Veronica Mars Kickstarter thoughts

After my ... discussion with some folks on Twitter the other night, I was interviewed by a very nice reporter from Hollywood Reporter, who had the courtesy to not misquote me (rarer than you think). I'd say, however, that fellow Leverage EP Chris Downey (@chrdowney) and big-time Veronica Mars fan sent me an email about the Veronica Mars Kickstarter which, although it was a question, actually summarized the issue far better than I could dealing with multiple lines of questioning over 5 hours:

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John:

I just tried to follow your Twitter war with the Veronica Mars Kickstarter haters.  What, exactly, is their problem?  

There is a product (VERONICA MARS MOVIE) that is being offered to consumers in exchange for money.  The more money you pay, the more product you receive.   For $35, you get a pretty good deal:  A digital copy of the movie and a script (I think).  For $100 (what I paid) you get that plus some swag and updates about the movie.  And there is an intangible value as well, i.e. the knowledge that but for my contribution, this product would not have been made.  That may prompt someone to pay $200 instead of $35.  That is, I think, similar to the intangible value someone puts on a shirt that costs $450 because it bears a designer label.

Who, exactly, is getting screwed here?

When the kickstarter funded VERONICA MARS MOVIE gets made, does the studio have an obligation to share the profits with the contributors?  Fuck no.  The contributors are receiving fair value for their money.  How do we know that?  Because yesterday, the free market decided that $35 for a digital copy of the movie plus a script was a pretty good deal.  

The fact that I pay $15 to see OZ THE GREAT AND POWERFUL after it's made instead of $35 to see VERONICA MARS MOVIE before it's made, is, I think irrelevant.  All that matters is if I, the consumer, believe I am receiving fair value.

What am I missing here? 

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The answer, of course, is he is missing nothing. Capitalism is harrrddd.

It's worth parsing out the three primary questions regarding the Veronica Mars Kickstarter I've encountered.

Question 1: Corporate involvement taints this Kickstarter project.

Answer 1: Massive sums of capital are needed to make television and movies. It's gonna come from somewhere -- a private human or collection of humans (that, for tax purposes, will form a corporation) or a production company that feels comfortable assuming the risk because they have distribution channels already in play (a big entertainment corporation). These are your two choices, because true crowdfunding on the scale necessary doesn't exist right now. (There's a running discussion on Twitter right now if a subscription model is bound by the same rules. So far -- unresolved!)

The first generation of these projects are going to be based in exploiting the social capital of established IP's. For legacy reasons those IP's will be owned by an entertainment corporation. The next generation of this sort of thing will be based around creator-driven projects, maybe. Big, big maybe. But those creators will still need distribution channels, and there's no guarantee those problems will be solved at the same time. So odds are, they'll wind up partnering with an established entertainment entity that already has distribution deals.

Also, it's KICKSTARTER. A common business term is right there in the name. It's not a charity site like Kiva (which is awesome, and you should go there). Whether the implication of "small business" or "indie" is hard-wired into the site is a matter of opinion, but I'd argue that once Double Fine raised $3.3 million for a video game, we all knew what the site was about. (Full disclosure: I backed them. Because they are cool and make cool things)

I mean, I hate to break it to you, but Double Fine is not two guys in a garage. It's a successful twelve-year old game studio that's released multiple profitable games into the mass market and looks to have around two dozen employees. You understand that they don't take the Kickstarter money, put that in a separate bank account, and then only draw from it when paying people who make the game, literally dollar for dollar, right? It moves into their overall financial structure as one of their revenue streams, it's used to collateralize loans -- that's just how businesses are run. Any illusions you have that they dumped that money into a kid's saving account and scrawled adorable handwritten checks to coders are your own.

In the Veronica Mars case a superhumanly determined creative person, Rob Thomas (@RobThomas) is using the Kickstarter system to raise funds to convince some fairly hip people in a single division of a very cautious studio that there is a low enough risk in making a Veronica Mars movie that they should invest their own time and money in IP they already own, and then assume all the risk of distribution -- and that risk is real, whether you want to believe that or not. 

Let's get this straight, right up front: the gross cost of making the Veronica Mars movie (getting insurance, completion bond, union contracts, just the fucking accounting etc, etc), distributing it, and then dealing with the expenses of maintaining that IP, from soup to nuts, will almost certainly cost more then the Kickstarter will make, and would be even MORE if it weren't leveraging Warner Brothers' existing relationships and contracts. 

