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7/30/2019 CMF Crowdfunding Study
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Canada Media Fund | Fonds des mdias du Canada
Cnin in aCanaian Cntxt
Prepared by: Nordicity .m-m.
Exploring thePotential oCrowdundingin the CreativeContent Industries
At, 2012
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2 Crowdfunding for the creative content industries in a Canadian Context
1. IntroductIon 3
2. crowdundIng deIned 4
2.1 ci M 6
2.1.1 The Donation Model 6
2.1.2 The Lending Model 9
2.1.3 The Investment Model 13
2.2 Mk t 15
2.2.1 US Market Trends 17
2.2.2 European Market Trends 18
2.2.3 Canadian Market Trends 20
3. deMand or crowdundIng In canadas
tV and dIgItal MedIa IndustrIes 22
3.1 t b f iv i 22
3.2 Bf c 25
3.3 rik Bi c 27
4. IMpleMentatIon consIderatIons
or the canadIan tV and
dIgItal MedIa IndustrIes 29
4.1 ci sii l piv ii 30
4.2 t civ c i em 33
4.2.1 Certied Independent Production Funds and
other unding grants 33
4.2.2 Provincial and Federal Tax Credits 33
4.2.3 Broadcast and Distribution Partners 35
5. suMMary and conclusIons 37
aix a ci ci pm 39
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3 Crowdfunding for the creative content industries in a Canadian Context
1. IntroductIonCrowdunding is an emerging alternative nancing vehicle that
has experienced a recent boom in Europe and North America,
primarily driven by recent multi-million dollar record-breaking
successes on platorms in the US. In the wake o the increased
media attention or these campaigns and recent changes to
securities laws in the US to accommodate crowdunding, this
nancing model has become more visible in Canada as well.
A number o Canadian-based crowdunding platorms have
emerged and discussion has been abundant among regulatory
and industry bodiesrom the tech sector to the creative media
sectorregarding how crowdunding ts into Canadas current
legal, regulatory and unding environment.The Canada Media Fund (CMF) commissioned Nordicity to
conduct a study on the topic o crowdunding in Canada with a
mandate to provide both an overview o the global crowdunding
phenomenon as related to the creative content industries and
also a domestic environmental scan to determine what the
demand or crowdunding might be among content creators,
how they might best leverage this type o unding and how it
might t into the broader structural environment or the creative
content industries in Canada.
Thro ugh secondary researc h, case study analys is and
stakeholder interviews (with producers, interactive digital media
(IDM) content developers, industry and regulatory bodies, andlegal and nance experts), Nordicity explored the opportunities
and challenges regarding the regulatory, nancial, social and
operational deployment o crowdunding within the Canadian
creative content environment.
The ollowing report rst provides a working denition o
crowdunding and a description o the various crowdunding
models, as dened by Nordicity. The report then goes on to
provide an overview o global market trends in crowdunding.
Finally, the report outlines the needs and key considerations rom
the perspective o content creators as well as key considerations
related to the regulatory, legislative, and nancial environment or
the creative content industries in Canada.
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4 Crowdfunding for the creative content industries in a Canadian Context
2. crowdundIng deIned
This sect ion pro vides a working de in i t ion o the term
crowdunding and a broad overview description o the concept;
what it is and how it is used. The sub-sections that ollow provide
an overview o the three basic existing crowdunding models.
Crowdunding:
A wk deft
Cnin i th aiin
n thh th cctin
ma cntitin m th
na ic (knn a th
c) in th Intnt an
cia mia
1 Crowdfunding: Disintermediated Investment Banking. Brian J. Rubinton. McGill University. April, 2011.2 SEC Regulations Barricade The Crowdfunding Floodgates. Kevin Lawton. Hungton Post. November 30, 2011.
http://www.hungtonpost.com/kevin-lawton/crowdunding_b_789088.html?.
ci i i i i
i, which is the broader concept o an individual
reaching a goal by receiving and leveraging small contributions
rom many parties.1 Crowdunding is the application o this concept
to the collection o unds through small contributions rom many
parties in order to nance a particular project or venture.
Interpreted in this way, Crowdunding has existed or a long
time in the not-or-prot world, where undraising campaigns
are ubiquitous. It has also existed in what is commonly reerred
to as a riends and amily nancing round in the technology start-
up sector.
t k i i x i i
ixib ik i i ki i bii
i mmii i x
j mi fi ii. Indeed,
the social networking aspect o crowdunding is the primary
driving orce behind its success.2
From the beginning, crowdunding was based on the shared values
and relationships built between those seeking support and the
donors, oten resulting in repeat donations. By leveraging existing
communities both online and ofine, crowdunding relationships
are strengthened through increased engagement and instant
gratication via social media, as opposed to the limitations o one-way messaging with broadcast media and direct mail. While the
concept o donation is not new, the ability or online crowdunding
to engage unders on such a large scale enables it to raise large
amounts o money in shorter periods o time rom a larger pool o
potential investors.
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5 Crowdfunding for the creative content industries in a Canadian Context
t -f f m
i i i i m. Two notable and
oten-cited early examples o successul crowdunding eorts
include the Hurricane Katrina disaster relie undraising campaign
and President Barrack Obamas rst-term election campaign
back in 2008.
M , i i bmi ii
mm m ii i
mi ii; ii mi, fm vi m.
