed sufficient. Since the standard is vague, and no specific steps to determine an investor’s status are suggested, it would be wise to verify an investor’s status by having them complete a detailed questionnaire that will provide information that can be used to justify a belief that they have the assets or income they claim.  If, for instance, a person claiming to be accredited, does not  have any investment or bank accounts and resides in low-income housing, then either they are not as wealthy as they allege, or perhaps they are a drug dealer whose savings are stashed in a mattress.

Filmmakers relying on the new Reg D rules should maintain careful records documenting what they have done to verify that each investor is accredited. And remember, these rules have not yet been adopted. The proposed rules can be read at: http://www.sec.gov/rules/proposed/2012/33-9354.pdf

You can submit your comments on the proposed rules at: http://www.sec.gov/cgi-bin/ruling-comments?ruling=s7xxxx&rule_path=/comments/s7-07-12&file_num=S7-07-12&action=Show_Form&title=Eliminating%20the%20Prohibition%20Against%20General%20Solicitation%20and%20General%20Advertising%20in%20Rule%20506%20and%20Rule%20144a%20Offerings

Contracts for the Film and Television Industry: 3rd Edition

The long awaited third edition of my Contracts book, now including 80 contracts, has just been published.  For more information, click� here.

Self Defense Seminar:

Date: October 20, 2012

Location: West Los Angeles College, 9000 Overland Ave., Culver City, CA 90230 (Free parking is available in the campus parking structure.)

This seminar explains how writers and filmmakers can prevent problems from arising by properly securing underlying rights, and by encouraging the other party to live up to agreements by adding performance milestones, default penalties and arbitration clauses.

Self Defense Class

California Lawyers for the Arts

I’m very fortunate to be friends with many accomplished independent film producers–people whose films have screened at the best festivals, won significant awards, gotten picked up by major distributors, earned healthy gross receipts, and …]]>

Summit of independent creative producers hosted by MoMA, Indiewire, and Zipline Entertainment in December 2009.

I’m very fortunate to be friends with many accomplished independent film producers–people whose films have screened at the best festivals, won significant awards, gotten picked up by major distributors, earned healthy gross receipts, and received accolades in the mainstream press.  We hang out sometimes, one-on-one or in groups, to catch each other up on our projects, share recent experiences, exchange opinions on companies and people we’ve worked with, etc.  But essentially, we get together for emotional support against an industry and an economy hostile to our work.  At any given time, half of us will have one foot out the door, ready to escape an occupation in which the appreciation and financial rewards we get have zero correlation with the insanely hard work we do and intense emotional stress we endure.

I was recently struck by three things I read that echoed some of these sentiments: Ted Hope’s forlorn blog post in which he catches up an old friend to where he is now, Brian Newman’s post about how YouTube stars are disrupting the old indie film model, and the Huffington Post article on Jay Van Hoy and Lars Knudsen.  I deduced a common theme running through all three: innovate or die.

Ted’s post lamented, “It is very frustrating watching what I love crumble away. I see many people with their fingers in the leaks, but few that want to build a new city higher up on the hill.” Brian said that filmmakers need to find innovative ways to connect to their audiences before the latter start to liken Sundance to the Metropolitan Opera, “a place you go to see a wonderful artform that you know you should respect, but that no one cares about anymore and which very few can afford to make or attend.” And the HuffPo article quoted Jay and Lars saying that too many indie producers “are too busy adapting when we should be innovating.” Film may be the new theater (or Metropolitan Opera), TV the new film, online streaming the new TV, but any way you frame it, the world of content creation, distribution, and consumption is changing–dramatically.

Independent producers are entrepreneurial by nature. Each feature film we undertake is a distinct startup, with rounds of financing to raise, a team to build, development and production phases, a launch (premiere), and an exit strategy (sale). We are, essentially, serial entrepreneurs, except–as a matter of survival–we have to run multiple businesses simultaneously, being in some combination of development, production, post, and distribution on different films, all at once. So why don’t we take our creativity, penchant for hard work, and entrepreneurial chutzpah, and put it all toward innovation?