You think Rob Thomas, personally, wants to be writing residual checks for the rest of his life?  The answer is "no", and I am sure of that because my friend Dean Devlin (@Electric44) will be writing Leverage residual checks for the rest of his life, and he is quite vocal about what a pain in the ass that is.

If somehow the thing is in the black from Day One because costs are low and the Kickstarter gets to a ridiculous number, that's cool. Why? Because we spend pretty much all our time in television financing trying to mitigate risk, and one of the ways we do this by getting pre-sales in different markets. This just means there's a new pre-sales market with different, wonky set of requirements. Not a game-changer. But an interesting data point.

Pre-sales are an important part of the television and movie financing process, and there's not a lot of daylight between the nature of the pre-sales contract revenue stream from a foreign buyer and an audience human. We finance movies and TV off audience pre-sales -- for example estimated future ticket sales, DVD sales, or download sales -- already. Hell, we finance based on theoretical profits kicked out by a modeling formulas, often absent actual data.   And we get giant bank loans for that shit. Movie studios don't use the profits from successful movies to make their next movie, because they have to wait a couple years for all those monies to come in. They get bank loans based on projections of that future income of a successful movie. TV financing is different because of the nature of the license fee income and evolution thanks to the increased throughput, but not fundamentally so.

SIDEBAR: I'd note this raises a possibility that most people are ignoring. Everyone's focusing on new IP or old IP. What's intriguing is the idea of bolstering current IP. Edging in a couple extra episodes, doing a much more spectacular DVD release, that sort of thing, may be more relevant down in the 1.x-2.x million per episode budget world. Maybe. You might also argue there's no such thing as non-current IP anymore. But that's a different post. :END SIDEBAR

Do you want cool things? Do you want bigger, more expensive cool things? Then as your desired projects scale up, reliance on the established infrastructure -- both financing and distribution -- will increase. Until a theoretical brand new perfectly democratized financing and distribution system are created, and even then things will gravitate back to cartels and leveraged production because the free market already kind of taught us that's the most efficient way to make big expensive chunks of entertainment.

Note: Some people will say I'm blurring the line here a lot between what are technically different financial organs -- financing, revenue, pre-sales, etc. Agreed. But parsing it all out precisely would take 15,000 goddam words. Let us just say that for the purposes of this discussion Money is Money, people who know better know what I mean, and people who don't know now know more than they did.

QUESTION 2: The investors are being duped/cheated.

Answer 2: People are not idiots, and I see no one intentionally misleading anybody. And trust me, as a guy who waded through 5 seasons of research on high-level corporate scumbaggery, I know misleading when I see it.

I think this is one of the big things people are missing: "intangible values" are part of the deal, and have been a legitimate "part of the deal" for an eternity.  As Chris so adroitly notes, the free market has determined that the people are getting the value they want for their money. As I said in the Hollywood Reporter article: "You pay for value added all the time. In this case, the value added is that the thing exists."

Some people were arguing that this was in no way circumventing the "gatekeepers", it was actually enriching them. (Some people typed that rather hysterically in all caps...) I think that fundamentally misunderstands the nature of "gatekeeping". It's not about who owns the stuff, it's who decides what gets made when. 

Or, rather more memetically, "People will trade money for control."

Since audience humans do not want to/are not qualified to spend all the time learning how to write, or make television, and probably won't come to a perfect solution that makes everyone creatively happy, they vest that control in someone they trust -- in this case, Rob Thomas. In a government, by the way, that's called a republic.  We are passingly familiar with that system, as a culture.

All that to say Warner Brother is not "getting $2 million for free." They are providing both actual physical products and other intangible rewards that are nonetheless of a non-zero value as established by the free market of Veronica Mars fans. "Free" would mean "we give you nothing in return." You know. Free.

Is there a chance that the movie might not actually get made? Sure. Shit happens. Is there any chance if that happens that the WB, who's holding that money in a production account, would want to be on the other end of a super-high publicity giant goddam class-action suit if they keep the money? You're adorable.

Yeah, the audience might not get what they want. Happens when you buy a book or go see a movie or buy a DVD set based on reviews. Life happens.

Question 3: I wrote a post for a nationally respected magazine that was factually wrong in several places, made a sexist crack about indie artist Amanda Palmer, and made an elitist argument extolling the virtues of exclusivity and relying on traditional financing, then when the internet smacked me down for it I spent hours pretending what I was REALLY saying was I concerned about the mixture of that traditional financing and crowdfunding, completely contra the article I actually wrote. Why is everyone being so mean to me?

Answer 3: The internet is big, mean and smart. Sack up.