Although internet crowdunding has existed in the music and lm
industries or almost a decade, it is only in the last ve years that
crowdunding in the media industries has gained momentum.3
tii, i i i m vm -f, i j (another
key characteristic o crowdunding being that it is an ex ante orm
o nancingmeaning that sponsors, backers, customers or
investors nance a project that is still in the development stage).4
As such, it has become particularly eective in projects where
individuals have an anity or the cause or or the creative team
involved. Acting as a social media platorm in their own right, some
crowdunding platorms acilitate a world o communities where
individuals can und their interests and passions.
t m iv fi
bi fi j,
b v iiz iv.Producers o all sizes have increased their access to nancing,
contributing to the democratization o content production.
Increasingly, new entrants have the potential to be recognized and
rewarded or their crat, where they may not have conventionally
been able to secure unding or distribution or their projects due to
traditional value chain barriers.
ci iq i vii
bivii ibii
i j. The power o the investor as ambassador
is uelled by the high impact o social media, where projects or
the undraising initiative have the opportunity to go viral. Oten,
beore a production has even begun, crowdunding can generate
3Crowdfunding Plan may Open Pandoras Box for Investors. Robert J Metzler. April 16, 2012.http://hbweb.sx2.atl.publicus.com/article/20120416/PRINTEDITION/304169981.
4Crowdfunding: Disintermediated Investment Banking. Brian J. Rubinton. McGill University. April, 2011.5Putting your money where your mouse is: Crowdfunding: Artists, musicians and writers are using the Internet to aggregatelots of small donations to fund their work.TheEconomist. Sept 02, 2012. www.economist.com/node/16909869.
audience engagement through the projects investors, who will inturn become the consumers. A crowdunding network can be a
projects best source o cost-ree promotion. Investors and unders
become ambassadors o the cause, infuencing their networks
through social media and word o mouth. Indeed, due to the trust
involved in personalized endorsements, social media can be more
infuential than many promotional campaigns, committees, CRM
networks and websites. Crowdunding also allows project creators
to engage more closely and more directly with those audiences
and ambassadors, who are increasingly attracted to this type o
direct connection and deeper engagement with the development
and production process o the content they are consuming.5
As such, crowdunding is redening the relationship between
producer, investor and consumer, oten resulting in some orm
o convergence and democratization o the three. Producers
are compelled to be as open and honest as possible in their
crowdunding campaigns in order to earn enough trust rom
audiences to secure their nancial support. It is thereore in the
producers best interest to maintain higher levels o transparency
and accountabil ity in their practices. However, levels o
transparency can vary and can become the object o public
scrutiny. For example, the crowdsourced undraising campaign
behind the Invisible Children Inc., and their short lm Kony 2012,
has been criticized or a lack o transparency on expenditures.
ci vi m iv
v i m vii b
i. Through crowdunding campaigns, content creators
can crowdsource public reactions and critiques to a projects
concepts and eatures. In this way, creators are equipped with
vital inormation to help with business and editorial decision-
making that respond directly to their audiences expressed
needs and desires. Useul back-end analytics that can come
rom crowdunding campaigns include click-through rates, time
spent on the site, the amount o money raised, and the number
o contributors as well as more open-ended qualitative audience
eedback in the orm o comments, suggestions, community
promotion and viral marketing.
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6 Crowdfunding for the creative content industries in a Canadian Context
2.1 ci MThree models o crowdunding are emerging or the creative
industries: The Donation Model, the Lending Model and
the Investment Model. Each model has its own unique
eatures, unctions, levels o applicability, and advantages and
disadvantages.
2.1.1 The Donation ModelThe Donation Model encompasses approaches to crowdunding
that are based on donations, philanthropy and sponsorship. It is
also sometimes reerred to as micro-patronage.
I diM, iivimkii
ibi j i xi
fi ibi. The primary driver behind
individual contributions in this model is a personal desire to support
the development and realization o a project that is in some way
meaningul to the contributor. Projects and platorms that employ
the donation model typically also use a reward or incentive system
to help stimulate contributions. Incentive rewards, gits or tokenscan range rom named recognition o contributors in the projects
credits or acknowledgements to branded merchandise or
opportunities to meet with creators and/or attend special events
related to the project such as a launch party or premiere screening
event. Typically, a range o incentives is oered or any given
project and contributors receive dierent rewards depending on
the amount that they contribute.
With its roots in philanthropy, the Donation Model is derived rom
the online donation model used by charities. The key to this model
is that while contributors might receive recognition or rewards or
their contribution, they do not receive any rights or equity in the
project. The Donation Model o crowdunding is currently the mostcommon means o crowdunding in Canada and around the world,
due primarily to securities regulations. Indeed, a recent report by
Massolution/Crowdsourcing LLC determined that donation-based
crowdunding initiatives raised the most money in 2011 at a total
$676 million (USD) rom platorms around the world.6
6Crowdfunding: $1.5B Raised, 1M Campaigns Funded In 2011; Figures Set To Double In 2012.Rip Empson. TechCrunch. May 08, 2012. http://techcrunch.com/2012/05/08/crowdunding-state-o-the-union/.