Let’s figure out how to reconcile the artfully crafted 100-minute narrative with the public’s growing appetite for cheap and quick content.  Let’s make sense of the confusing array of social media and alternative distribution tools out there.  Let’s build on the examples set by folks like Louis C.K. and Ed Burns (except let’s try to remove the “be famous already” prerequisite to their success). Let’s see if we can’t operate outside Hollywood’s lottery system, outside its control, and sustain ourselves as “middle-class filmmakers” who continue to make films that speak to people.

If we don’t innovate the way we make and sell our movies, the independent film space will become further dominated by two groups: young first-time filmmakers who are willing and able to work for free (and who haven’t yet maxed out the favors they can call in), and filmmakers who are already rich and don’t need a paycheck or a return.  Writers, directors, and producers who come from economically disadvantaged backgrounds, those who are older, those from immigrant and minority groups, and those who are trying to make their second, third, fourth features (to which they could apply the expertise gained from making their previous ones) will leave the business–and the scope of stories being told will become severely limited.

Fellow producers, I know you’re busy. I know it’s hard to tread water in a vast sea of emails, calls, contracts, scripts, screeners, budgets, schedules, financing plans, accounting statements, tax filings. I know you’re juggling so many projects, you sometimes confuse the names of your protagonists. I know you wish you were doing a better job of absorbing the continuous stream of industry news. I know there are a ton of writers, directors, composers, actors, cinematographers knocking at your door, hoping to introduce you to their work and pick your brain (and I know you’d love to meet with many of them). I know you waste a lot of time talking to “potential financiers.” I know dealing with agents, managers, and lawyers exhausts you. I know it’s maddening to hustle for paid short-term gigs in the midst of prepping, posting, or delivering your feature, or traveling to festivals and markets. I know you never get enough sleep or have enough time with your loved ones.

But, my dear producer pals, the next time we meet up to kvetch about work and life, let’s put our  heads together and figure out how to sustain not only ourselves, but ultimately, the art that we love so dearly, and the diversity of artistic voices that make it. There is a better way, and we’ve got to find it soon.

I’ve been in theatrical distribution for 5 years (a short time by some standards), and have already seen the playing field shift dramatically.  5 years ago, I interned at a reputable distribution company that no longer exists. 3 years ago, I placed trailers in art house theaters that …]]> By Sara Kiener

I’ve been in theatrical distribution for 5 years (a short time by some standards), and have already seen the playing field shift dramatically.  5 years ago, I interned at a reputable distribution company that no longer exists. 3 years ago, I placed trailers in art house theaters that have since changed owners multiple times or…no longer exist. Throughout, I worked on great films that wouldn’t find their way to a theater today and I worked on campaigns that were banking on ad buys and (fingers crossed) strong reviews. Those days are over, for the most part. And I’ve joined the band of noisemakers encouraging filmmakers to consider alternative means of marketing and exhibition.

But my heart still belongs to the independent theaters, so I’m a bit torn.

That’s why I was so thrilled when I first read about Tugg in indieWIRE. Their mission couldn’t be more straightforward: “Tugg brings the movies you want, to your local theater,” yet its’ approach is up to speed with cutting edge social media tactics (crowdsourcing and crowdfunding are at the heart of their model).  Here’s how it works in a nutshell: a promoter or a hardcore fan can create an event at a theater, pick a date and time, and then they have to pre-sell a set number of tickets in order to lock-in the event. Everyone gets a percentage of the ticket sales (the filmmaker, the theater, Tugg and even the promoter!) so it’s win win. As an outreach gal, I was particularly interested in how this new model could lend itself to documentaries and niche issue narratives. So I put it to the test, and helped set up an event for Julie Wyman’s new film STRONG! about U.S. Olympian Cheryl Hayworth. I am thrilled with the results and can assure you that there are more screenings in the pipelines.

STRONG! Directed by Julie Wyman

So should you be thinking about TUGG? Does it make sense for your film? Here are some questions you should ask yourself before pulling the trigger:

*Does your film have a regional audience that is locatable and reachable?

*Do you feel confident that you and your team can locate regional partners and engage them?

