PROTECTING FILM INVESTORS (A brilliant article by Mr. Litwak © Mark Litwak. All Rights Reserved)

PROTECTING FILM INVESTORS (A brilliant article by Mr. Litwak © Mark Litwak. All Rights Reserved)

BY: MARK LITWAK

Film investments have a bad reputation, and deservedly so. There are instances where financiers have been cheated and lost their entire investment. Consequently, some investors simply refuse to consider film-related investments. This is unfortunate because an intelligent investment in a motion picture can earn substantial returns. While film investments are risky, the potential return from a hit can be enormous. Not only can the film earn revenue from box office receipts, but there are many ancillary sources of income. These sources include revenue from television, home video, merchandising, music publishing, soundtrack albums, sequels and remakes.

As an attorney who represents investors, as well as filmmakers, I have learned that there are ways to reduce the risk of film investments. Here is a checklist to guide investors.

DUE DILIGENCE: Thoroughly investigate the reputation and track record of any producer or distributor you contemplate doing business with. No contract can adequately protect you against a scoundrel. Speak to filmmakers and investors who have done business with a candidate. Check court records to see if the company has been sued.

FULL DISCLOSURE: Federal and State security laws are designed to protect investors. Offerings to the public generally require prior registration with the SEC or a state agency. Usually private placements are limited to persons with whom the offeror has a pre-existing relationship. Even if registration is not required, the anti-fraud provisions of the security laws require that the offeror make full disclosure of all facts that a reasonably prudent investor would need to know in deciding whether to invest. The information disclosed should include a detailed recitation of all the risks involved in developing, producing and marketing a movie. Avoid any offering that appears to violate this requirement by making less than full and truthful disclosure. Carefully read the prospectus, and consult your own financial and legal advisors before making a decision to invest.

TRACK RECORD: Do not back a filmmaker or production team that does not possess the proven skill needed to make a professional-looking movie. Avoid first-time filmmakers. You are safer backing filmmakers whose have completed at least one short or a feature-length work. Partner with people of integrity who bring the skills, expertise and resources to the endeavor that you lack. For instance, if you don't have the knowledge necessary to evaluate a script, bring aboard someone who has that expertise, or hire a script doctor.

IDENTIFY THE POTENTIAL MARKET FOR THE FILM: There is a very limited market, and modest potential revenue, to be earned from short films, documentaries, black and white films, and foreign language pictures. Distributors and exhibitors are prejudiced against motion pictures shot on videotape. They prefer films shot on 35 mm stock, although quality films shot on 16 mm or Super 16 mm stock can obtain distribution. The top festivals do not exhibit motion pictures on videotape.

Certain themes, topics and genres can be difficult to sell. Religiously-themed pictures can easily offend audiences. Cerebral comedies can be difficult to export because their humor may not translate well. Films with a great deal of violence may be shunned by European television which is a prime market for independents. Films with explicit sex may not pass censorship boards in certain countries.

Independent films without name actors are difficult to sell. Of course, name recognition varies around the world. The star of an American television series may be a big name in the United State but unknown abroad. On the other hand, some actors have large following aboard, yet are relatively unknown in the United States. There are several publications that can be consulted to determine the commercial appeal of actors. The Ulmer Guide (julmer@primenet.com) surveys financiers, sales agents and other industry insiders. Also, the Hollywood Reporter (213) 525-2087 publishes its "Star Power" guide.

DON'T BACK DIRECTORS WHO ARE ONLY CONCERNED WITH THEIR OWN VISION: The director of the film is the key person who will determine whether the final product is marketable. If a filmmaker shows no concern about making a movie with audience appeal, you can expect a film whose exhibition will be limited to the family and friends of the filmmaker. This is not to say that the only films you should invest in are low-brow fare like "Dumb and Dumber." A well-made "art" film like "Elizabeth," can win awards and make a handsome return on investment. Filmmakers should give some thought beforehand as to the nature of the film's intended audience. I once watched a wonderful "Lassie" type film spiced with four-letter words uttered by one character. I explained to the filmmaker that his film would never sell in the family market because of the vulgar language, and it was too soft a story to appeal to teens and adults.

CONGRUENCE OF INTERESTS: It is best to invest in an endeavor where everyone shares the same risks and rewards. A filmmaker who takes a large fee from the production budget may financially prosper from a picture that returns nothing to the investors. It is better to back a filmmaker willing to work for a modest wage and share in the success of the endeavor through deferments or profit participation. An investor can take some comfort investing in a motion picture on the same terms as a producer or distributor where all parties recoup at the same time. Beware of investing in a project where other parties benefit when you lose.

UNDERSTAND THE PARAMETERS OF A FAIR DEAL: Usually, investors are entitled to recoup all of their investment from first revenues before payment of deferments or profits. Many times investors are allowed to recoup 110% or more of their investment in order to compensate them for loss of interest and inflation. Profits are declared after payment of debts, investor recoupment and payment of deferments. Profits are generally split 50/50 between the producer(s) and the investors. Thus, investors who provide 100% of the financing are entitled to 50% of the profits. From the producer's half of net profits are paid any third-party profit participants (e.g. the writer, director and stars).

OBTAIN ALL PROMISES IN WRITING: Don't ever accept oral assurances from a producer or distributor. If they promise to spend $50,000 on advertising, get it in writing. If there is not enough time to draft a long-form contract, ask for a letter reiterating the promises. Retain copies of all correspondence, contracts and any promotional literature. If a filmmaker makes fraudulent statements in order to induce you to invest, you will have a much stronger case if his statements are in writing.

Avoid filmmakers who make handshake deals. Such individuals may neglect to obtain the necessary contracts needed to fully secure ownership to their motion picture. In order to have a complete chain of title to a film, one needs to secure written contracts with many parties including actors, writers and music rights owners. Filmmakers who fail to pay attention to such legal niceties lack the professionalism needed to succeed.

SECURE AN ARBITRATION CLAUSE: Provide that any contractual disputes be subject to binding arbitration, rather than litigation, with the prevailing party entitled to reimbursement of legal fees and costs. Arbitration is usually a quicker, more informal, and less expensive method of resolving disputes than litigation. The parties and the arbitrator typically gather in a meeting room. Each side is given an opportunity to present documents and witnesses. The rules of evidence do not apply. Parties may be represented by counsel, or they may choose to represent themselves. Usually disputes are resolved within a matter of months.

Investors should also have their filmmakers demand an arbitration clause when contracting with distributors. The filmmaker is invariably the financially weaker party -- often the filmmaker cannot afford to retain an attorney and pay court costs in order to bring a suit. If the filmmaker doesn't a have a viable means of protecting his interests, he may be forced to watch from the sidelines as a distributor ignores the terms of a distribution agreement and pockets revenue from the film. An arbitration clause levels the playing field.

Binding arbitration awards are difficult to overturn. The grounds for vacating an award are limited to such instances as when an award is procured by corruption or fraud, or if the arbitrator lacked jurisdiction. A party cannot reverse an arbitration award simply because he does not like the outcome.

The arbitration clause may provide that the award is final, binding and non-appealable. Otherwise, trial costs may be avoided only to incur large legal bills on appeal. The parties should specify the venue for any arbitration. The parties may agree on the number of arbitrators and their qualifications. It is common for the parties to have disputes resolved by a single arbitrator who is an entertainment attorney.

Most entertainment industry arbitrations are conducted under the auspices of either the American Arbitration Association (AAA), or IFTA, a trade organization representing the interests of international distributors. The AAA has a well-defined system of procedural rules and maintains numerous offices across the nation and in many foreign countries. IFTA is the entity which organizes the American Film Market (AFM). IFTA arbitrations usually occur in Los Angeles, but they can be held during an international film market or in a foreign city. All of the IFTA arbitrators are experienced entertainment attorneys.

Under IFTA rules, if a filmmaker wins an award, and the distributor refuses to comply with its terms, the filmmaker can have that distributor barred from participation in future AFM's. This remedy is particularly useful if the distributor's assets are abroad and difficult to reach under the authority of U.S. law. The threat of being barred from AFM may convince a distributor to obey an arbitration award. Some disreputable individuals, however, have sought to avoid awards against them by abandoning their distribution company -- often a shell corporation -- and then establishing a new enterprise. Conducting their business under a new name, they exploit another wave of filmmakers, fully expecting to abandon the new company when the law catches up with them.

To preclude such behavior, IFTA has created a personal binder that can be enforced against distribution executives. If an executive signs this binder, and his company fails to comply with an arbitration award, the executive can be barred from future AFM's.

INTEREST ON LATE PAYMENTS: Remove any incentive for a producer or distributor to hold onto your money. Generally, courts do not award pre-judgment interest to a prevailing party, unless there is a provision in the contract providing for such interest. Thus, if you become embroiled in a dispute with a distributor who is unlawfully holding onto $100,000 owed you, and after four years of litigation you win the case, the court will award you $100,000 in damages without interest. During those four years the distributor could invest your money and reap the profits. Under such circumstances the distributor has an incentive to delay payment.