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7 Crowdfunding for the creative content industries in a Canadian Context
7How Double Fine Raised $3.3 million on Kickstarter and Changed Game Financing Forever. Dave Their, Forbes.com. March 14, 2012.http://www.orbes.com/sites/davidthier/2012/03/14/how-double-ne-raised-3-3-million-on-kickstarter-and-changed-game-nancing-orever/.
Record-breaking Donation-based crowdfundingcampaign: Double Fine Adventure (Kickstarter)
Type of production/project:Digital Media (game)
Funding Target: $400,000 (USD)Funds Raised:$3.3 million (USD)
The Company:Double Fine
Based in San Francisco, and founded in 2000 by industryveteran Tim Shafer, Double Fine is an award-winningindependent games development company with a strongtrack record on different games platforms includingXBOX and Playstation.
The Story: Double Fine set out to raise an ambitious targetof $400,000 (USD) for a point and click game and behind thescenes video. On March 13, 2012 when Double Fines Kick-starter campaign concluded, the company had raised sevenand a half times that amount, reaching $3.3 million (USD),more than enough to fund the development of their game.The campaign set a precedent for how independent gamesKIVVIVKM\PMQZXZWRMK\[_Q\PW]\MVOIOQVOX]JTQ[PMZ[
Analysis: Of all genres, games arguably have the most activeKWUU]VQ\QM[IVL[]JKWUU]VQ\QM[IZW]VL[XMKQKproperties such as the phenomenally successful and persis-tent World of Warcraft. Games are interactiveand attract users who want to be members of a community
and participate in it. Double Fine recognized this communitydesire and engaged potential investors by offering themexclusive access to development forums and to brainstormwith developers. Double Fines success proves that avidgamers will pay for this privilege.
For the independent games producer, Kickstarter providesthe promise of creative freedom. Games developers thatmeet their funding targets with consumer support canmove forward without the compromise that often comeswhen working with publishers. According to Double Fine,crowdfunding democratizes the process giving developersthe freedom to experiment, take risks, and design withoutanyone else compromising their vision. Its the kind ofKZMI\QMT]]Za\PI\UW[\UIRWZM[\IJTQ[PML[\]LQW[[QUXTacant afford. At least, not until now.7
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8 Crowdfunding for the creative content industries in a Canadian Context
7MPMTOWNWMNMMTMOPWMaTSMP-Ma?WUIV3QKS[\IZ\MZ0W\,WK[+]ZI\ML8IOM
Type of production/project:Documentary (Film/TV)Funding Target: $50,000 (USD)Funds Raised:$56,525 (USD)The Company: /WTLMV6]OOM\8ZWL]K\QWV[
Toronto-based Golden Nugget Productions is a relatively newKWUXIVa_Q\PW]\IVM[\IJTQ[PMLZMX]\I\QWVIUWVOUIRWZJZWILKI[\MZ[1\Q[LQNK]T\NWZVM_MV\ZIV\[\WN]VL\PMQZ
LWK]UMV\IZQM[][QVO\PMKWVMV\QWVITUM\PWLWNVIVKQVOthrough broadcasting development funding or a broadcastinglicence. They often pay to pitch before licensing executives atforums such as Hot Docs or the Banff World Media Festival.
The Story: The pitch forum at HotDocs in 2011 is the route GoldenNuggets director, Tiffany Hsiung, tookto crowdfunding in order to raisefunding for Within Every Woman(www.wewoman.org). Hot DocsForum and Market Director, ElizabethRadshaw recommended Within Every
Woman for the HotDocs curated pageon Kickstarter. Initially, Hsiungsproducer wanted to target $100,000but the company was late to takeadvantage of their 60-day fundingwindow; they did not begin to promotethe Kickstarter campaign until 30days after the campaign had been kicked-off, which is halfway through the allotted 60-day funding period imposed byKickstarter. As such, given that the producers effectively hadonly 30 days to raise their funds, they decided that a goal of$50,000 was more realistic. The $56,000 (USD) raised fallswithin the range of development funds typically offered by
broadcasters and did kick-start Within Every Woman butQ\Q[VW\MVW]OP\WVIVKM\PMN]TTXZWL]K\QWVWN\PMLWK]UMV-tary. Hsiung estimates she requires another $200,000 and isseeking a broadcasting license as well as private investment,but does not plan on starting another crowdfunding campaignNWZ\PQ[XZWRMK\
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9 Crowdfunding for the creative content industries in a Canadian Context
2.1.2 The Lending Model
t li M i i imi i
i i, iivi m j
m i xi i i b i. In the
context o crowdunding, the lending model can take a number o
orms, shown below:
s!TRADITIONALLENDINGAGREEMENT standard terms are used
and there is an expectation or a monetary reimbursement
in the orm o interest. In this case, the loans may or may not
be guaranteed, depending on the crowdunding platorm
being used.
s!FORGIVABLELOAN contributions are reimbursed to the lenderonly i one o two possible conditions is met: a) i and when the
project begins to generate revenue or b) i and when the project
begins to make a prot.
s0RESALES the nished product is promised in return or the
contributors pledge. In the case o a pre-sale lending model,
the contribution amounts are determined according to an
assessment o the air market value o the product. In addition,
larger contribution amounts are typically accompanied by a
promise o more copies o the product equal to the value o the
amount o the contribution.
