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The Costs Of Crowdfunding

by Ted Hope
September 5, 2011 5:30 AM
11 Comments
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Filmmakers speak of crowdfunding as if it is free money. It isn't. In some instances it isn't even close to being so.

In Indie Film, where filmmakers are routinely asked to take blood from a stone, you'd think the costs would leap from everyone's tongue.

So what platform, puts the most money into your pocket? Well, the answer ain't so easy.

As this is now the era of the six figure crowdfund raise, the answer is a combination of low fees and high user base. How many campaigns truly open up beyond the friends and family base?

The hard facts are a little easier to come by. Costs, in ascending order:

Kapipal • Currently no fee + PayPal processing fee (~2-4%), (must use PayPal, Italian)
IndieGoGo • 4% fee if you make your goal, 9% otherwise, +3% credit card processing fee
Kickstarter • 5% fee, +3-5% credit card fee (only funded if you make your goal)
Eppela • 5% fee + PayPal processing fee (~2-4%), (must use PayPal, only funded if you make your goal, Italian)
RocketHub • 4% fee if you make your goal, 8% otherwise, +3-5% credit card fee
SoKap • 5% fee, 10% fee on product sold via their marketplace, +3% credit card fee
United States Artists • 15% fee + 4% credit card fee

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More: Crowdsourcing , Financing

11 Comments

  • Eric Walsh | September 6, 2011 8:45 AMReply

    Well, you should simply look with more attention. There are sites, like http://www.Kapipal.com that are free (0% fee).

  • Eric Anderson | September 6, 2011 1:04 AMReply

    You really need to consider what bang you're getting for your buck too. I chose SoKap because of their unique territory licensing/distribution system. I like knowing that a) supporters are getting something in return for the money they put in and b) there's a distribution system in place when the film is finished.

    Here's the writeup we did for our project (I'm copying and pasting because I don't know that I can extemporaneously explain it any better than we did here):

    http://sokap.com/project/view/pid/6

    INCENTIVES FOR LICENSE HOLDERS

    By buying a license to a territory, you are entitled to a commission for all sales made within that territory.

    PRODUCT COMMISSIONS (PER SALE) FOR THE DEVIL'S PROMENADE

    Feature Film Download – HD (50%): $ 6
    Official Movie Poster (25%): $ 3.75
    Official Movie Poster (Signed Limited Edition) (25%): $ 7.50
    The Devil's Promenade – DVD (25%): $ 3.75
    The Devil's Promenade Blu Ray (25%): $ 7.50
    The Devil's Promenade Special Edition DVD: $ 7.50
    US Premiere (25%): $ 6.25
    Theatrical Screener (50%): $ 150

    If you're an active marketer, any traffic coming from your territory means cash in your pocket, but even a passive marketer will make revenue from THEATRICAL screenings. Here's how:

    If a theater pays to screen the film in your area, the revenue from every screening fee purchased is split 50/50 between the filmmaker and you. So if your city has 10 theaters, they all screen the film and the screening fee is $300/day ($2,100/week), there's the potential to make up to $10k/week on theatrical. If your town has one theater, then your cut would be $1,050/week if the theater chooses to show the film. Considering that licenses for smaller areas generally start around $35, that's not a bad deal. And on that note...

    INCENTIVES FOR THEATER OWNERS

    Theater owners stand to benefit the most by snapping up licenses in their areas. Maintaining/increasing revenue from theatrical screenings is an ongoing battle, and the competition grows every day. By engaging with SoKap, theater owners gain multiple revenue streams rather than relying on attendance alone. When a theater owner becomes a license holder, they also become 50/50 partners in all merchandise sales in their market, including dvds and digital downloads. Additionally, a theater owner can buy theatrical screeners at 50% off, because they are in essence selling the theatrical screener to themselves.

    HOW TO PURCHASE A LICENSE

    Click on Purchase a License
    Click on the country you wish to search in (United States or Canada)
    Click on the State you want to search in
    Scroll down to find the city you’re looking for, or type the name in the Search field
    Check the price, then click the Plus Symbol (+) to buy your license.

    Simple.
    _______________________________________________

    SoKap is just launching, so its potential remains to be seen. But I'm excited about that potential.

  • Fondomat | September 5, 2011 10:31 AMReply

    Fondomat is the Czech Republic's first crowdfunding website enabling its users to realise their dreams, help those in need or fund their next big project via its social networking tools. In English and Czech language versions.