COMPLETION BOND: A completion bond is issued by a completion guarantor which is an insurance company that insures the production against budget overruns. Before issuing the policy, the completion bond company will closely review the production personnel, script and budget and assess whether they think this team of individuals can bring in this script within the shooting schedule and budget proposed. The completion bond company usually is quite diligent in its review because if the film goes over budget, the bond company is financially responsible. Having a completion bond should give investors some comfort. They know that if the budget is inadequate to complete the film, the investors will not confront the dilemma of either putting up more money or owning an unfinished film.

TAKE AN ACTIVE ROLE: As a shareholder in a corporation, or limited partner in a partnership, an investor has very limited control over the management of the enterprise. In the past, investors who wanted limited liability, had to be willing to pay the price of accepting limited control. With a Limited Liability Company (L.L.C.), however, an investor can be one of the managers of the enterprise yet maintain limited liability. Thus, the investor can have a vote on critical decisions such as approval of the script, cast, budget, and distribution agreements. By being actively involved in the production, an investor will be better able to monitor the performance of the filmmaker and discover problems while there is time to remedy them.

MAKE SURE FUNDS ARE SPENT ON PRODUCTION: During fundraising, it is common for the filmmaker to set up an escrow account to hold investor funds. The money stays in the escrow account until the filmmaker raises the minimum necessary to produce the film. If the filmmaker cannot raise sufficient money, the funds in escrow are returned to the investors. By depositing money in an escrow account, investors are protected because they know none of their capital will be spent unless and until all the money needed to produce the film has been raised.

After funds are disbursed for production, there should be a system of checks and balances to ensure that all monies are properly spent and accounted for. A budget and cash flow schedule should be approved beforehand. Production funds should be placed in a separate segregated account and not commingled with the filmmaker's personal funds. All checks withdrawing funds from the account should be signed by two individuals. Investors may want to insist that one of the signatories is a trusted person selected by the investors.

OBTAIN AN EXPERIENCED ADVISOR: Retain an entertainment attorney or experienced producer's rep to advise you and review all documents. Make sure the filmmaker has adequate representation as well. Filmmakers may be very capable in the arena of production, and yet be unsophisticated in business matters. Film makers can be badly taken advantage of if they attempt to negotiate a distribution deal without assistance. Since the investor generally shares in the revenue paid to the filmmaker, if the filmmaker gets taken, the investor suffers as well.

A skilled attorney or producer rep who represents many filmmakers may have added clout in negotiations. Such a person is aware of what distributors pay for films, and the concessions they are willing to make. By virtue of the attorney's or rep's relationships with festival directors and acquisition executives, attention can be drawn to a film that might otherwise get lost in the shuffle.

RETAIN YOUR MASTERS: The production company should retain possession of all master elements. Original film negatives, video masters, sound masters, artwork, still photos and slides should not be delivered directly to a distributor. Instead, the distributor should be given a lab access letter which enables it to order copies of the motion picture so the distributor can fulfill orders.

There are numerous reasons why a producer should retain possession of master elements:

      1) Masters may be irreplaceable. If lost or damaged, the producer will incur a substantial expense to replace them, if they can be replaced.

      2) In the event of a dispute, it is best for the producer to control the materials. If the distributor has defaulted, for instance, the film maker may have a right to terminate the agreement and seek a new distributor. The film maker will need access to his materials, however, in order to make delivery to a new distributor.

      3) If your initial distributor has become bankrupt, you do not want to have to go to court to extricate your materials from bankruptcy proceedings.

      4) You may need to give several distributors access to your materials. Typically, independent filmmakers enter into multiple distribution deals. Often, one deal is concluded with an international distributor (a.k.a. foreign sales agent) to distribute the film outside North America, and one or more deals may be made with a domestic distributor for distribution in the United States and Canada. The best solution, when dealing with multiple distributors is to place your materials in a professional laboratory. Each distributor is then granted a lab access letter enabling each to order copies.

      5) You can discourage cheating by keeping masters in a laboratory and having the lab report to you how many copies have been duplicated. Suppose that at the end of one year, the lab reports to you that ten film prints have been made. You review your producer reports and see eight sales reported. This is a red flag alerting you that sales may have been made that were not reported. Most filmmakers would not know if their film had been licensed in Malaysia. Distributors do not order copies of films without an order in hand. Typically, they receive full payment for the film before they manufacture a duplicate and ship it.

One way to monitor which countries have licensed a film, is to place the music on the soundtrack with a music publisher (which could be a publishing company the producer establishes), and make sure the publisher has entered into an agreement with ASCAP, BMI or one of the other music collection agencies. These agencies collect public performance royalties when the film is exhibited on television in the United States, and in theaters and television abroad. If the music is registered with such an agency, and royalties from Thailand are remitted, this alerts you that a sale to Thailand has been made.

In selecting a laboratory to deposit your materials, choose one that charges competitive rates and has experience duplicating films for international distribution. Buyers in certain countries, such as Germany, are notoriously finicky and often reject films on the grounds of poor technical quality. It is also a good idea to select a lab that is not the lab ordinarily used by the distributor. A lab in the habit of fulfilling orders for a distributor who is a regular client may not bother checking to see if the distributor has authority to order copies. Moreover, such a lab might inadvertently release the master to the distributor. The filmmaker should always deliver the master directly to the laboratory after the laboratory and distributor have signed a lab access letter. If you deliver your materials to the distributor, and the distributor places them with a lab, the laboratory may treat the distributor as the owner of the film.

The lab access letter should include language permitting the film maker to receive copies of all invoices or report disclosing the nature and amount of duplication performed. Some film makers insist that the laboratory ship all copies directly to the territory buyers.

The distributor will probably insist that the lab access letter be irrevocable for the term of the distribution deal. The distributor will want to retain access to the materials in order to fulfill any orders arising from its licenses.

OBTAIN AND REGISTER SECURITY INTERESTS: A security interest gives the secured party rights in designated collateral. A bank, for instance, has a security interest in the form of a mortgage when it disburses a home loan. If the house is sold, the bank loan must be repaid from the proceeds. In the movie and television industry, film lenders may want to secure their financial interests by obtaining a security interest in certain collateral, such as the film negative and master materials.

Likewise, investors may want to make sure the filmmakers they back protect their rights by having distributors grant the filmmaker a security interest. The collateral here is the proceeds derived from exploitation of the film. By having a security interest, the filmmaker will have superior rights to unsecured creditors. If a distributor goes bankrupt, its assets will be auctioned off to pay the distributor's creditors. One of the distributor's assets may be the right to distribute your film, and any revenue generated from this right. If the filmmaker has a security interest, then proceeds derived from it will be paid to the filmmaker first, as a secured creditor, before payment is made to the distributor's unsecured creditors (e.g., the office supply store).

It is important not only to have a written security agreement, but also to record it. The distribution agreement should have a clause granting the filmmaker a security interest. A separate long and short form security agreement is also signed by the parties, as well as a UCC-1 form which is signed and recorded with the Secretary of State where the collateral or distributor is located. The security interest should also be recorded with the Copyright Office at the Library of Congress in Washington, D.C. If you are not knowledgeable about security interests, it is advisable to retain an attorney to assist you.

DON'T INVEST MORE THAN YOU CAN AFFORD TO LOSE: Investing in a film is a highly risky endeavor. Investors should never invest more than they can afford to lose. The complete loss of your investment should not appreciably affect your standard of living.

THE INFORMATION IS PROVIDED "AS IS" AND MARK LITWAK MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING WARRANTIES OF PERFORMANCE, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THIS INFORMATION. MARK LITWAK DOES NOT GUARANTEE THE COMPLETENESS, ACCURACY OR TIMELINESS OF THIS INFORMATION. YOUR USE OF THIS INFORMATION IS AT YOUR OWN RISK. YOU ASSUME FULL RESPONSIBILITY AND RISK OF LOSS RESULTING FROM THE USE OF THIS INFORMATION. MARK LITWAK WILL NOT BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR ANY OTHER DAMAGES WHATSOEVER, WHETHER IN AN ACTION BASED UPON A STATUTE, CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION NEGLIGENCE) OR OTHERWISE, RELATING TO THE USE OF THIS INFORMATION.

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Sources & Credit: Entertainment Law Resources - Mark Litwak © 2013, Mark Litwak. All Rights Reserved

WHAT IS CROWDFUNDING? (With a glossary of crowdfunding terminology)

WHAT IS CROWDFUNDING? (With a glossary of crowdfunding terminology)

Bruce Bisbey…please follow us at: https://dumbdogproductionsllc.blogspot.com

The practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet.

Crowdfunding (alternately crowd financing, equity crowdfunding, crowd-sourced fundraising) explains the collective effort of individuals who network and pool their money, usually via the Internet, to support efforts initiated by other people or organizations. Crowdfunding is used in support of a wide variety of activities, including disaster relief, citizen journalism, and support of artists by fans, political campaigns, startup company funding, motion picture promotion, free software development, inventions development, scientific research, and civic projects.