According to Massolution/Crowdsourcing LLC, Lending Model
campaigns tend to reach completion in hal the time it takes or
Investment Model campaigns.8 The Lending Model is similar to
micro-nancing schemes common in developing countries or
micro-lending platorms, such as Kiva, which allow individuals
to solicit and provide micro-loans to support individuals or
communities in developing countries or support small businesses.
These micro-lending platorms have helped pioneer the concept
o individual investment through micro-lending.
Lending-based crowdunding also accounted or $522 million
(USD) o the crowdunding monies raised globally in 2011, making
it the second-largest orm o crowdunding in terms o the amount
o money raised.9
8 Crowdfunding Industry Report: Market Trends Composition and Crowdfunding Platforms. Crowdsourcing.org. May 2012. P. 22.9 Crowdfunding: $1.5B Raised, 1M Campaigns Funded In 2011; Figures Set To Double In 2012. Rip Empson. TechCrunch. May 08, 2012. http://techcrunch.com/2012/05/08/crowdunding-state-o-the-union/.
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10 Crowdfunding for the creative content industries in a Canadian Context
A successful DIY lending-based crowdfunding campaign:
My Million Dollar Movie (DIY Campaign)
Type of production/project:Feature Length MovieFunding Target: $1 millionFunds Raised:$1.9 million
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11 Crowdfunding for the creative content industries in a Canadian Context
A record-breaking pre-sale crowdfunding campaign:
8MJJTM?I\KP3QKS[\IZ\MZ
Type of production/project: ,QOQ\IT5MLQIPIZL_IZM?I\KPFunding Target: $100,000 (USD)Funds Raised:$10,266,845 (USD)The Company: 8MJJTM
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12 Crowdfunding for the creative content industries in a Canadian Context
2.1.3 The Investment Modelt IvmMmbqi
ivm, iivi iv qi i i
i fi. There are two standard sub-categories
o Investment Model crowdunding:
Securities Investment Model
shares in the company are bought by investors. In this model,
contributors would be buying ownership in the parent company
or rights in a project.
Prot or Revenue-sharing Model
a share o the revenue or prots o the project is earned by
investors, as opposed to shares in the underlying company. Thisis also known as a Collective Investment Scheme.
Typically under a crowdunding investment scheme, the investment
would be passive rather than active. In other words, investors buy
ownership or revenue or prot shares but do not have an active
role in creative or management decision-making.
The investment model is currently not legal in Canada due to
current securities laws. However, The US recently passed the
Jumpstart Our Business Start-ups (JOBS) Act, which opens
the door to investment-based crowdunding. Although the act
outlines some initial regulations related to the new law, the ull
extent o the new regulations are currently being developed by the
National Securities Regulator and will not be known until the new
law comes into eect in early 2013.
There are currently a number o platorms based in the US
and other countries that oer investment-based crowdunding
models, including SellABand.com, Appbackr, EquityCircle,
SEEDUPS and Motaavi.
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13 Crowdfunding for the creative content industries in a Canadian Context
Investment Model Case Study: The Age of Stupid
Type of production/project:DocumentaryFunding Target: N/AFunds Raised:730,000The Company:Spanner Films
The Story: .IVVa)ZU[\ZWVOIVL=3JI[ML;XIVVMZTU[
LMKQLML\WKZW_LN]VL
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21 Crowdfunding for the creative content industries in a Canadian Context
ci
b
m
mm
m
i fmmk - j,
vii i j m mm
iv i
m.56 In particular, documentary lms seem to be one o
the most common types o projects eatured on crowdunding
platorms.57 It is harder or television producers to use crowdunding
because the cost o producing a traditional broadcast television
production is too high or a typical crowdunding campaign.58
However, web series are very well suited to a crowdunding model
because their production cost is signicantly less than a traditional
broadcast production.59 Similarly, k
i m i xm i iiv
ii mi j, because o the project-based businessstructure o IDM content developers (much like that o smaller,
independent production companies).
ci i i iv i
jivi. Projects
aimed at niche markets are typically much harder to und through
traditional unding options. Crowdunding provides creators o
these projects with a way to access unding by directly appealing
to the audiences that would consume the product or support. In
many ways, crowdunding provides an opportunity or projects to
be created that might not otherwise have been possible.
Stakeholders seemed to show the most reluctance when
considering selling equity or giving up intellectual property rights or
their projects. M i x
i i v iv i
qi.This reluctance is most oten related to equity structures
that would complicate or even prevent additional nancing and
that could require such substantial legal maintenance to make the
project nancially unsustainable.
56Mobcaster Crowdfunds Its First TV Season. Anthony Ha. TechCrunch. March 09, 2012. http://techcrunch.com/2012/03/09/mobcaster-crowdunds-the-weatherman/. Stakeholder interviews. Conducted by Nordicity. May-June, 2012.
57 Stakeholder interviews; conducted by Nordicity; May-June 2012.58Time to Join the Crowdsourcing Trend?. Playback. Spring 2012. P. 13-117.59Time to Join the Crowdsourcing Trend?. Playback. Spring 2012. P. 13-117.