*Do you have partners on board who want to help you spread the word but can’t support you financially (i.e., help pay for traditional theatrical distribution and/or pay rental fees)?

*Do you have your theatrical rights?

*Is your film being distributed in NYC and LA?  Do you know what to do with it regionally after that?

*Do you believe there’s a home and an audience for your film outside of or in addition to the classroom and the community center setting?

If the answer to most of the questions above is yes, then you should probably start looking into Tugg! Some other films are already hip to the approach and doing rather well. Here are a few examples:

#ReGENERATION
This documentary about the Occupy Wall Street movement (narrated by Ryan Gosling) had 10 screenings across the country over the course of one evening, promoted by the filmmakers themselves and people who had read a Huffington Post article about the film and wanted to get involved.  The screenings featured Q&As with the filmmakers as well as members of local communities including professors and figures of the Occupy movement.

ONE DAY ON EARTH
On Earth Day this documentary was shown throughout the US via Tugg.  It was filmed in every country across the globe over the course of one day — a crowd-sourced film utilized a crowd-source platform (Tugg) to play in theaters in 11 cities, selling over 1800 tickets without spending $1 on traditional marketing.

INCENDIARY
The filmmakers of this critically-acclaimed documentary about the death penalty have utilized Tugg to arrange screenings in partnership with death penalty orgs across the country.  To date, Tugg has provided theatrical showings of INCENDIARY in more than double the amount of markets it reached during its traditional theatrical run.

ECTASY OF ORDER: THE TETRIS MASTERS
There was a sold out show in Austin for a documentary called ECSTASY OF ORDER: THE TETRIS MASTERS about Tetris World Champions. The promoter, who saw the film at a festival and had to share it with his friends and community, arranged a unique screening through Tugg with an in-theater Tetris competition on the big screen following the film.  He has a great recap on the event here.

And this is just the beginning, IMHO. I’m really excited to see what other filmmakers and distributors do with this platform. If enough clever filmmakers and promoters dabble with Tugg, we may be looking at the next phase of theatrical distribution…one ticket at a time.

PUTTY HILL has been playing strong throughout the US; we’re preparing for a wide release in France through ED Distribution (supported by ACID, it opens in Paris theatres September 7th); I was part of a group show at the Baltimore Museum of Art and …]]> A lot’s happened since my last post:

PUTTY HILL has been playing strong throughout the US; we’re preparing for a wide release in France through ED Distribution (supported by ACID, it opens in Paris theatres September 7th); I was part of a group show at the Baltimore Museum of Art and won Maryland’s prestigious Janet & Walter Sondheim Prize; I attended the Robert J. Flaherty Film Seminar last month on a fellowship; I broke my right arm.

But the most important and exciting thing happening in my world right now is the feature film we’re shooting in Baltimore August 1st, I USED TO BE DARKER

Once again, we’re cobbling together investments and using Kickstarter to launch a very time-sensitive campaign.

My producers and I wanted to craft a campaign that pushed beyond what we’d done with our successful effort to finish PUTTY HILL in 2009. In a typically impulsive decision, I decided to make a bold gesture and shoot a video that would demonstrate my commitment to this project. I told no one but my student intern, Clayton Lee, we shot and edited it in less than three hours, and launched it the following day.

Will it be successful? I certainly hope so. We’re asking for $40K, three times more than we set out to raise for PUTTY HILL, but already, in three days, we’re close to 15% of what we need to meet our goal. Our hope is to have enough money in place mid-way through production to push it into the can.

I USED TO BE DARKER is a project co-written by partner Amy Belk, starring musicians Ned Oldham (brother of Will and Paul) and Kim Taylor, as well as very-talented newcomers Deragh Campbell and Hannah Gross. It will be shot by my good friend Jeremy Saulnier, who DP’d both my previous features, and will combine many of the same crew and collaborative team behind PUTTY HILL with some new friends, like Amy Dotson and Nomadic Independence Pictures.

I feel a bit like I’m playing chicken with a freight train, pushing ahead without all our financing in place; but at this point, two weeks out, I won’t back down. I may not have an abundance of talent or even great luck, but I don’t give up, and I’d like to think that goes a long way.