How is Crowdfunding Different?

Crowdfunding is essentially the opposite of the mainstream approach to business finance. Traditionally, if you want to raise capital to start a business or launch a new product, you would need to pack up your business plan, market research, and prototypes, and then shop your idea around to a limited pool or wealthy individuals or institutions. These funding sources included banks, angel investors, and venture capital firms, really limiting your options to a few key players.  You can think of this fundraising approach as a funnel, with you and your pitch at the wide end and your audience of investors at the closed end. Fail to point that funnel at the right investor or firm at the right time, and that’s your time and money lost.  

Crowdfunding platforms, on the other hand, turns that funnel on-end. By giving you, the entrepreneur, a single platform to build, showcase, and share your pitch resources, this approach dramatically streamlines the traditional model. Traditionally, you’d spend months sifting through your personal network, vetting potential investors, and spending your own time and money to get in front of them. With crowdfunding, it’s much easier for you to get your opportunity in front of more interested parties and give them more ways to help grow your business, from investing thousands in exchange for equity to contributing $20 in exchange for a first-run product or other reward.

The Benefits of Crowdfunding

From tapping into a wider investor pool to enjoying more flexible fundraising options, there are a number of benefits to crowdfunding over traditional methods. Here are just a few of the many possible advantages, which we’ll cover in greater detail later in this guide:

Reach – By using a crowdfunding platform like Fundable, you have access to thousands of accredited investors who can see, interact with, and share your fundraising campaign.

Presentation – By creating a crowdfunding campaign, you go through the invaluable process of looking at your business from the top level—its history, traction, offerings, addressable market, value proposition, and more—and boiling it down into a polished, easily digestible package.

PR & Marketing – From launch to close, you can share and promote your campaign through social media, email newsletters, and other online marketing tactics. As you and other media outlets cover the progress of your fundraising, you can double down by steering traffic to your website and other company resources.

Validation of Concept – Presenting your concept or business to the masses affords an excellent opportunity to validate and refine your offering. As potential investors begin to express interest and ask questions, you’ll quickly see if there’s something missing that would make them more likely to buy in.

Efficiency – One of the best things about online crowdfunding is its ability to centralize and streamline your fundraising efforts. By building a single, comprehensive profile to which you can funnel all your prospects and potential investors, you eliminate the need to pursue each of them individually. So instead of duplicating efforts by printing documents, compiling binders, and manually updating each one when there’s an update, you can present everything online in a much more accessible format, leaving you with more time to run your business instead of fundraising.

Types of the most common Crowdfunding

Just like there are many different kinds of capital round raises for businesses in all stages of growth, there are a variety of crowdfunding types. Which crowdfunding method you select depends on the type of product or service you offer and your goals for growth. The 3 primary types are donation-based, rewards-based, and equity crowdfunding (this guide will focus mostly on rewards-based and equity).

Donation-Based Crowdfunding

Broadly speaking, you can think of any crowdfunding campaign in which there is no financial return to the investors or contributors as donation-based crowdfunding.  Common donation-based crowdfunding initiatives include fundraising for disaster relief, charities, nonprofits, and medical bills.

Rewards-Based Crowdfunding

Rewards-based crowdfunding involves individuals contributing to your business in exchange for a “reward,” typically a form of the product or service your company offers. Even though this method offers backers a reward, it’s still generally considered a subset of donation-based crowdfunding since there is no financial or equity return. This approach is a popular option here on Fundable, as well other popular crowdfunding platforms like Kickstarter and Indiegogo, because it lets business-owners incentivize their contributor without incurring much extra expense or selling ownership stake. Read more about preparing and launching a successful rewards-based campaign here.

Equity-Based Crowdfunding

Unlike the donation-based and rewards-based methods, equity-based crowdfunding allows contributors to become part-owners of your company by trading capital for equity shares. As equity owners, your contributors receive a financial return on their investment and ultimately receive a share of the profits in the form of a dividend or distribution

Crowdfunding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowdfunding has recently received attention from policymakers in the United States with direct mention in the JOBS Act; legislation that allows for a wider pool of small investors with fewer restrictions. While the JOBS Act awaits implementation, hybrid models, such as Mosaic Inc., are using existing securities laws to enable the public in approved states to invest directly in clean energy projects as part of a crowd.

Crowdfunding has its origins in the concept of crowd-sourcing, which is the broader concept of an individual reaching a goal by receiving and leveraging small contributions from many parties. Crowdfunding is the application of this concept to the collection of funds through small contributions from many parties in order to finance a particular project or venture.

Crowdfunding models involve a variety of participants. They include the people or organizations that propose the ideas and/or projects to be funded, and the crowd of people who support the proposals. Crowdfunding is then supported by an organization (the “platform”) which brings together the project initiator and the crowd.

People who choose to support crowdfunding campaigns often have a personal interest in the project or theme and are often made up of friends and family to start with. Equally, they can be completely unrelated people who just want to get involved in a new project or idea. Crowd funders are typically just as interested in soft rewards as they are in making a profit. They may value the feeling of having contributed or the opportunity to access a particular perk or reward. When it involves film financing, this can be receiving movie merchandise, attending film set or red carpet film premieres, meeting celebrities and actors, or even appearing in the movie.

The days of waiting tables in Hollywood with hopes of bumping into some big name producer or actor or director to fund your movie that you happen to have on you are officially over. If The Veronica Mars Movie, a show that hasn’t been on television in a decade, can raise $5.7 million on Kickstarter, you can too. Crowdfunding is an emerging option for filmmakers to raise film funding for films. Crowdfunding sites are an innovative way forward when it comes to modern film financing. In fact, crowdfunding and equity funding are concepts that are appearing all over the place these days, in a wide variety of contexts. Most recently, the “Gosnell Movie” filmmakers have raised $2.3 million for the movie, a crowdfunding website designed specifically for investing in movies.

Glossary of Crowdfunding Terminology

Crowdfunding – A method of raising capital through the collective effort of friends, family, customers, and individual investors.

Accredited investor – An individual whose net worth is greater than $1MM, or whose income exceeds $200k for the past 2 years. Currently the U.S. Securities & Exchange Commission (SEC) mandates that only accredited investors are legally able to invest in private companies.

Blue Sky Laws - State specific regulations in the United States meant to protect investors from fraud. These laws vary from state to state, but in general they require the registration of all securities offerings and sales with each states appropriate regulatory agency. Some SEC registration exemptions, such as Registration A Tier 2 offerings, pre-empt blue sky laws, meaning that if a securities offering adheres to the SECs requirements it does not have to register and comply with different blue sky laws in every state.

Broker-Dealer - Registered professionals, firms, or agencies that buy and sell securities on behalf of clients, including large stock brokerages. Broker-Dealers execute securities sales and purchases on behalf of clients, provide investment advice to customers, supply liquidity through market-making activities, publish investment research, raising capital for companies, and operate market platforms. Broker-Dealers must be registered with the SEC and are closely regulated. Several types of investment crowdfunding and general solicitation activities require that the issuer work with a registered broker-dealer.

Crowdfunding Platform - A website which facilitates crowdfunding by allowing people or companies seeking money to raise it from members of the public. Platforms list different projects, collect and process the payments between those the crowd funders giving money and the crowdfunded receiving it.

Crowdfunding Portal - Similar to a crowdfunding platform, a portal does not handle investments or finances, but merely acts as an intermediary connecting investors with projects and businesses online. The term Crowdfunding Portal is strictly defined by the SEC in the JOBS act.

Crowd-sourcing / Crowd Sourcing - Piecing together skills and tasks performed by many individuals to put together a larger project.

Convertible Note - A hybrid security. It is a short term loan made to a startup which accrues interest and then converts into equity at a pre-determined time or event, usually issued when a company raises its seed investment round, and then converted to equity when it’s next Series A round of investment in which its valuation is better established.

Debt-based crowdfunding - (also known as "peer to peer", "P2P", "marketplace lending", or "crowd lending") arose with the founding of Zopa in the UK in 2005 and in the US in 2006, with the launches of Lending Club and Prosper.com. Borrowers apply online, generally for free, and their application is reviewed and verified by an automated system, which also determines the borrower's credit risk and interest rate. Investors buy securities in a fund which makes the loans to individual borrowers or bundles of borrowers. Investors make money from interest on the unsecured loans; the system operators make money by taking a percentage of the loan and a loan servicing fee.

Donation-based crowdfunding – Any crowdfunding campaign in which there is no financial return to the investors or contributors. Entrepreneurs presell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.

Emerging Growth Company - A company with revenues below one billion dollars per year, as defined by the JOBS act. Companies meeting these requirements may be eligible for certain privileges, like being allowed to use test-the-waters communications with qualified institutional buyers.

Equity-based crowdfunding – Any crowdfunding campaign that allows contributors to become part-owners of your company by trading capital for equity shares. The backer receives shares of a company, usually in its early stages, in exchange for the money pledged.