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22 Crowdfunding for the creative content industries in a Canadian Context
IngredIents or a successul
crowdundIng caMpaIgn
stakh an cnay ach intif
a nm ky chaactitic that inca
th chanc a cnin camain in
cc, th inc:
CoMpellINgproJeCTThe most successul projects are
ones that manage to capture an audiences emotions and
get people excited. People need to care about and believe
in the project in order to be motivated to contribute to it.60
s!NEISTINGPASSIONATEAUDIENCE. Projects that appeal
to already existing, highly supportive and passionateaudiences (e.g. projects that deal with topics that have
strong grass roots ollowing) are ar more successul
because those audiences help support and promote the
campaign on behal o the project owner.61
s! STRONGEISTINGNETWORK. Successul crowdunding
campaigns typically start o being promoted in the
project owners network and spread rom there. A strong
existing social networking presence and network o
ollowers make it easier or creators and project owners
to leverage the power o the social networking side
o crowdunding.62
shi qi mi mi i v mi . Successul campaigns typically
result rom strong promotional eorts by the project owners
throughout the entire duration o the campaign. In
addition, the quality o promotional materials, such as a
promotional video or trailer, need to be o good quality.
The promotional materials need to inspire condence
among potential contributors that the nal product will be
worth their contribution.63
sOOD AUDIENCEENGAGEMENT Part o the appea l in
crowdunding comes rom the audiences desire and ability
to participate in the development process. Campaigns that
provide their audiences with regular updates on the projects
progress or other promotional and unding activities related
to the project will tend to be more successul.64
s#OMPELLINGCONTRIBUTORINCENTIVESTypically, tangible
goods (i.e. branded merchandise) or pre-sale copies o
a product are the most compelling incentives as well as
advanced access to the product. Unique experiences
related to the product and/or its creative team are also
good incentives.65
s! REALISTICFUNDINGGOALProjects that succeed in
reaching their unding goal tend have a goal that makes
sense rom the perspective o potential contributors. An
amount that appears too high can make it seem like the
creator either does not have a good understanding o the
cost o producing his/her project or that they are simplygreedy. A unding goal that seems too small similarly
makes it seem like the producer does not know the real
cost o producing their project and could create doubt in
a contributors mind about whether or not the project will
actually get made.66
s! CLEARLDElNED FUND ALLOCATION PLAN Projects
are more likely to be successul i the creator clearly
demonstrates why they need to raise the unds they
are asking or and how it will be used to urther their
project. Contributors need to eel condent that their
contributions will be well-used.67
60Whitepaper Presents Community Sourced Approach to Better CrowdFunding Campaigns, PRWeb, June 12, 2012,http://www.prweb.com/releases/2012/6/prweb9596475.htm; Stakeholder interviews. Conducted by Nordicity. May-June, 2012.
61RocketHub founder Brian Meece on crowd funding, Russ Martin, Canada.com, June 12, 2012,http://blogs.canada.com/2012/06/12/rockethub-ounder-brian-meece-on-crowd-unding/
62RocketHub founder Brian Meece on crowd funding, Russ Martin, Canada.com, June 12, 2012, http://blogs.canada.com/2012/06/12/rockethub-ounder-brian-meece-on-crowd-unding/ ; Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
637 Reasons Why Crowdfunding Projects Fail. Justin Kownacki. CrowdFundingHelp., January, 2012. http://crowdundinghelp.com/7-reasons-why-crowdunding-projects-ail/; Some Thoughts on Kickstarter. Celcius Game Studios. May 2012. http://www.celsiusgs.com/blog/?p=446#more-446; Stakeholder interviews.Conducted by Nordicity. MayJune, 2012.
64 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.65 http://blogs.canada.com/2012/06/12/rockethub-ounder-brian-meece-on-crowd-unding/ ; Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.66 http://crowdundinghelp.com/7-reasons-why-crowdunding-projects-ail/ ; Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.67 http://www.celsiusgs.com/blog/?p=446#more-446
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23 Crowdfunding for the creative content industries in a Canadian Context
3.2 Bf cci mi vi i mb
bf, b i fi i, including:
s!RAISEDPROlLE A successul crowdunding campaign or
a compelling project can help raise a producers prole and
provide a boost to their reputation.
s!PROVENMARKETCrowdunding is a great way or creators to
develop proo that the concept or their project has an existing
audience and market. In the case o an unsuccessul campaign,
it provides good market eedback that a certain concept is not
viable. Beyond simply reaching the unding goal, which provides
one level o proo, analytics regarding the number o backers,contributors or pledges are invaluable in terms o estimating the
size o the projects audience. I the campaign ails to attract
attention, then creators have solid market eedback that the
project may not have an audience in its current incarnation. This
is a very important run-o benet o crowdunding as market
research is oten weak or non-existent or dicult to amass or
creative content producers.
s!UDIENCEBUILDING The unding campaign itsel and all the
promotional eorts around the campaign have the add-on benet
o promoting the project itsel among existing and potentially
new audiences. In this way, a crowdunding campaign can
help a producer reach existing audiences, as well as build and
grow new audiences or their project beore they even begin to
produce it. Producers are also excited by the direct distribution
potential behind crowdunding platorms, such as with pre-
sales-based models.
s!UDIENCEENGAGEMENT Stakeholders agree that one o the
most unique add-on benets o crowdunding is its role as a
orum where content creators can engage with their audiences
and audiences can engage with meaningul content. Audiences
are increasingly interested in the creation o the content they
consume and producers are increasingly looking or new ways
to engage with their audiences more deeply.68 Crowdunding
acilitates just that. Audiences can both contribute nancially to
a project they care about, and engage in the production process
by ollowing progress through updates rom the creators and
sharing eedback via comment eatures on the projects
crowdunding page.
s!UDIENCEEEDBACKOne o the ollow-on eects o being able
to engage with audiences through crowdunding is that content
creators can use crowdunding websites to gather important
creative eedback rom their audiences as the project develops.