    Website: http://www.fondomat.com

    Charges: 4% fee, +3.4% credit card fee

  • Russel Y | January 10, 2012 6:45 AM

    Thanks (I'm in Prague!)

  • Rebecca Gutierrez | September 5, 2011 10:20 AMReply

    Great comparison, Ted! Thank you for this and it's a great help for anyone wishing to make their dreams a reality through crowdfunding.

    Here's another interesting comparison on various crowdfunding platforms, http://crowdsourcing.org/l/505.

  • Gregory Bayne | September 5, 2011 9:29 AMReply

    You truly can't get something for nothing. The fees associated with these are not much different than those associated with non-profit fiscal sponsorship, and make sense in regard to the for-profit nature of Kickstarter and Indiegogo, etc.

    The costs I believe would be more interesting to delve into re: crowdfunding, and I thought this post might, is the cost of delivering on rewards. I think many folks don't plan appropriately when it comes to the arithmetic of: goal to raise - fees - time & costs of rewards and their delivery.

  • Bob Ray | September 5, 2011 8:48 AMReply

    USA Projects takes a higher cut, but they also hook you up with arts organizations and philanthropists who will match your pledges (once you get to 25% or your funding goal). Having done (and failed) at Kickstarter and IndieGogo, I figure it's worth a shot. My campaign is up and running:

    http://www.unitedstatesartists.org/project/the_four_shortfilms_of_the_apocalypse

  • George L. | September 5, 2011 8:47 AMReply

    Thanks for this very useful comparison. It's important to note the additional value that some of the platforms provide.

    One of my friends (http://www.rockethub.com/projects/1248-sides-of-the-track-a-political-short-film) successfully completed a project on RocketHub but was particularly enamored by their team and additional support - i.e. responsiveness, free consultation regarding rewards/goal, etc.

    If I'm going to pay a fee then I want the full value of the platform. It seems that RH provides that and that's why I'll be funding my next film project through RocketHub.com

  • Chris Dorr | September 5, 2011 7:50 AMReply

    Ted, thanks for laying out the numbers for the various crowdfunding platforms.

    I think to really evaluate the "cost" of this money you have also add a column that reads-- "compared to other forms of raising money" In other words if a filmmaker were to try and raise 10k, 50k or 100k in some other way, what costs in time and money would he/she incur and how would they compare to a crowdfunding strategy using one of these platforms. My guess is that the crowdfunding approach would compare very well with any other approach available and most importantly it is does not exclude those other ways of raising money, it actually complements it.

    In addition, it is the only strategy for raising money that also engages an audience and should be used as the basis for the marketing of the movie you are making. So the the bang for the buck in time and money can actually be quite large. Given that, the costs you laid out are really quite small in most cases.

  • Zak Forsman | September 5, 2011 7:17 AMReply

    Also, I've crunched the numbers on the Kickstarter and Amazon Payments fees and it's shaking out to approximately 8.1% total for us. The higher end of the 3%-5% attributed to Amazon is for pledges under $10. But everything pledge above that is 2.9% plus 30¢.

    https://payments.amazon.com/sdui/sdui/about?nodeId=6022

  • Zak Forsman | September 5, 2011 6:59 AMReply

    While not a six figure campaign, my recently concluded run for "Down and Dangerous" exceeded our expectations.

    http://kck.st/qB45dd

    Right or wrong, we hadn't pre-arranged any pledges at all, big or small. And within 48 hours of launching, we'd attracted donations in the thousands of dollars from people we'd never met, in addition to our core supporters. We were thrilled, but also very surprised by it. I don't really know what this adds to the discussion, but mention it because it seems to fly in the face of conventional wisdom that you will be hard pressed to reach beyond your core audience (friends and family) on a microbudget level.

    The other thing I rarely see discussed are the additional funds a crowdfunding campaign can stir up outside of your chosen platform. The work that went into fostering a conversation around the Kickstarter page also attracted a few big contributors that didn't want to use it. So there is gifted money coming in from Tel Aviv, The Netherlands, and New York because of this. The link above shows us being 126% funded. But at the end of the day, we were actually 177% funded if you include everything our Kickstarter videos and updates brought in – which also means we would have cracked their top 100 for the amount we raised.

    Anyway... Ted, I wanted to thank you for posting the series of posts from Jennifer Fox. I devoured every word and it was huge in shaping our own campaign.

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