General Solicitation - The practice advertising to potential investors outside of one’s current network with the intent of fundraising, as is now allowed by the SEC for private issuers under particular registration exemptions enabled in the JOBS act (Title II 506c, Title IV Reg A, and upcoming Title III Reg CF).

Litigation crowdfunding - allows plaintiffs or defendants to reach out to hundreds of their peers simultaneously in a semiprivate and confidential manner to obtain funding, either seeking donations or providing a reward in return for funding. It also allows investors to purchase a stake in a claim they have funded, which may allow them to get back more than their investment if the case succeeds (the reward is based on the compensation received by the litigant at the end of his or her case, known as a contingent fee in the United States, a success fee in the United Kingdom, or a pactum de quota litis in many civil law systems). LexShares is a platform that allows accredited investors to invest in lawsuits.

I.P.O: An Initial Public Offering - The first sale of stock to public investors by a new company or by an existing company in a new product or project.

Investment Crowdfunding - Investing in a company via crowdfunding in exchange for equity ownership, debt payments, a convertible note, or some other financial return.

Issuer - A company that raises money by creating and selling a security to investors.

JOBS Act - The Jump-start Our Business Startups Act, which was signed into law in 2012. The act eases some securities regulations in order to make it easier for businesses to launch, including through crowdfunding.

Peer to Peer (P2P) Lending - A form of debt crowdfunding, peer to peer lending is when individuals or individual companies offer loans to other individuals or companies. There is a fixed rate of return for such loans.

PIPR - Private Issuer Publicly Raising. A company raising money from investors taking advantage of Regulation D Rule 506(c) which allows general solicitation (advertising) to the public.

Primary Market - The first sale of new securities to investors in order to raise investment money for the issuing company. (As opposed to a Secondary Market in which investors buy and sell securities among each other without the issuing company receiving the funds.)

Private Offering - The sale of investment securities by businesses who do not wish to raise funds through public offerings can seek private placement with a small group of investors. Private offerings must adhere to the rules of any one of several SEC registration exemptions.

Real Estate Crowdfunding - Reserved largely for wealthy investors, real estate crowdfunding involves using mainly equity and peer-to-peer lending to finance real estate purchases using multiple investors.

Rewards-based crowdfunding – Any crowdfunding campaign that involves individuals contributing to your business in exchange for a “reward,” typically a form of the product or service your company offers.

Reward - Something given to investors in exchange for their funds while crowdfunding, either the first run of an actual product, or a shirt, sticker, or small object related to the project or company being funded, or even just a “thank you” acknowledgement.

Rewards Crowdfunding - Crowdfunding in which backers receive a reward in exchange for their financial gift. Reward types are often based on the amount given by investors. Some are offered in various forms that the investors can choose from.

ROI - In short, return on investment. The payback earned from investing in something. Examples include financial return through stocks or emotional return through feeling good about giving.

S.E.C.: Securities and Exchange Commission - The part of the United States government that regulates investment and finance, including startups and the various forms of crowdfunding.

Secondary Market - A market on which securities and assets such as stocks are bought and sold between investors. Secondary Markets provide liquidity by allowing investors to exchange their investment for cash. Also called the aftermarket. (As opposed to a Primary Market in which securities and assets are purchased directly from the issuer.)

Securities - Examples of securities include stocks, bonds, and certificates. These serve as financial and/or investment instruments that hold certain values and that can be bought, sold, and exchanged.

Software value token - Another kind of crowdfunding is to raise funds for a project where a digital or software-based value token is offered as a reward to funders which is known as Initial coin offering (abbreviated to ICO). Value tokens are endogenously created by particular open decentralized networks that are used to incentivize client computers of the network to expend scarce computer resources on maintaining the protocol network. These value tokens may or may not exist at the time of the crowd sale, and may require substantial development effort and eventual software release before the token is live and establishes a market value. Although funds may be raised simply for the value token itself, funds raised on block chain-based crowdfunding can also represent equity, bonds, or even "market-maker seats of governance" for the entity being funded.

Startup - A new business, often using a highly scaleable new technology or novel process, and often outside investment funding, to grow quickly.

Testing the Waters - Communicating with potential investors to gauge interest before raising money or formally registering with the SEC.

Venture Capital (VC) - Equity funding in a startup provided by an investment company.

Venture Exchange - A secondary market in which early investors in startups and small businesses could sell their shares, and new investors could buy and trade private stocks. Meant to improve the liquidity for the securities of small companies. There is currently a draft bill in the House of Representatives intended to expand the use of Venture Exchanges in the US.

Sources & Credits: Google, Wikipedia, Pinterest, IMDB, PMI, Forbes, Indiegogo, Investopedia, Fundable, The Movie Fund, Your Money, Financial Times, Screen Magazine, Variety, Film Maker Magazine, Research Gate, Think Adviser, Crowd Expert

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION IS PROVIDED "AS IS" AND BRUCE BISBEY MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING WARRANTIES OF PERFORMANCE, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THIS INFORMATION. BRUCE BISBEY DOES NOT GUARANTEE THE COMPLETENESS, ACCURACY OR TIMELINESS OF THIS INFORMATION. YOUR USE OF THIS INFORMATION IS AT YOUR OWN RISK. YOU ASSUME FULL RESPONSIBILITY AND RISK OF LOSS RESULTING FROM THE USE OF THIS INFORMATION. BRUCE BISBEY WILL NOT BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR ANY OTHER DAMAGES WHATSOEVER, WHETHER IN AN ACTION BASED UPON A STATUTE, CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION NEGLIGENCE) OR OTHERWISE, RELATING TO THE USE OF THIS INFORMATION.

ANGEL INVESTORS IN THE FILM INDUSTRY…What are angel investors…The expectations!

ANGEL INVESTORS IN THE FILM INDUSTRY…What are angel investors…The expectations!

Bruce Bisbey…please follow us at: https://dumbdogproductionsllc.blogspot.com

Are you thinking about joining the growing ranks of angel investors’ movie in an attempt to make money from the film industry? If this is your first time investing in movies, you may feel a little overwhelmed about the whole process. Any investment can be daunting if you are doing it alone and are unfamiliar with the territory. Investing in film production, investment options, types of investments, financial investment can be intimidating.

Experienced investors will ideally have plenty of success and experience in the field of business, with a strong knowledge of financial matters, but they may not have the necessary knowledge of the film industry, which is where we come in. Whether you are a sole investor or investing on the behalf of an investment company, you need to begin by researching the reputation of the producer. You want to ensure they have a credible track record — that you can trust them to ensure that the film is a success.

Small investment opportunities, independent film funding, low risk investments, small business investment, investors, smart investments, invest, investment firm, investment banking.

There is certainly a lot to consider.

WHAT ARE ANGEL INVESTORS?

If you have ever tried to start your own business, then you know that one of the hardest aspects of entrepreneurship is finding the funding for your new business endeavor. So many people approach banks and lenders every day looking for money for their businesses that it can be quite difficult to find the funding you need. If you are having difficulty getting a bank to be willing to fund you the money, or you do not want to wait for all of the paperwork and approvals to go through, then you may benefit from seeking an angel investor.

Angel investors are a good source of funding for your business. What are they? They are generally individuals who are independently wealthy. In order to maintain their wealth, they invest some of it in businesses that are just starting. In return for their investment, these individuals become part owner or shareholder in the company they have invested in. They have some say in how the company is run, and earn off return on their investment off the equity of the company. The percentage of ownership of an angel investor is usually between fifteen and thirty percent, depending on the amount of risk associated with the business.

Most angel investors are retired businessmen or women who did quite well in their own business pursuits. Having their expertise on board with a new business plan is a good idea for most new business owners. These business angels provide much more than just money. They provide leadership and guidance for young, starry-eyed business owners. This level of expertise often proves to be priceless for the young entrepreneur.

Angel investors can also use stock in the new company as a way to fund growth. They are given stock in the company as part of the investment agreement. Then, when they receive dividends on that stock, instead of pocketing those dividends the investors forward them on to the new company or business, allowing the funds to be used to grow the company. This is allows them to become board members of the new company, sharing in its equity over the long run.

You can use the internet to find angel investors. Do not feel that you have to be limited to a geographical area when seeking the help of a business angle. If your investor feels that your business is a good investment, he or she will not mind traveling from time to time to help with the oversight of the business. Having the help of an angel investor can mean the difference between a successful business startup, and failure. So if you have the next big idea, consider enlisting the help of an angel investor to fund your initial expenses, and give you the advice and direction you need to succeed!

EXPECTATIONS OF AN ANGEL INVESTOR

If you are considering using an angel investor to help fund the initial expenses of your new business, you need to know what an angel investor expects to get out of the deal. After all, you cannot expect to use the investor's money for free, can you? There are certain aspects of the business deal that most investors expect to see happen, which lead to profit on their end.