For example, beyond just the proo o concept eedback that
comes rom completing a successul campaign, project owners
can gather more specic creative eedback rom contributors
or other visitors about specic aspects o the project through a
comment eature on their campaign page, which is available on
most crowdunding platorms. In addition, oering pre-release
access to content and/or the opportunity to beta-test content
as part o a unding incentive package provides creators with
instant access to good market testing eedback data on the
project beyond just knowing whether or not there is a large
enough audience that supports the concept or idea.69 It provides
an opportunity or audiences to give more specic creative
eedback on various aspects o the project.
s)NTERNATIONALSUPPORTFOR#ANADIANPROJECTSCrowdun
provides a unique opportunity to attract audiences and investors
rom around the world to support Canadian productions, thereby
expanding the market reach o Canadian-produced content. This
is a very important potential benet o increased crowdunding
eorts among Canadian screen-based content creators.70
68Time to Join the Crowdsourcing Trend?. Playback. Spring 2012. P. 13117.69 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.70 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
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24 Crowdfunding for the creative content industries in a Canadian Context
3.3 rik Bi cci m i mb i ik
bi mi i i i mi
i m among screen-based content creators in Canada.
The risks and barriers identied by stakeholders include:
s!WARENESS Crowdunding is just beginning to emerge as a
serious industry in Canada and as such, the majority o content
creators do not have a ully developed understanding o the
crowdunding environment or how they could use it.71 The
general public is even less aware o crowdunding and do not
necessarily know that they can support creative projects they
care about in this way, let alone where they can go to do so.
s!$AMAGED2EPUTATIONI a content creator starts a campaign
and does not meet his/her unding goal or receives very little
support, this is a very public ailure. There is a certain measure
o apprehension among producers about what impact this type
o public ailure could have on their reputation. Producers are
also concerned about what could happen to their reputation in
the event that they successully gather a large amount o public
support or a project but are not able to complete it or some
reason. Similarly, producers are concerned about not meeting
the expectations o their supporters once the project is complete.
s#OST AND RETURN ON INVESTMENT Many producers are
apprehensive about the costs in resources and eort thatare needed in order to manage a successul crowdunding
campaign. First, there are hard costs such as the cost o creating
promotional material (e.g. a promo video) and those associated
with producing and shipping any tangible goods incentives.
Second, there is the time and eort cost associated with
creating and promoting the campaign as well as the ongoing
eort needed to engage and update contributors on the projects
progress both during and ater the campaign. On the fip side is
the ever-present risk that the campaign will be unsuccessul and
that any time, eort or other resources invested in the campaign
would have no return.
s3KILLSGAPMany producers do not have the necessary skills
to carry out the various activities related to the campaign (e.g.
promotion, audience engagement, ulllment management
related to honouring incentives) and would need to engage
additional internal human resources or pay or external services
just to be able to manage the campaign.
s)0PROTECTIONMany Interactive Digital Media (IDM) developers
and content producers are reluctant to publicly announce the
details o a project beore production starts due to concerns
about idea thet and protecting their IP rom plagiarism.72
s$ONOREHAUSTIONThere is always the risk that i a content
creator reaches out to the same network multiple times, that
network will eventually cease to supply the necessary support.
When producers are leveraging their existing online networks
to promote their crowdunding campaigns, there is a risk that
the network will cease to be supportive i they are approached
too many times. In addition, as crowdunding grows and thenumber o platorms and projects to choose rom increases,
it will become increasingly dicult or projects to distinguish
themselves rom the masses and attract the necessary support.
s0UBLICFEAROFABUSE Amongst the investors and venture
capitalists that we interviewed, there was a shared concern
that without a regulatory ramework, the likelihood o a scam or
abuse o unds was quite high. This valid concern could become
a barrier to public engagement and unding i the regulatory
ramework in Canada does not quickly address the addition o
crowdunding nancing in a non-accredited investor context.
71 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.72 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
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25 Crowdfunding for the creative content industries in a Canadian Context
4. IMpleMentatIon consIderatIonsor the canadIan tV and dIgItal MedIaIndustrIes
There are a number o structural considerations to take into
account when thinking o how crowdunding applies to screen-
based content creators in Canada. Due to the emergent nature o
crowdunding, particularly in the Canadian market, it is dicult to
ully understand what implications there might be in the broader
legal, regulatory and unding ecosystem. That being said, there
are a ew potential implications that are commonly raised in
discussions on crowdunding in Canada.
crowdundIng platorMs: structure
There are i m,
based on what types o projects they eature:
s3PECIALIZEDPLATFORMSCertain crowdunding platorms
cater to specic industries such as music recording
(SellABand), video games (Gambitious), or independent
television (Mobcaster).
s!CTIVITSPECIlCPLATFORMS Other platorms cater
to a variety o industries but ocus on certain types o
projects (e.g. creative projects, technology or hardware
development). For example, Kickstarter only eaturescreative projects, though they can t in any number o
categories (e.g. Music, Art, Film, Video Games).
sENERAL0URPOSEPLATFORMSThese platorms have no
restrictions on what they will eature. These platorms
eature campaigns that range rom individuals soliciting
support or a medical procedure or a wedding to artists
seeking to und creative projects and technology
start-ups seeking to und the development o a new
innovative product.
a i i j i
d-i-y m i m j bi. This requires a great deal more
administrative eort rom the project creator, but allows
them to engage directly with their supporters (rather
than going through a third-party platorm) and means
that 100% o the unds raised go to the creator without
having to pay a commission to the platorm operators.