Usually a project …]]> In their quest to secure funding for their projects, independent mediamakers are more and more using a financing option called “crowdfunding” in which mediamakers place their projects on such websites as Indie GoGo and Kickstarter and request that people donate usually small sums of money towards such projects.

Usually a project is listed on these websites and includes some preliminary information about the project and a request for people to donate funds so the mediamakers can reach some pre-established goal. Mediamakers generally use these funds which range from a few thousand dollars to approximately $20,000 for distinct purposes such as development of a project or as finishing funds when a project has been shot and is in the post production phase. However, mediamakers can use crowdfunding at any phase of a project.

These websites and mediamakers with projects on their websites generally utilize such social media as Facebook and Twitter as well as blogs or dedicated websites in conjunction with these websites to get the word out about a project.  Donations can be in any amount of money; however, the main distinction between IndieGoGo and Kickstarter is that Kickstarter requires mediamakers to set a deadline by which a mediamker’s funding goal has to be met or the mediamakers cannot access the donations for their projects. Some proponents of the Kickstarter approach emphasize that when mediamakers fix a funding deadline, it forces their efforts and those who may be interested in donating towards projects to focus more than if there is an open-ended opportunity to donate.

Mediamakers often set a funding goal that is too high and, as the deadlines nears, they are compelled to place enough funds themselves to meet their funding goals.

In addition, mediamakers have offered various items as perks for donating at a certain level. These perks may include receiving a “thank you” or “producer”-type credit on the project, a T-shirt or a cap with the project’s title on it, a DVD copy of the project which would be sent to certain level donors when (and if) the project is completed. This type of securing donations is akin to the public television pledge breaks in which different donation levels can entitle a donor to a tote bag, a copy of a book based on the pledge program, a CD or a DVD of the pledge program.

Mediamakers use crowdfunding as a means to building an audience for their projects who often will have a pre-existing interest in a project’s subject matter in the hope that donors would encourage others to donate to these projects as well as pay to see such projects.

Mediamakers and potential funding contributors should realize the operative word is “donate” and donors should have no expectation of receiving anything but the perk generated by donating at a certain funding level and a sense of accomplishment that they have helped to fund the production of a project which features a subject matter that is interesting to them or to acknowledge confidence in mediamakers who these donors know or wish to support.

The problem arises when mediamakers are offering any financial benefit derived from the exploitation of thee rights in their projects because then they are offering what is a security (no matter what the mediamakers call it). Mediamakers then may run afoul of the state and federal securities laws which require that mediamakers offering such financial benefits either to register these interests as securities or seek an exemption in which mediamakers would not have to spend the time and money to register such interests. In addition, such financial documents as a private placement memorandum (or a prospectus in the case of a public offering and an operating agreement would be required to provide extensive information regarding the seller and its key executives, the use of the funds, and the financial risks associated with project. The preparation and filing of such documents can be cost prohibitive or financially steep for most ultra-low budget projects. Some companies occasionally have offered stock or the opportunity to receive proceeds from a company or a project directly over the Internet, but that approach can result in a public offering which would require either seeking an exemption from registration or a full registration of the securities with the Securities Exchange Commission and the states in which the securities are offered or sold or mediamakers could face substantial penalties and liabilities.

Therefore, any mediamaker who uses such terms as “invest” and “investment” or offers some financial benefit to the donor regardless of what the mediamaker calls it) should raise red flags to potential donors.

For very low budget projects, crowdfunding can replace or be used with the much more technically challenging sale of securities (as well as loans and tax credits, if applicable) to fund a project.

Whether used by mediamakers solely or in combination with other funding techniques, crowdfunding utilizes the social media and permits mediamakers simultaneously to seek funding as well as market their projects to an audience which supports the mediamakers’ and the audience’s goals and/or interests.

Disclaimer: The information provided here is intended to provide general information and does not constitute legal advice. You should not act or rely on such information without seeking the advice of an attorney and receiving counsel based on your particular facts and circumstances. Many of the legal principles mentioned might be subject to exceptions and qualifications, which are not necessarily noted in the answers. Furthermore, laws are subject to change and vary by jurisdiction.