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I love this. Reminds me of the Tonya Harding vs. Paula Jones sketch on SNL a while back. Thanks to Robert Dugan for the link.
By Gordon Firemark | May 13, 2009
In recent weeks, I’ve begun to see more and more independent filmmakers and theatre producers using forums, chat rooms, and other internet-services to seek out investors for their projects. In most cases, these inquiries are couched in plain language: “Seeking investors for independent film” or similar.
Unfortunately for these producers, their use of the internet as a tool in identifying and securing the financing for their projects may actually serve as an impediment to their efforts, making the sometimes improbable chances of raising funds virtually impossible.
Projects financed through the use of funds contributed by investors must comply with myriad laws and regulations governing the manner in which the investment opportunity is communicated and the transaction completed. First among these laws is the 1934 Securities Act, which established the Securities Exchange Commission, and gave that agency authority to regulate the offer and sale of securities.
What is a “security”?
Generally speaking, any sale of an investment in a venture where the investor’s role is “passive”, in that he or she does not share meaningfully in the right to control the day-to-day operations of the venture, and/or does not share the risk of loss with those in control, is likely to be considered a security, subject to the rules and regulations of the SEC.
The Registration Requirement
The general rule is that every offering or sale of securities must be registered with the SEC unless there is an available exemption on which the issuer relies. Registration of securities is a time-consuming and often cost-prohibitive option for low-budget filmmakers and producers of theatrical plays and musicals.
Exemptions from Registration: Advertising not permitted.
Although there are several exemptions from registration available, those that are most commonly available to producers of entertainment arise under SEC Regulation D. Unfortunately, these exemptions are intended for private, limited offerings, rather than offers made to the general public. As such, the regulations prohibit the use of advertising in the offer and sale of the securities.
Internet postings seeking investors ARE advertisements.
Lawyers are in agreement that any communication put on the internet for the purpose of raising money via sales of securities WILL be considered an advertisement, and thus, renders the Regulation D exemptions inapplicable. Therefore, by posting in an internet forum, chat room or social networking site, producers often make things much harder for themselves.
Solutions
So, how can a producer effectively use the internet in her efforts to finance her project?
One possible solution is to work outside the securities realm. By this I don’t mean to skirt the law, but rather to ensure that the offering being made does not involve securities, but instead, an opportunity to become an “active” investor and participant in the production. Typically, this is done by posting or offering prospects the chance to review the business plan for the project, and the chance to join as a partner, co-venturer or founder of an initial incorporation for the purpose of producing the project.
This drastically limits the universe of likely financing partners, since by being “active”, the partner shares in the downside (liability) as well as the possible upside from the profitable project.
Another viable approach (if executed carefully), is to use the internet as a tool for developing and building relationships with people whom you may later approach on a personal, private basis with the investment opportunity. Care should be taken, however, that this relationship building is in fact more than merely window-dressing. The common interests of those involved must go beyond the project being financed. The internet in such situation isn’t involved in making the offer, but merely in networking with like-minded individuals.
Finally, there ARE some internet based organizations that focus on attracting “accredited” investors and building a pool or network of people interested in investing in entertainment projects. By engaging the services of such an organization, (which has a pre-existing relationship with pre-qualified investors), some producers have succeeded in securing financing.
Ultimately, however, the internet should be thought of as simply another medium for communication. It cannot be used in ways that older, more traditional communication methods would be prohibited. Before starting any campaign to raise funding for a film or theatre project, producers should consult with a qualified and experienced entertainment lawyer (like the author), as the pitfalls for noncompliance with securities regulations are onerous.
NOTE: This article addresses U.S. Law only. Securities laws vary from one country to the next, and from state-to-state within the U.S. This article is not a substitute for legal advice obtained from an experienced entertainment attorney you’ve hired to counsel and represent you.
NOTE: The above movie is NOT Robbie's film. Click the "Visit and Vote" button to get to the semi-finalist page, and look for Natural Selection. Then tell Netflix that their "Share Video" feature randomly sucks.It would be a great thing for a Texas filmmaker to win. Cruise over to the Netflix site and help a brother out. Check out the other fine trailers, too, from several talented filmmakers around the world.
Our dinosaur studio system does not make sense. This is a revolution.Words to live by. Check it out.
--McG, director of Terminator: Salvation
"[It] is a horrible, exhausting struggle, like a long bout of some painful illness. One would never undertake such a thing if one were not driven by some demon whom one can neither resist or [sic] understand. For all one knows that demon is the same instinct that makes a baby squall for attention. And yet it is also true that one can write nothing readable unless one constantly struggles to efface one's personality [...] Good prose is like a window pane."Except that Orwell was talking about writing a novel, of course.
-Why I Write, by George Orwell
When discussing sales on Amazon I heard you mention "onsies" and "twosies" (if that spelling is even remotely correct) What is that?During my discussion with writer/actor/producer Ben Taylor in TFS episode 2, I referenced the success of Amazon's "long tail" sales model. The term long tail is a reference to Chris Anderson's book.
Also I heard Ben mention you wrtiting "Chubic notes" (again, I hove no idea how to spell that) and I've never heard of that before either. Is it a study method or something like that?Yes, it is a study method (sorta) originated by Ivanna Chubbock, by way of Roy London, by way of Uta Hagen, by way of Stanislavsky, with a detour through cognitive psychology. I studied it with Bentley Mitchum, one of Ivanna's prize pupils, who taught the class in L.A., before moving to Texas.
From Crackle: Angel of Death Ep 1 "Edge" starring Zoe Bell
There was only a 2 vote difference between Jason and the Grand prize winner. Considering this was Jason's first contest submission, and his competitors were some of the best professional 3D CG artists in the world (including artists in the film industry), this is an amazing accomplishment by any standard. He is one extremely talented dude!