Since angel investors are all individuals, they have differing views as to what to expect to receive out of the deal. However, most angel investors want to have a seat on the board of the new company. Also, many wish to have a role as a consultant for the company. This consulting capacity is actually quite valuable to the new entrepreneur, because they have access to the invaluable expertise of someone with years of experience in the business world.

No matter whom you have as your angel investor, you can expect to be asked to provide the angel with excellent communication about the progress of the business. Now, what excellent communication means is going to be different for each investor. Some will choose to have access to quarterly business reports, while others will want weekly or monthly reports, as well as profit projections.

All angels will want to own part of the business. This ownership is usually in the fifteen to thirty percent range. This ownership can be in the form of stocks, either common or preferred, as well as convertible debt.

Angels that are particularly impressed with a potential business investment often ask to be the first choice when more financing is needed. While they can refuse this financing, they want be the first option the owner turns to when seeking more money for expansion and growth projects. This can be problematic for some entrepreneurs, because they want to limit how much control any one investor has over their company. However, most business owners understand the reason behind this request, and are willing to comply. This needs to be carefully written into the proposal.

Finally, because they have invested money that they have spent their entire lives earning, angel investors may ask a potential business investment to ask their approval before taking certain actions, such as before seeking more financing, hiring management, or buying and selling stock. This request is designed to give the angel even more say in the business, protecting their investment and ensuring them a high rate of return.

If you are comfortable with these expectations and are in need of startup capital for your business, seeking the help of an angel investor is probably a good idea. Start networking and get your name out there in the investment world. You can have the money you need with the help of angel investors, if you play your cards right.

Whether you are a potential investor or looking for an investor. Here are a few strategies and tips to help you with your research in locating potential film investors, or that right project to invest in. 

1. State Film Commissioners. They don’t want to advertise this, but state and sometimes city film commissioners are aware of the equity investors in their region, particularly in those areas where there are tax incentives or rebates.  Why? Commissioners process all applications (from filmmakers seeking film incentives or rebates), which must list all the investors. Film commissioners are usually paid via taxes and must cater to the needs of resident filmmakers.  If you hark on the state or local pride and promise to film something in their region, you never know what introductions may be made.

2. Entertainment Lawyers. When investors and producers need to protect themselves legally, they call on their favorite entertainment lawyers.  Those who specialize in independent film are aware of dozens upon dozens of executive producers, investors or angels. Whether they will divulge them to you is another matter. But a good start is to get to know them, perhaps become a client and try to get invited to their private parties.  Also, a good entertainment lawyer can be a superb ally for the entirety of your creative career.

3. Startup Investors. There are tech and entrepreneurial meetups, conferences and gatherings in every major city in America.  Go to them. Why? Two reasons: It demands that practice you’re schmoozing and networking skills, which are absolutely essential to creative success.  Furthermore, startup investors lurk in the shadows (or corners). Tech and other startup businesses are extremely risky, just like films. It’s possible that these same investors could be persuaded to invest in your next startup, aka your film.

4. Restaurant/Bar/Nightclub Investors. Just like the startup financiers, investors in restaurants, bar or nightclubs are used to risky and collaborative investments.  They also like fun or glamorous investments. If you happen to know this type of investor, go for it. If you don’t, go to your favorite restaurant, bar or nightclub and meet them. Tell them how much more business and media coverage they can generate by being the locale for an important scene in your film or by hosting the premiere party.  Also helps to offer them or their spouse a small role.

5. Philanthropists. Every community has them.  They donate large sums to the local schools, parks, gardens, landmarks, museums, theaters, ballets and orchestras.  And sometimes, if you’re lucky–and they like you and your project, they may just invest in your next film.  Those philanthropists who live in your region (which is another serious bond/head start) and have a history of contributing to the arts are your best bet.

6. IMDB. As everyone knows, IMDB lists the casts and crews of films and television shows. This also makes it a great source for researching and locating investors. It’s not the subtlest method, but it can be a start: Find film titles similar to your upcoming film in both budget range and genre.  Then click on “full cast and crew” and locate the producers’ section. Those who have a “produced by” credit are generally film producers and not investors.  They are money raisers, but not investors themselves.  Those who have “executive producer” or “co-executive producer” titles (and no other position on the film) are more likely to be your target: independent film equity investors.

Movie Fund keywords: film finance plan, film finance corporation, film finance, film crowdfunding sites, film crowdfunding, documentary film financing, crowdfunding movies, crowdfunding movie, crowdfunding for film, crowdfunding film sites, crowdfunding film, equity funding, equity finance, Angel Investors, Investing.

Sources: Google, Wikipedia, Pinterest, IMDB, PMI, Jim Jermanok, Linked In, Indie Wire, The Movie Fund, Venture Worthy, Your Money, Financial Times, Screen Magazine, Marc Jacobson, KPMG, Variety, Film Maker Magazine, Research Gate, Think Adviser

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION IS PROVIDED "AS IS" AND BRUCE BISBEY MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING WARRANTIES OF PERFORMANCE, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THIS INFORMATION. BRUCE BISBEY DOES NOT GUARANTEE THE COMPLETENESS, ACCURACY OR TIMELINESS OF THIS INFORMATION. YOUR USE OF THIS INFORMATION IS AT YOUR OWN RISK. YOU ASSUME FULL RESPONSIBILITY AND RISK OF LOSS RESULTING FROM THE USE OF THIS INFORMATION. BRUCE BISBEY WILL NOT BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR ANY OTHER DAMAGES WHATSOEVER, WHETHER IN AN ACTION BASED UPON A STATUTE, CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION NEGLIGENCE) OR OTHERWISE, RELATING TO THE USE OF THIS INFORMATION.

WHY INVEST IN FILM? THE BENEFITS…THE RISKS…THE GLAMOUR

WHY INVEST IN FILM? THE BENEFITS…THE RISKS…THE GLAMOUR

Bruce Bisbey…please check us out at: https://dumbdogproductionsllc.blogspot.com

Ever wondered what it would be like to be a part of the next blockbuster?  Want to invest in film but think it’s out of your reach? Looking to make an investment and want the best return on your investment (ROI) that you can achieve?

Investing in film is not for the fainthearted but with possible returns of 10% per annum and first recoup, it’s no wonder investors want a slice of the action. The risks have been minimized to some extent with globalization of the film and TV industry and the internet. Where as in the past, film relied on the box office and fairly defined and controlled distribution patterns. In the last decade the advent of a film or video being released straight to DVD, VOD (Video on Demand), and direct purchase and down load from a growing number of worldwide sources. These options and audience targeting can mean a quick return on the investment.

Films, particularly low – budget and indies are usually targeting a specific audience. A Zombie movie is targeting, horror, zombie, survivalist audiences, as is a documentary on the animal kingdom which appeals to a totally different demographics.

There are many reasons why people from all walks of life invest in a film or movie they usually have a passion for film and movies, a good return on investment, to be a part of the film industry, a financial stake, a family legacy, tax relief and savings, part of a financial portfolio, or it can be that the investor simply wants to be behind the scenes in a producing capacity.  Whatever it is, investing in films and movies is fun, exciting, inspiring, beneficial to you financial status, oh, and different!

For many film, movie and small business investors, it is often a ‘once in a lifetime’ opportunity to meet the stars, rub shoulders with celebrities, attend premieres and parties, not to mention the other perks that come with distribution, i.e. merchandise, posters, interactive games, DVDs and Blu-ray, even signed copies of the script and film set stills, visits to the set during filming, a Director’s or Producer’s chair with your name inscribed on it!  Some investors in a film are more involved than others by having a cameo role in the film or a film credit by investing in film.

There are a variety of ways in which you can investing in film and movies: as an ‘angel’ investor, via a film financing organization, as a private investor, through a crowd-sourcing platform, through a hedge fund, via an independent financial adviser, through equity finance or a venture capitalist.

Every producer wants to achieve the best ROI they can for a film and distribute the film or movie to as wide an audience as possible for an investor by investing in film.  Many different film and movie genres go on to not only break-even, but significantly surpass their budgets, ensuring that all investors generate greater revenues that often expected, often within the first year!

As any film investor will know investing in film, spreading your investment across a selection of projects in your portfolio is another way of protecting your financial investment further.

THE RISKS

Film funding; are films a good investment opportunity?  They are for the right kind of investor.  Why is film investment an attractive investment opportunity?  Is it because of the high return or because of the nature of business?

For many investors on film funding, the high return is a big draw, because film funding do have the potential for a very large return, though there is a very high risk with a lot of big “Ifs”.  The RISK, you can lose your entire investment if the project is not finalized and in the can and even then there is no guarantee. DO NOT invest if you are fainthearted, you cannot afford the loss or you are waiting for a quick buck. The quick return from a distribution network utilizing the box office, direct to DVD, VOD and purchased downloads is real, but DO NOT depend on it, there is no guarantee.

