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If you remember that there once was a glimmer of hope for more sustainable financing for innovative small business (and, for my concern, an indie film industry) through “Equity Crowdfunding” as demanded by the JOBS Act of 2012, the fact is that it’s not going to happen. It’s already far past the Act’s imposed deadlines because the concept is anathema to the entrenched and self-interested bureaucracy.
Instead of becoming a ‘big brother’ to the dynamic and egalitarian donor crowdfunding process that helped the art of indie film continue through the Great Recession and the Great Digital Disruption, the SEC and FINRA bureaucracies have delayed it and gutted it by turning it into a ‘little sister’ to mammoth elitist and exclusive brokerages.
A key element to kill the hope of equity crowdfunding: “the SEC decided that the financial statements should be provided in accordance with US GAAP (Generally Accepted Accounting Procedures). That is expensive…” and beyond the capability of most small business start-ups.
Equity crowdfunding will be nothing more than an easier way for the well-to-do professional investors to invest money in large corporations, but will not be an open door for the common citizen to participate in rebuilding America’s economy. There will be no widespread job creation, just as there hasn’t been since the Act was signed years ago. The dreams of the JOBS Act and its Equity Crowdfunding have been swallowed up by the bureaucracy and entrenched self-interests of the professional funding elite.
Say goodbye to the crashed dream of Equity Crowdfunding helping rebuild America through small business creation (including a healthy indie film industry infrastructure.)
By the way, if you are the type of person who believes entrenched anti-citizen bureaucracy can be swayed, you can let the SEC know your opinion about allowing Equity Crowdfunding to be accessible to all citizens by emailing your statement to email@example.com
Also see my original assessment, “FILMMAKERS, IT’S 2013. DO YOU KNOW WHERE YOUR JOBS ACT IS?“
OK, here’s my 2¢ about the political hysteria against Hollywood movies and state incentives used to entice movies to their states:
A political contingent shows disdain toward Hollywood, and therefore incentive plans, and does it through such pronouncements as those from e21, which, of course, says it’s “nonpartisan” but which is openly hostile toward any existing government action and on the path of the tea party and its positions. Likewise, such political contingent will dismiss the research of legitimate organizations such as EY (formerly Ernst & Young Accounting) while wholly believing in the partisan blathering of any number of ad-hoc websites, most of which don’t understand filmmaking and the choices for spending production dollars.
The thing is, when looking beyond the partisan Hollywood bashing, I am not a fan of the proliferation of the myriad state incentive plans. Of course, I am also not a fan of the political posturing that is against Hollywood for a wrongly perceived liberal bent and a wrongly perceived everyman millionaires.
What used to be a valid business strategy — not much different than those benefits given companies such as Walmart to entice them to come into a city, or to sports teams to build a stadium, or to auto makers to attract them to one area over another, etc. – has been polluted by hyper-politicizing based on our society’s tailspin into hyper-partisanship and the loud clanking drumbeat against “liberal Hollywood.” And, there have even been a couple incidents of flat-out wrongdoing by some of the principles offering the incentives–corruption, who woulda thunk?? (Yes, some think that’s only Hollywood. Yep.)
Nonetheless, the overlooked fact about the incentive programs is this: IF IT WERE NOT FOR THE INCENTIVES, NOT ONE SINGLE PENNY WOULD BE SPENT BY ANY PRODUCER IN ALMOST ANY OF THOSE LOCATIONS. Period. The restaurants would not feed the crew, the hotels would not house the stars, the airlines would not fly everybody, the gift shops would not sell souvenirs to grips, the rental car companies would not rent any cars to any of the people responsible for a movie, the residents would not gawk at the stars and then brag in their tourist materials that the movie had been made there, etc., etc.
Hollywood would rather stay in beautiful California where we live and make our movies here.
For instance, Hollywood would not be in Louisiana except the state benefited from especially generous movie-making incentives in an effort to help them rebuild after Katrina (the IRS Section 181 provisions included expanded benefits to encourage shooting in Louisiana). It worked for them. Maybe it doesn’t work as well for everyone, but that’s the risk of business. If you’re an American, you understand that you have to take risks in order to get rewards, whether a cafe owner risks opening another location, a producer risks which movie to make and where to make it, or a city risks offering incentives to try to build a new filmmaking industry (which, by the way, means the capability to make corporate videos, commercials, web episodes, and many other productions besides “Hollywood movies”).
Raging that incentives are liberal and therefore must be failures is not changing the fact that they may work: they bring movie production to areas where movies would not be produced if not for those incentives. Those people look at incentives as if it were cash being shoveled into the pockets of rich movie people, ignoring the fact that lots of money must first be spent before any tax benefits — a percentage of the money spent – can be accrued by the production company. And, the people working on the movies are trying to earn a living, just as you are. The $20 million star is a myth, and even the highest paid star is just one person, while a few hundred people working on the movie are working for occasional union wages or less. And, they’ve been yanked from their homes to go to some far-away little town because of your tax incentives.
So, rage against the liberal tyranny, please! Kill all the incentive programs, please! Even killing them for wrong, reactionary reasons will at least help Hollywood stay in Hollywood. Thank you, everyone who believes in the evil liberal millionaire Hollywood! Kill your tax incentive plans so we can stay in OUR homes and work, hire OUR neighbors, eat in OUR restaurants, rent OUR equipment, and stay with OUR families.
