What Do Crowdinvesting And Blockchain Have To Do With Hollywood?

What Do Crowdinvesting And Blockchain Have To Do With Hollywood?
Javier-Rodriguez / Pixabay

Ryan Clarkson, Co-Founder and Co-CEO, Leveller on opportunities in Holywood crowdinvesting

Hollywood has a problem, and their failures represent an opportunity for investors. The problem, simply put, is that our dream factory is top-heavy: Oligarchy is thriving in the movie business. It’s not enough that Disney has 40% of the U.S. box office; now their new streaming service Disney Plus acquires a million new subscribers a day. With the Paramount Decree revoked, Netflix is going into the theater business. While cookie-cutter blockbusters earn billions, smaller films hardly open outside of New York and LA; if they make it to streaming services or even to physical media, they are released without fanfare or promotion. 

Every year, it seems, one movie or another breaks records for money earned at the box office or for money spent on production and promotion. “Four-quadrant” would-be blockbusters proliferate as choices vanish at the multiplex: Many viewers stay away from the cinema because they feel focus-grouped and franchised to death. The success of films like Parasite — subtitled, genre-bending, low on special effects, and with no actors familiar to U.S. audiences — shows that there’s a real appetite for new stories. If today’s studios won’t fund many of these films, can other investors pitch in? 

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Crowdinvesting vs crowdfunding

As studios have grown reluctant to tell new stories, ambitious creators have had to cobble together financing for even low- and mid-budget projects; five or six production companies often work on a single release. Why not have individual investors, without vanity shingles, contribute to films and benefit from their successes? Film and television represent extremely appealing investment products. First, in the streaming era, there are more markets for distribution and licensing than ever before. Second, there’s the satisfaction of making a difference. While some investors care only about returns and profits, producing art can allow investors to make a genuine difference to the culture. Filmmakers have occasionally made masterworks through self-funding

Some might object that crowdfunding already exists. It’s true that there have been past successes with crowdfunded films, but those successes have been closer to fan projects than to sophisticated investments. The crowdfunder pays for a film to be made or distributed; in return they may receive a t-shirt, or a download, or at higher levels of involvement, a visit to the set or a cameo. Should the film make its way to theaters and earn multiples of its production costs, the fans who made it possible will see nothing. Crowdfunding is about payment and patronage, not investment. 

Crowdinvesting and blockchain

In the past, crowdinvesting, as opposed to crowdfunding, has been difficult, if not impossible. If every potential contributor to a project is entitled to some portion of the receipts, logistical challenges abound. Kickstarter projects often struggle to ship and deliver backer rewards when addresses change, packages get lost, or shipping fees prove unusually high. The complications for a crowdinvested project are more daunting: With traditional methods, creators would need a whole team of accountants to collect bank information, verify forms, confirm personal information, and finally wire proceeds. The scale of the work would be overwhelming, especially on smaller projects. 

Thankfully, technology has advanced enough that once-insurmountable challenges may be overcome. Just as the internet reinvigorated subscription-style crowdfunding, new technologies like blockchain make the distribution of funds and the matching of investors to creators far simpler than they’ve ever been. Communication has been revolutionized and simplified by the internet. Finance is not far behind. 

With blockchain distributed ledgers, an individual’s transaction, similar to an investment in a film, may be immutably and automatically linked to a predetermined payout, like X% of a film’s gross receipts. Advanced bookkeeping is handled at the point of initial investment; due to blockchain’s encrypted immutability, even the creators of the program cannot meddle with the agreement once entered. In a blockchain system, unscrupulous Hollywood accounting falls by the wayside. 

In today’s markets, investors have more choices than ever before; as the world gets smaller and new assets are devised, they must make hard decisions. Film and television investment have historically been the domain of corporations and the extremely wealthy; today they’re opening to all. Hollywood’s failures of diversity and fixation on the biggest hits may yield outsize results for investors willing to steer a different course. As we enter the 2020s, it’s time to change the story.

About the Author

Ryan J. Clarkson is Co-Founder and Co-CEO of Leveller Media. Ryan grew up in suburban Michigan. He studied International Security Affairs and hard sciences at University of Michigan, then earned  his J.D. at Michigan State University. He joined a prestigious firm and transferred to Los Angeles in 2007. In 2011, Ryan founded his own firm, which represents litigation clients in the entertainment industry.

Ryan and fellow co-founder Eric VonFeldt were intrigued by crowdfunding film production, but recognized its flaws for global investors. Together they created Leveller Media, which harnesses AI and blockchain technology to empower producers and investors.  In his spare time, Ryan enjoys golf, basketball, and studying foreign languages and cultures. Ryan is proficient in French, Spanish, Farsi, and Albanian.

About Leveller

Based in Los Angeles, Leveller Media is a globalized entertainment studio and blockchain-powered investing platform. For more information please visit https://leveller.io/.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver

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