Again depending on your portfolio and how healthy your finances are, another plus is the potential of tax deductions on your capital expenditures and gains. Works for many people. A film can do extremely well if it has a good script, good acting, good production value, has a budget that fits the type of film this is, and strikes a chord with distributors or buyers for the TV, DVD, foreign rights, or other markets. Then, if the film goes into theatrical release, it has the potential to have an even larger audience, though theatrical is not the primary source of income for most films, just the big blockbusters, since the theater owners take about 60% of the box office unless a film goes into a long-term release and there is a high costs for prints (though an increasing number of theaters are going digital).  The value of a theatrical release is more for its promotional value for gaining other kinds of sales, except for the huge blockbusters.

Despite the potential for high returns by film funding for some films, investors in it for the money have to realize that any film investment is a big risk from film funding, because many problems can develop from when a film goes into production to when it is finally released and distributed. These risks include the film not being completed because it goes over budget and is unable to get additional financing or there are problems on the set.  Another risk is that the film is not well-received by distributors and TV buyers, so it doesn’t get picked up.  Or even if a film gets a distribution deal, the risk is that there is little or no money up front, so the film does not see any further returns.   So yes – a Film Funding or investment can have a high return, but an investor can lose it all.

PROTECTING YOURSELF

• ·         Get an attorney, preferable an entertainment one
• ·         Due diligence
• ·         Full disclosure
• ·         Track record
• ·         Understand the parameters of a fair deal
• ·         Obtain all promises in writing
• ·         Secure an arbitration clause
• ·         Interest on late payments
• ·         Completion bond
• ·         Take an active role
• ·         Make sure funds are spent on production
• ·         Obtain an experienced advisor
• ·         Don't invest more than you can afford to lose

As a result, for many investors, other key reasons for investing are more important on film funding.  They believe in the message of the film.  They like and support the film producers, cast, and crew.  They like the glamour of being involved with a film, including meeting the stars and going to film festivals.  They see their investment as an opportunity to travel to distant locations for filming and for promoting the film funding.  And they see investing in the film as a tax write-off, much like giving to a charity.

What kind of investment returns can investors can expect, since many independent productions are not designed for big screens, where are the sales coming from film funding?

If all the stars align, and there is a good film done with a reasonable budget and distributors, buyers, and an audience responds, the film could readily earn 4 to 10 times its cost, making everyone very happy.  A low-budget indie scenario for this level of return might be a film shot for $50,000-200,000.  It might get $500,000-750,000 for a TV sale and earn $1-2 million more through DVD, streaming, and foreign rights sales, even without a theatrical release. Remember depending on your investment strategy, there will be potential residuals forever or for as long as you have investment ownership in the property.

For most films, the main value of a theatrical release is the PR value of getting the film known, so buyers will want to purchase or rent the DVD and TV buyers will want to show it on one of the premium cable movie channels.  Also, most films don’t get a theatrical release, and the funds are earned through other channels. What kind of movies can usually generate good profits, since the recent Oscar Awards show that a big investment does not necessary mean big returns on film funding? Some of the big blockbusters that pass the $100 million threshold can certainly make a profit from a successful theatrical release, both in the U.S. and abroad.  But whether they make a profit depends on their budget.  Because of the high salaries of stars that are typical in these films and other high cost items, such as special effects, many blockbusters still may not make a profit by film funding. 

Thus, dollar for dollar, many low-budget indie films may be a better investment, since the multiples are higher with a success; there is more likelihood that a low-budget indie, which is done well at a reasonable budget, will be sold and make back its money, and the potential for loss is much less need to use film funding.

SOME OF THE GLAMOUR AND BEING PART OF FILM HISTORY

As an investor, you have the opportunity to be credited as an Associate or Executive Producer, take part with a cameo or extra role, and see you name as part of the film credits on the website and in the movie.  You will have the opportunity to visit the film set and watch the professionals, receive your personal, signed copy of the script, and go home with signed film set stills.  Fancy a bit of the glamour?  No problem… be a VIP at your home-town screening, trip the lights fantastic at the after show parties, walk the red carpet at world premieres, film festivals and exclusive private events, meet the stars in the Green Room and find out what really goes on behind those closed doors of the cutting room!  You will be one of the first to hear all the gossip, the latest news, gadgets and technology that nobody else knows about… go on, let your imagination run away!

Just about all of us have a favorite film, enjoy a visit to the cinema, or have bought a video, DVD or Blu-ray to watch at home.  How many times have you thought, “I can do that, I’ve got a great idea for a film…”

Your investing in film is your legacy… something that you and your family, your children, your grandchildren, can look back on in years to come.

Sources: Google, Wikipedia, Pinterest, IMDB, PMI, The Movie Fund, Your Money, Financial Times, Screen Magazine, Marc Jacobson, KPMG, Variety, Film Maker Magazine, Research Gate, Think Advisor

THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION IS PROVIDED "AS IS" AND BRUCE BISBEY MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING WARRANTIES OF PERFORMANCE, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE, REGARDING THIS INFORMATION. BRUCE BISBEY DOES NOT GUARANTEE THE COMPLETENESS, ACCURACY OR TIMELINESS OF THIS INFORMATION. YOUR USE OF THIS INFORMATION IS AT YOUR OWN RISK. YOU ASSUME FULL RESPONSIBILITY AND RISK OF LOSS RESULTING FROM THE USE OF THIS INFORMATION. BRUCE BISBEY WILL NOT BE LIABLE FOR ANY DIRECT, SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR ANY OTHER DAMAGES WHATSOEVER, WHETHER IN AN ACTION BASED UPON A STATUTE, CONTRACT, TORT (INCLUDING, WITHOUT LIMITATION NEGLIGENCE) OR OTHERWISE, RELATING TO THE USE OF THIS INFORMATION.

WHAT IS CRAFT SERVICE IN THE FILM, TELEVISION AND VIDEO INDUSTRY

WHAT IS CRAFT SERVICE IN THE FILM, TELEVISION AND VIDEO INDUSTRY

Bruce Bisbey…Please check us out at our blog: https://dumbdogproductionsllc.blogspot.com

In film, television and video production, craft service refers to the department which provides food service and beverages to other departments such as camera, sound, electricians, grips, props, art director, set decorator, special effects, hair and make-up, background. These other departments are simply referred to as crafts. In addition to policing the set of empty cans and trash, the craft service department provides buffet style snacks and drinks.

There is a difference between craft service and catering. Craft service refers to the food always available to the crew while they are working, and can range from a single table of cookies, candy, cereal and coffee (on a low-budget indie feature), to more elaborate meals. Catering, on the other hand, is ordered from a restaurant or outside the company and handles the true meals like lunch and a second meal if the day goes over 12 hours. It is required that craft services supply a hot meal to the crew every six hours. Snacks and drinks are regularly supplied throughout the day along with the meals.

Craft service is a crew position and craft service workers are oftentimes represented by a union, the International Alliance of Theatrical Stage Employees (IATSE). In Los Angeles, craft service workers are represented by IATSE Local 80. In areas that have a large amount of production work, such as Atlanta, Georgia, there are well over 400 union represented "crafties." In smaller markets such as Minneapolis/St. Paul, there are only two. Certain productions will require that the worker be a union member, where others may not. Craft service is considered an entry-level position in film and television.

During meal time, food is often served to actors and directors first. The order in which you are served typically depends on the status of your position as a crew member. Production Assistants are served towards the end, followed by background actors then nonunion workers.

In the history of craft services, the job originally entailed doing odd jobs such as helping with set setup. People used to bring their own food to set since food was not typically being served for free, therefore craft services at this point did not involve the serving of food. In the mid-1960s, craft service employees still operated as general laborers. They had also been put in charge of answering telephones and making coffee. At Universal Studios, they had huge roll-around carts where they would brew coffee. These carts could be shut during takes so that the bubbling machines would not spoil a sound take. Studios now anticipate the needs of craft services and oftentimes make a kitchen available for the crew to use.

Typically there is one main table where the snacks and coffee are set up (which is simply called "crafty" or "the crafty table"). Occasionally there are two craft service stations, with one being for cast and crew and another for non-union background actors. A "satellite" crafty may be set up next to the camera, as they may not reasonably be able to leave their workstations to grab a snack from the crafty table, which may be located in another room. This smaller, scaled-down set-up may be on a rolling cart or on top of an apple box. It could consist of a few small baskets containing granola bars, dark chocolate, gum, aspirin, bananas and bottled water. The food provided can vary widely, due to fluctuating budgets; for example, pilots and low-budget productions often offer very limited food, while big-budget productions often offer generous food and drinks. Aside from snacks and beverages, crafty can also be the go-to place for bandages, aspirin, gum, antacids, toothpicks, hand sanitizer, sunscreen, and hand-warmers.

Crafty is the nickname given to the craft service workers. They are given radios to communicate with production and will respond to a call by saying "go for crafty." Craft service workers will bring the necessary equipment in order to prepare various snacks and beverages, such as skillets for quesadillas or a blender for smoothies. Any equipment brought with them is part of a kit that the production rents for the duration of the shoot.