Prolific indie film producer Ted Hope, who spent the past year as Executive Director of the San Francisco Film Society, recently posted “Towards A Sustainable Investor Class: Accessing Quality Projects” as a call to build a healthy independent filmmaking industry. As always, he makes an astute and excellent comment about the big picture of indie filmmaking. We engaged in a conversation, and here’s my comment about the industry and investors: Continue reading
“Profit Participation” at the Hollywood Studios is impossible. (See “STUDIO SHAME! Even Harry Potter Pic Loses Money Because Of Warner Bros’ Phony Baloney Net Profit Accounting”) They are incestuous. Each of their stand-alone divisions siphons off all the money generated by each movie, deliberately leaving none for the Profit Participants.
I have worked in the studios, both as part of the studio divisions, and as part of individual movies. It is clear and simple how a studio demands a movie’s production buy everything from the very expensive in-studio divisions, whether snacks, sign making, props, construction, casting, studio space, trucks, crew, marketing, distribution, or whatever. Every division must show its own profit/loss, to feed into the overall studio, and every movie is obligated to make all purchases from the very expensive studio divisions. There are no bargains to be found on a movie studio lot.
That’s inevitable for the STUDIOS, which are huge corporate conglomerates.
BIG DIFFERENCE: It is NOT true for small independent producers.
It is not true, because I can go to a dollar store to buy snacks, I can go to a friend and borrow a truck, I can go to an up-and-coming talent to hire for advertising. And, I have no studio overhead, no fancy lot in Los Angeles, no fancy headquarters building in New York City. That’s a huge difference, and that’s reality.
A one million dollar indie movie that makes ‘only’ three million dollars from every market (box office, TV, online, etc.) could return more to an investor than a major studio blockbuster would return to a “Net Profit Participant.”
THIS IS A MAJOR JOBS PROBLEM AND NEEDS OUR ATTENTION:
America needs good jobs. Joblessness and low-wage jobs have crippled the survival and prosperity of millions of Americans, and are a drag on our entire economy.
The promise of the JOBS Act, signed into law a year ago and supported by the most bi-partisanship effort in recent history, is DEAD because the Federal Securities and Exchange Commission (SEC) has failed to enact it.
The JOBS Act established a deadline of Wednesday, July 4, 2012, for the SEC to promulgate rules and regulations for the implementation of TITLE II—ACCESS TO CAPITAL FOR JOB CREATORS (commonly referred to as the “general solicitation rule“). The SEC missed that deadline. The agency did publish proposed rules for TITLE II on August 29, 2012, but has not implemented them. There is no anticipated date for finalizing the rules for Title II of the JOBS Act.
The JOBS Act established a deadline of Monday, December 31, 2012 for the SEC to promulgate rules and regulations for the implementation of TITLE III—CROWDFUND (commonly referred to as “Equity Crowdfunding“). The SEC missed the deadline, and has no anticipated date for the rulemaking to implement TITLE III.
AMERICA NEEDS JOBS! Hope from the JOBS Act of 2012 has been *crushed* by the SEC’s inaction and dismissal of the JOBS Act!
Find your representative here: http://www.house.gov/representatives/find/
See the potential for the JOBS Act at “FILMMAKERS, IT’S 2013. DO YOU KNOW WHERE YOUR JOBS ACT IS?“
I was at a seminar this week that purported to be about the new EQUITY CROWDFUNDING, but sadly, the panel was populated by finance professionals whose disdain for those of us who are not “high end, high net worth” made the panel useless.
These types of professional fundraisers, coming from the status quo investment community, are not willing to acknowledge that the true value of EQUITY CROWDFUNDING is the escape from the expense, time and headache of pursuing Reg D exemptions and PPMs (“Private Placement Memorandums”). They collect monstrous fees to create those, so they have no respect for those who pursue crowdfunding as an entry to the financial world. Continue reading
The Securities and Exchange Commission is accepting comments on how it will formulate rules for the new equity CROWDFUNDING act that was included in the JOBS ACT. (See my story on ReelGrok.com at http://www.reelgrok.com/jobs-act-crowdfunding)
This is important for indie filmmakers, since the ability to reasonably raise up to $1,000,000 from investors could reinvigorate the indie film biz.
FILMMAKERS, this is very important:
WHAT CONGRESS DID
The house has passed the Entrepreneur Access to Capital Act which offers a tremendous opportunity to rebuild the independent film industry. The Act is designed to allow businesses to raise capital through crowdfunding. Under current securities laws, filmmakers can only ask for donations, and donors support the film without any participation in its potential profit.
You know that your favorite movies, and even ones you don’t like, exist in an uneasy alliance of art and commerce. Movies have the potential to be both emotionally and financially powerful; sometimes one, sometimes the other, sometimes both. They brew in a caldron of artistic expression, profit potential, and career possibilities. Some movies find life solely because of demand for profit, and some find life solely because of someone’s passion for storytelling. Some come together for any number of reasons between those two ends of the spectrum.
Read about the making of the independent feature film NATE AND KELLY here:
Has a movie ever touched your life?
Here’s what I think specifically about MARKETING LOW-BUDGET INDIE FEATURE FILMS (NARRATIVE FICTION).
This is an effort to help visualize the numbers needed for this new world of filmmakers becoming responsible for their own direct distribution.