There are i i i m
i i :
s4HEMAJORITOFPLATFORMSUSEATIMEDFUNDINGROUND
typically ranging rom 30-90 days.
st a-i-m-i m. Some platorms award
any unds raised during the unding period to the project
owner (e.g. Indiegogo).
st a--ni m. Many platorms only
award unds to the project owner i the original
unding goal is either met or surpassed within the pre-determined unding period (e.g. Kickstarter). In the
event that the project does not meet its unding goal,
contributors are either reimbursed or their pledges
are never ullled (i.e. credit cards or other payment
accounts are never charged).
c i m i
mmii-b bi m where the
platorm receives somewhere in the range o 2%-5% o
the total amount o unds raised during the campaign
rom the project owner. However, a ew platorms have
adopted a xed-ee approach where a project creator
pays a pre-determined xed ee to the platorm operatorin exchange or the service o housing their campaign on
that platorms website.73
73 Crowdunding Industry Report: Market Trends Composition and Crowdunding Platorms. Crowdsourcing.org. May 2012. P.23.
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26 Crowdfunding for the creative content industries in a Canadian Context
4.1 ci sii l piv ii
As discussed in sections 1.1.3 and 1.3.3,
ci ii i i i m
qi i j m i.
Under current laws, there are limited circumstances under which
private investors can buy securities in a company without that
company issuing an in-depth prospectus used in a traditional initial
public oering.74 There are some exemptions to the prospectus
requirement, but these vary across provinces/territories and are
typically limited to Friends and Family contributions. Nevertheless
there are two exemptions that do apply in all o the provinces
and territories: 1) Accredited investors those who have eithera net worth o more than $1 million or annual income o more
than $200,000 or 2) i an investment is a minimum o $150,000
or more.75 Current laws also prohibit public solicitation o equity
investments, which makes the social networking aspect o the
crowdunding concept inherently illegal when equity is being sold.
t ci av t ai i
i - bbi mi i
v 13 vii ii ii
ii ii in a manner similar to how
the ederal securities legislation is currently being changed in the
US in the wake o the new JOBS ACT. In addition, the Canadian
Securities Administrators (the umbrella group or the countrys
13 provincial and territorial securities commissions) is also in the
process o a large-scale review o the prospectus requirement
exemptions with the intention o broadening them to potentially
leave room or crowdunding.76 And the Ontario Securities
Commission has ocially submitted a notice o review o the
exemptions in Ontario.77
I it were to ever become legal to sell securities via crowdunding, it
would come into direct competition with seed or angel investors.78
However, crowdunding would not compete directly with venture
capital nancing because traditional venture capitalists (VC) do
not typically invest in projects, they invest in companies and
most content creators are using crowdunding or individual
projects. Nor do traditional VCs typically invest in an initiative at
the concept stage, which is where the majority o creative projects
enter a crowdunding campaign. Furthermore, traditional VCs
do not typically make investments o less than $1 million, which
is signicantly higher than the average crowdunding goal or a
creative project (typically $20,000$50,000). For most VC rms
looking or higher returns, higher levels o investment are more
attractive. Investments that all under $1 million would typically getpicked up by the boutique VC community or angel investment
network.79 On the fip side, VCs might benet rom a crowdunding
campaign because it can yield useul market analytics that could
help validate the case or investment at a later stage.80
Beyond the clear legal restrictions associated with equity-based
crowdunding, there are concerns among stakeholders about
how changes to securities laws could aect the publics protection
against investment raud. There is an inherent risk o raud either
originating with project owners or with the platorms and services
that host campaigns. However, proponents o the model claim that
crowdunding actually encourages greater transparency because
o the larger role that trust plays in infuencing an investors
decision, thereby maintaining a relatively low risk o raud. 81 The
JOBS ACT in the US has a number o provisions to help mitigate
the increased risk o investor raud, as outlined in section 1.3.1.