SOME ADVICE AND TIPS

1. Hire someone to run Craft Services: Hire someone that has done craft services before, don’t just assign a production assistant to put food on a table. You need to hire someone who is actually passionate about what they are doing and it helps if they love food. The craft services table isn’t something that gets set up in the morning and then left alone all day, it should be maintained throughout the shoot day and food and water should be walked around and offered to cast and crew.

2. Have a daily Craft Services budget that is fair: A lot of productions will try to work with a very unreasonable and low budget when it comes to craft services, count how many people need to be fed and allow enough money to cover that cost. A better fed crew is usually a harder working crew.

3. Take dietary restrictions into consideration: You will come across all kinds of dietary restrictions when it comes to feeding large crews. There will be all kinds of allergies, gluten free diets, lactose intolerance, vegans etc. Be prepared to spend a little more money on specialty foods to accommodate these restrictions. Make sure that the food for these people is just as substantial as the food for people without issues, you don’t want people to be going hungry because there is nothing for them to eat.

4. Be creative and mix things up: Cheese and crackers, chips and chocolate are all fine but when it comes to substantial’s (substantial’s are the food served three hours into the day and again three hours after lunch, they are not just craft table snacks, they are a “substantial” enough snack to get through the six hours) it is always good to get creative and try new things. Try not to repeat the same things day after day. Subs should be served 3 hours into the day and 3 hours after lunch. Try not to serve soup, if you do serve it put it into cups with lids, it is much better for the crew to drink it like a coffee then to have to stop and eat it with a spoon. Soup can get messy so the lids allow for less spills. Hot sandwiches or wraps will go over better than soup almost every time.

5. Ask people what they like: If you are ever stuck for ideas on what to feed your crew just ask them what they like to eat, ask for feedback on the food you have provided and find out what works and what doesn’t. There is nothing wrong with getting on someone’s good side by getting them something they love to eat. Obviously this has to be within reason.

6. Shop smart: Don’t shop at a convenience store or at the most expensive grocery store because it is easy, shop in bulk, freeze things so they don’t go bad and look for the best deals on items. Make your budget go as far as possible. Don’t waste food, use leftovers for the next day’s subs if possible.

7. Plan ahead: If you can make things ahead of time it will make your days much easier, prepare sandwiches the night before, make food that can be frozen and then reheated on the day and break bulk food into smaller portions for daily use. Anything you can do ahead of time will make life a little easier for you on the day. Always have extra on hand in case the way you have prepared the food doesn’t work for everyone. Be flexible, don’t take it personally if people don’t love everything you make.

THE CRAFT KIT MAY INCLUDE:

• Tablecloths

• Food nets

• Serving trays, bowls, platters and utensils, knives

• Scissors, tape, pens, clips, paper, labels, markers

• Baskets

• Markers, tape and paper for making signs

• Cutting boards and knives

• Slow cookers/food warmers

• Toasters

• Blenders

• Food storage containers/bags

• Coolers

• Ice packs

• Extension cords

• Coffee makers and thermal pots

• Hot water kettles

• Decaf coffee

• Basic first aid kits

• Basic medicines

• Toiletries

• Garbage cans

• Recycling cans

• Compost bins

• Garbage/recycling bags

• Hand sanitizer/wipes

• Dish soap

• Hand soap

• Spray cleaner

• Paper towels and cloths

• Food service gloves

• Wax paper, foil, plastic wrap

• A wide variety of hot teas, cocoa, apple cider, chai

• Sugar/sweeteners

• Hot bag

• Rolling cart

• 6 foot table

• 4 foot table

Craft service is usually the first to come to set and the last to leave. Although wage minimums are oftentimes set by the unions, the craft service worker is one of the lowest paid within any given production. Instead of hourly pay, most productions base wages on a day rate. This is oftentimes a set rate for 10 hours. Some productions may negotiate a 12 hour day, but this is circumstantial.

Sources: Google, Wikipedia, IMDB, Spoon University, Pinterest, Susan Stamberg, How Hollywood Gets Fed: A Lesson In Craft Service, NPR, The Black and Blue, Media Match, Bon Appetit, How Stuff Works. No Film School, How to Film School, Video Maker

THE HISTORY OF FILM / HOW IT BEGAN

THE HISTORY OF FILM / HOW IT BEGAN

Bruce Bisbey

The Kinetoscope

The concept of moving images as entertainment was not a new one by the latter part of the 19th century. Magic lanterns and other devices had been employed in popular entertainment for generations. Magic lanterns used glass slides with images which were projected. The use of levers and other contrivances made these images "move". Another mechanism called a Phenakistiscope consisted of a disc with images of successive phases of movement on it which could be spun to simulate movement. Additionally, there was the Zoopraxiscope, developed by photographer Eadweard Muybridge in 1879, which projected a series of images in successive phases of movement. These images were obtained through the use of multiple cameras. The invention of a camera in the Edison laboratories capable of recording successive images in a single camera was a more practical, cost-effective breakthrough that influenced all subsequent motion picture devices.

While there has been speculation that Edison's interest in motion pictures began before 1888, the visit of Eadweard Muybridge to the inventor's laboratory in West Orange in February of that year certainly stimulated Edison's resolve to invent a motion picture camera. Muybridge proposed that they collaborate and combine the Zoopraxiscope with the Edison phonograph. Although apparently intrigued, Edison decided not to participate in such a partnership, perhaps realizing that the Zoopraxiscope was not a very practical or efficient way of recording motion. In an attempt to protect his future inventions, Edison filed a caveat with the Patents Office on October 17, 1888, describing his ideas for a device which would "do for the eye what the phonograph does for the ear" -- record and reproduce objects in motion. Edison called the invention a "Kinetoscope," using the Greek words "kineto" meaning "movement" and "scopos" meaning "to watch."

Edison's assistant, William Kennedy Laurie Dickson, was given the task of inventing the device in June 1889, possibly because of his background as a photographer. Charles A. Brown was made Dickson's assistant. There has been some argument about how much Edison himself contributed to the invention of the motion picture camera. While Edison seems to have conceived the idea and initiated the experiments, Dickson apparently performed the bulk of the experimentation, leading most modern scholars to assign Dickson with the major credit for turning the concept into a practical reality. The Edison laboratory, though, worked as a collaborative organization. Laboratory assistants were assigned to work on many projects while Edison supervised and involved himself and participated to varying degrees. Ultimately, Edison made the important decisions, and, as the "Wizard of West Orange," took sole credit for the products of his laboratory.

The initial experiments on the Kinetograph were based on Edison's conception of the phonograph cylinder. Tiny photographic images were affixed in sequence to a cylinder, with the idea that when the cylinder was rotated the illusion of motion would be reproduced via reflected light. This ultimately proved to be impractical.

The work of others in the field soon prompted Edison and his staff to move in a different direction. In Europe Edison had met French physiologist Étienne-Jules Marey who used a continuous roll of film in his Chronophotographe to produce a sequence of still images, but the lack of film rolls of sufficient length and durability for use in a motion picture device delayed the inventive process. This dilemma was aided when John Carbutt developed emulsion-coated celluloid film sheets, which began to be used in the Edison experiments. The Eastman Company later produced its own celluloid film which Dickson soon bought in large quantities. By 1890, Dickson was joined by a new assistant, William Heise, and the two began to develop a machine that exposed a strip of film in a horizontal-feed mechanism.

A prototype for the Kinetoscope was finally shown to a convention of the National Federation of Women's Clubs on May 20, 1891. The device was both a camera and a peep-hole viewer, and the film used was 18mm wide. According to David Robinson who describes the Kinetoscope in his book, From Peep Show to Palace: The Birth of American Film, the film "ran horizontally between two spools, at continuous speed. A rapidly moving shutter gave intermittent exposures when the apparatus was used as a camera, and intermittent glimpses of the positive print when it was used as a viewer--when the spectator looked through the same aperture that housed the camera lens."

A patent for the Kinetograph (the camera) and the Kinetoscope (the viewer) was filed on August 24, 1891.

The Kinetoscope was apparently completed by 1892. David Robinson writes:

It consisted of an upright wooden cabinet, 18 in. x 27 in. x 4 ft. high, with a peephole with magnifying lenses in the top...Inside the box the film, in a continuous band of approximately 50 feet, was arranged around a series of spools. A large, electrically driven sprocket wheel at the top of the box engaged corresponding sprocket holes punched in the edges of the film, which was thus drawn under the lens at a continuous rate. Beneath the film was an electric lamp, and between the lamp and the film a revolving shutter with a narrow slit. As each frame passed under the lens, the shutter permitted a flash of light so brief that the frame appeared to be frozen. This rapid series of apparently still frames appeared, thanks to the persistence of vision phenomenon, as a moving image. (From Peep Show to Palace, p. 34)

At this point, the horizontal-feed system had been changed to one in which the film was fed vertically. The viewer would look into a peep-hole at the top of the cabinet in order to see the image move. The first public demonstration of the Kinetoscope was held at the Brooklyn Institute of Arts and Sciences on May 9, 1893.

