Moneyball Moviemaking is Killing Creativity, Crypto is the Cure
ByAlexandra Hooven, Director of Strategic Partnerships,Rally
After another incredible (albeit virtual) display of vibrant and distinctive voices at this years Sundance Film Festival, all eyes are on the studios as they open their wallets to swoop in and hitch their wagon to the nextMoonlight. Cashing in on creative success without rolling the dice on that upfront financial risk. Of course, I dont blame anyone for wanting to make money. Thats the way this industry works. As we go deeper into the streaming era, financing options no longer have to follow the traditional binary: cobbling together independent financing to follow your vision and hope someone picks it up on the back end, or submitting to the platformization of film and television production that has fallen victim to a continued reliance on opaque algorithms, metrics and aversion to risk. New options are emerging underpinned by blockchain technology that allow for entirely new models of ownership and development in the film industry.
I spent years at a talent agency focusing on finding ways to capture new revenue streams for artists from big brands and corporations to afford them the ability to create things on their own. This unfortunately always came with strings attached, hitting and reporting on brand KPIs, product placement, branded content tie-ins, all distractions from the art. Whether it’s Google or Netflix, these are businesses at the end of the day. Theyre not looking through a lens of how this project might shift culture and introduce inclusive, diverse narratives that help us see the world; theyre looking out for their bottom line.
On the flip side, filmmakers have been selling their comic book collections or launching Indiegogo campaigns to raise money, propose fixed or flexible budgets, and/or use reward-based fundraising for years. There have always been viable, although challenging, ways around the traditional studio system. Crowdfunding or raising money from the projects most loyal fans and friends was a key part of financing movies such as Veronica Mars and The Babadook.Equity crowdfunding, introduced in title III of the JOBS Act in 2016, took this concept to the next level and gave non-accredited investors the opportunity to invest in early stage startups and companies. Platforms like WeFunder and StartEngine are giving fans the opportunity to become producers and earn returns on their investments in new creative work. This industry hasnt generated major traction yet, but it has been an inspiration for another movement that has the potential to take the industry by storm.
The newest innovation in film finance is perhaps the most exciting.Decentralized Autonomous Organizations, or DAOs, are community-led groups that rely on software instead of centralized individuals to come to a consensus and make decisions. If equity crowdfunding created thousands of new producers, DAOs areallowing any community to become the next movie studio. Forming a DAO takes the ownership model of equity crowdfunding and supercharges it by encouraging collective action. Instead of individual investors incentivized by potential returns, a blockchain-powered studio creates a cultural movement out of a community. This means that the movement doesnt stop at one film; the DAO can vote to take profits from their first film and make a collective decision to invest in a second, third, and fourth. This ability to build as a unit has powerful implications for the future of film financing.
This technology is the same tech that underpins cryptocurrencies and NFTs. I know crypto can sound like a dirty word, but the possibilities of blockchain technology are almost uniquely suited to helping enterprising creators maintain control and make money off of their IP. Say what you will about NFT community projects likeStoner Catsbut they present the path for creatives to be in the drivers seat without strings attached from studios through distributed and collective ownership models. Stoner Cats serves as a new proof of concept for Hollywoods never ending search for the built-in audience. They proved a loyal community that demonstrated their excitement for the project via their willingness to pay roughly $700 (at the time of sale) to have exclusive access to the episodes. Whether this model is ultimately sustainable remains to be seen; but best case scenario, it proves that projects that might otherwise be considered creative risks at the studio level, now have a legitimate opportunity to be financed, marketed and even distributed independently using cryptocurrency tooling like NFTs and Social Tokens.
For the unfamiliar, some quick definitions:NFTsare an underlying technology that allows users to show ownership of unique items through blockchain. Simply put: Art is scarce. The internet is not. NFT technology has given us the ability to create scarcity on the internet which is why the most popular use case to date has been proven through digital artworks.Social Tokensare a fungible digital asset that can be used like currency and is backed by the reputation of a brand, individual, or community.Smart contractsallow issuers of tokens to build utility (or access) into the ownership of these tokens; whether that be access to exclusive content, memorabilia and more significantly, participation in future profits of the sale and distribution of the film.
Micah JohnsonsAku Worldproject serves as a groundbreaking case study of how the power of community paired with blockchain technology, specifically NFTs, can revolutionize the way film and television projects are financed and produced. Inspired by his nephew asking can astronauts be black?, Johnson debuted his Aku series on NFT marketplace Nifty Gateway to the tune of $2 million in a mere 24 hours. The meteoric success of the series proved just how large of an appetite there is from communities to see more dynamic, inspiring characters like Aku in the world. Two months later, the Aku character was optioned by Anonymous Content. What sets the Aku project apart from other source material is that Johnson invites his NFT holder community to participate in the characters story development through private channels on his official discord server. Johnson harnesses some of the most impactful aspects of web3 with this series; he has essentially built a DAO that functions as a creative director forAku World, and created a built-in audience that is willing to financially support the project over a longer time horizon. And hes done all of this himself, without relying on a middleman as a financing and marketing engine.
Streaming platforms took on both traditional TV and video rental stores by looking to the future and understanding the possibilities of cutting out the middleman with new technology. Filmmakers creators can do the same by embracing the possibilities of crypto culture and putting the power back in the hands of the people. By controlling the funding, creators can follow their own vision backed by the confidence of hundreds of investors and stay dedicated to truly original content. Crypto allows entire communities to create, deliver, and capture value and as more and more projects start experimenting with these new models, well start to see more fresh voices on screen.
About the author:
A seasoned entertainment executive and web3 innovator, Alexandra Hooven is director of strategic partnerships at Rally, where she works closely with creators, artists, athletes and their management teams to design, launch and implement token economy strategies powered by social tokens and NFTs.
Previously, Hooven served as head of content and creator partnerships at UTA for more than 5 years where she built a team to lead all client work related to original content and creator driven partnerships. She was a founding member of the Digital Assets practice where she advised clients on their NFT and larger blockchain strategy.
In her spare time, Alex is active in several crypto projects including Friends with Benefits where she serves as a governance and operations lead for LA. She is based in Los Angeles.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