THE FIRST FEATURE

The first feature film originally presented as a talkie was The Jazz Singer, released in October 1927. A major hit, it was made with Videophone, which was at the time the leading brand of sound-on-disc technology. Sound-on-film, however, would soon become the standard for talking pictures.

The history of film began in the 1890s, when motion picture cameras were invented and film production companies started to be established. Because of the limits of technology, films of the 1890s were under a minute long and until 1927 motion pictures were produced without sound. The first decade of motion picture saw film moving from a novelty to an established mass entertainment industry. The films became several minutes long consisting of several shots. The first rotating camera for taking panning shots was built in 1898. The first film studios were built in 1897. Special effects were introduced and film continuity, involving action moving from one sequence into another, began to be used. In the 1900s, continuity of action across successive shots was achieved and the first close-up shot was introduced (that some claim D. W. Griffith invented). Most films of this period were what came to be called "chase films". The first use of animation in movies was in 1899. The first feature length multi-reel film was a 1906 Australian production. The first successful permanent theater showing only films was "The Nickelodeon" in Pittsburgh in 1905. By 1910, actors began to receive screen credit for their roles and the way to the creation of film stars was opened. Regular newsreels were exhibited from 1910 and soon became a popular way for finding out the news. From about 1910, American films had the largest share of the market in Australia and in all European countries except France.

New film techniques were introduced in this period including the use of artificial lighting, fire effects and low-key lighting (i.e. lighting in which most of the frame is dark) for enhanced atmosphere during sinister scenes. As films grew longer, specialist writers were employed to simplify more complex stories derived from novels or plays into a form that could be contained on one reel and be easier to be understood by the audience – an audience that was new to this form of storytelling. Genres began to be used as categories; the main division was into comedy and drama but these categories were further subdivided. During the First World War there was a complex transition for the film industry. The exhibition of films changed from short one-reel programs to feature films. Exhibition venues became larger and began charging higher prices. By 1914, continuity cinema was the established mode of commercial cinema. One of the advanced continuity techniques involved an accurate and smooth transition from one shot to another.

D. W. Griffith had the highest standing among American directors in the industry, because of the dramatic excitement he conveyed to the audience through his films. The American film industry, or "Hollywood", as it was becoming known after its new geographical center in Hollywood, a neighborhood in Los Angeles, California, gained the position it has held, more or less, ever since: film factory for the world and exporting its product to most countries. By the 1920s, the United States reached what is still its era of greatest-ever output, producing an average of 800 feature films annually, or 82% of the global total (Eyman, 1997). During late 1927, Warner's released The Jazz Singer, with the first synchronized dialogue (and singing) in a feature film. By the end of 1929, Hollywood was almost all-talkie, with several competing sound systems (soon to be standardized). Sound saved the Hollywood studio system in the face of the Great Depression (Parkinson, 1995).

The desire for wartime propaganda created a renaissance in the film industry in Britain, with realistic war dramas. The onset of American involvement in World War II also brought a proliferation of films as both patriotism and propaganda. The House Un-American Activities Committee investigated Hollywood in the early 1950s. During the immediate post-war years the cinematic industry was also threatened by television and the increasing popularity of the medium meant that some film theaters would bankrupt and close. The 1950s was a 'Golden Age' for non-English world cinema.

Roundhay Garden Scene is an 1888 short silent film recorded by French inventor Louis Le Prince. It is believed to be the oldest surviving film in existence, as noted by the Guinness Book of Records. The film Sortie de l'usine Lumière de Lyon (1895) by French Louis Lumière is considered the "first true motion picture”.

THE BEGINNING

In the 1890s, films were seen mostly via temporary storefront spaces and traveling exhibitors or as acts in vaudeville programs. A film could be under a minute long and would usually present a single scene, authentic or staged, of everyday life, a public event, a sporting event or slapstick. There was little to no cinematic technique, the film was usually black and white and it was without sound.

The novelty of realistic moving photographs was enough for a motion picture industry to blossom before the end of the century, in countries around the world. "The Cinema" was to offer a cheaper, simpler way of providing entertainment to the masses. Filmmakers could record actors' performances, which then could be shown to audiences around the world. Travelogues would bring the sights of far-flung places, with movement, directly to spectators' hometowns. Movies would become the most popular visual art form of the late Victorian age.

The Berlin Wintergarten theater hosted an early movie presentation in front of an audience, shown by the Skladanowsky brothers in 1895. The Melbourne Athenaeum started to screen movies in 1896. Movie theaters became popular entertainment venues and social hubs in the early 20th century, much like cabarets and other theaters.

Until 1927, motion pictures were produced without sound. This era is referred to as the silent era of film. To enhance the viewers' experience, silent films were commonly accompanied by live musicians in an orchestra, a theater organ, and sometimes sound effects and even commentary spoken by the showman or projectionist. In most countries, inter-titles came to be used to provide dialogue and narration for the film, thus dispensing with narrators, but in Japanese cinema human narration remained popular throughout the silent era. The technical problems were resolved by 1923.

The first motion picture with a synchronized soundtrack was titled "Don Juan." Released in 1926, it was directed by Alan Crosland. The movie was produced specifically to show off the Vitaphone sound system. "Don Juan" featured a synchronized musical score and sound effects -- but no spoken dialogue -- and was hailed as a moderate success. Still, theater owners and many movie producers were not convinced that audiences wanted to see pictures that included recorded sounds.

Illustrated songs were a notable exception to this trend that began in 1894 in vaudeville houses and persisted as late as the late 1930s in film theaters. Live performance or sound recordings were paired with hand-colored glass slides projected through stereopticons and similar devices. In this way, song narrative was illustrated through a series of slides whose changes were simultaneous with the narrative development. The main purpose of illustrated songs was to encourage sheet music sales, and they were highly successful with sales reaching into the millions for a single song. Later, with the birth of film, illustrated songs were used as filler material preceding films and during reel changes.

The 1914 The Photo-Drama of Creation was a non-commercial attempt to combine the motion picture with a combination of slides and synchronize the resulting moving picture with audio. The film included hand-painted slides as well as other previously used techniques. Simultaneously playing the audio while the film was being played with a projector was required. Produced by the Watch Tower Bible and Tract Society of Pennsylvania (Jehovah's Witnesses), this eight–hour bible drama was being shown in 80 cities every day and almost eight million people in the United States and Canada saw the presentation.

BIRTH OF MOVIES

The first eleven years of motion pictures show the cinema moving from a novelty to an established large-scale entertainment industry. The films represent a movement from films consisting of one shot, completely made by one person with a few assistants, towards films several minutes long consisting of several shots, which were made by large companies in something like industrial conditions.

The year 1900 marks the emergence of the first motion pictures that can be considered as "films" – at this point, film-makers begin to introduce basic editing techniques and film narrative.

THE FIRST MOVIE EVER MADE…1878

The first movie ever made, you can look back to The Horse in Motion, created by Eadweard Muybridge in 1878. Muybridge was asked by Leland Stanford (railroad magnate, California senator, race-horse owner, and eventual founder of Stanford University) to answer a popularly debated question: When a horse trots, do all four hooves leave the ground simultaneously? Muybridge's stop motion film made it clear that they do.

FILM WITH SOUND OR THE TALKIES

A sound film is a motion picture with synchronized sound, or sound technologically coupled to image, as opposed to a silent film. The first known public exhibition of projected sound films took place in Paris in 1900, but decades passed before sound motion pictures were made commercially practical. Reliable synchronization was difficult to achieve with the early sound-on-disc systems, and amplification and recording quality were also inadequate. Innovations in sound-on-film led to the first commercial screening of short motion pictures using the technology, which took place in 1923.

The primary steps in the commercialization of sound cinema were taken in the mid- to late 1920s. At first, the sound films which included synchronized dialogue, known as "talking pictures", or "talkies", were exclusively shorts. The earliest feature-length movies with recorded sound included only music and effects. The first feature film originally presented as a talkie was The Jazz Singer, released in October 1927. A major hit, it was made with Vitaphone, which was at the time the leading brand of sound-on-disc technology. Sound-on-film, however, would soon become the standard for talking pictures.

By the early 1930s, the talkies were a global phenomenon. In the United States, they helped secure Hollywood's position as one of the world's most powerful cultural/commercial centers of influence (see Cinema of the United States). In Europe (and, to a lesser degree, elsewhere), the new development was treated with suspicion by many filmmakers and critics, who worried that a focus on dialogue would subvert the unique aesthetic virtues of soundless cinema. In Japan, where the popular film tradition integrated silent movie and live vocal performance, talking pictures were slow to take root. In India, sound was the transformative element that led to the rapid expansion of the nation's film industry.

Sources: Google, Wikipedia, Pinterest, IMDB, Open Culture, New World Encyclopedia, Class Room, Sound Film, Film Site, Hollywood Reporter, Popular Mechanics, Britannica, Library of Congress, David Robinson, From Peep Show to Palace, History, American-Historama, Wide Screen Museum