There is also the risk o unintentional raud which can happen
when a successully unded project never gets produced or some
reason or when the nal product delivered is not quite what was
originally envisioned and advertised.82 Furthermore, it is common
that a creative project never generates revenue or prot making
it risky to promise revenue or prot share return on investment.83
74
A case for crowdfunding. Christine Dobby. Financial Post. April 18, 2012. http://business.nancialpost.com/2012/04/18/a-case-or-crowdunding/.75A case for crowdfunding. Christine Dobby. Financial Post. April 18, 2012. http://business.nancialpost.com/2012/04/18/a-case-or-crowdunding/.76A case for crowdfunding. Christine Dobby. Financial Post. April 18, 2012. http://business.nancialpost.com/2012/04/18/a-case-or-crowdunding/.77 Stakeholder interviews. Conducted by Nordicity. May-June, 2012.78Venture capital rejection leads to funding record. Wallace Immen. The Globe and Mail. April 18, 2012. http://www.theglobeandmail.com/report-on-business/small-
business/sb-money/business-unding/venture-capital-rejection-leads-to-unding-record/article2405552/.79 Stakeholder interviews. Conducted by Nordicity. May-June, 2012.80Venture capital rejection leads to funding record. Wallace Immen. The Globe and Mail. April 18, 2012. http://www.theglobeandmail.com/report-on-business/small-
business/sb-money/business-unding/venture-capital-rejection-leads-to-unding-record/article2405552/.81The Crowdfunding Revolution Will Democratize Venture Investing. Kevin Laughton. Hungton Post. December 08, 2010. http://www.hungtonpost.com/kevin-lawton/
democratizing-venture-cap_b_792498.html.82 US: State acts to boost start-ups through Funding Portals. Chriss Nuttall. Financial Times. July 12, 2012. http://www.t.com/intl/cms/s/0/79363204-a5-11e1-b737-
00144eabdc0.html#axzz1ypg3rmO5.83 Stakeholder interviews. Conducted by Nordicity. May-June, 2012.
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27 Crowdfunding for the creative content industries in a Canadian Context
legal consIderatIons or canadIans
usIng KIcKstarter
whi Kicktat i nt acci t Canaian,many Canaian c hav ht camain
thi jct n th a atm. Hv,
th a a nm cniatin t tak int
accnt c kin t acc Kicktat:
Kickstarter is only available to project owners who comply
with the ollowing eligibility requirements:
s !REAPERMANENT53RESIDENTWITHA3OCIAL3ECURIT
Number
s (AVEA53STATEISSUEDIDENTIlCATIONEGDRIVERS
license)
s (AVEA53BANKACCOUNTANDAMAJOR53CREDITCARD
or debit card
s (AVEA53ADDRESS
The eligibility requirements listed above exist primarily
in order to comply with the requirements o Amazon
Payments, Kickstarters payment processing partner.84
In order to host a campaign on the Kickstarter website,Canadian content creators need to engage a third-party
based in the USbe it a riend or amily member or a
partner company. Engaging a third-party partner in this
way comes with a number o implications:
s !THIRDPARTMANOTOWNTHERIGHTSTOPROMOTEAND
distribute a product on behal o the creator, and
thereore not have the legal right to do so.
s 4HEREISAMBIGUITABOUTOWNERSHIPOFTHEPROJECTAND
the legal relationship between the platorm, the creator
and the third-party partner.
Funds raised through Kickstarter would have to betranserred rom a partners oreign (US) bank account
to the original project owners Canadian bank account,
which has a number o legal implications regarding duties
and income taxes when money crosses borders in that
way.85 For example, revenues gained rom a reward-
based and/or pre-sale-based crowdunding campaign
could be considered revenue rom the sale o goods
and would be subject to income tax, i the money is not
properly reported as such when it is passed rom the US
partner to the Canadian project owner this could have
legal implications.86
84 Kickstarter announced in early July, via Twitter, that project owners based in theUK would be eligible to host projects on the platorm beginning in Fall o 2012.
85 Stakeholder interviews. Conducted by Nordicity. May-June, 2012.86 Stakeholder interviews. Conducted by Nordicity. May-June, 2012.
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28 Crowdfunding for the creative content industries in a Canadian Context
4.2 t civ c i emAs a relatively new phenomenon in Canada, there remains a great
deal o ambiguity about crowdunding and what the broader
nancial implications might be or producers who wish to access
both crowdunding and other more traditional sources o unding
or their projects.87 Many o the stakeholders in the unding
ecosystem are currently either reviewing the crowdunding
question or using a wait and see or case-by-case approach.
However, in the absence o clear positions and guidelines to
ollow, producers who are already accessing unds through
crowdunding campaigns do not know how to report these unds
in their unding or tax credit certication applications. As such,
they could be at risk o penalties should they be audited at a later
date and it is ound that crowdunding dollars were not reported in
the appropriate manner.
The is sues rela ti ng to how crowdunding impacts conten t
creators access to other orms o unding is only applicable to
producers who would be accessing both traditional and non-
traditional sources o unding. However, as section 2.1 discusses,
those projects and producers that are best suited to crowdunding
may be the very projects that cannot access traditional unding
sources to begin with.
That being said, stakeholders did identiy key considerations
or potential implications that should be noted in cases where a
producer might want to access both crowdunding and traditionalunding sources.
4.2.1 Certied Independent Production Funds andother unding grants
Currently, there are no clear restrictions on the use o crowdunding
in terms o how it impacts a producers eligibility or unding
grants.88 Most unding bodies currently allow producers to engage
in crowdunding without it impacting their eligibility or unding.
However, many are also waiting to encounter an application that
cites crowdunding in order to make a decision or how it will be
treated.89
87Time to Join the Crowdsourcing Trend?. Playback. Spring 2012. P. 13117.88Time to Join the Crowdsourcing Trend?. Playback. Spring 2012. P. 13117.89 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
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29 Crowdfunding for the creative content industries in a Canadian Context
4.2.2 Provincial and Federal Tax Creditstmi mbii
i mi iibii
vii x i.
In act, c rv a i i
vi xmii qii
i v b
i x i.90 In the meantime, provincial and
ederal tax credit administrators are waiting or the decision beore
they take action to change their own certication guidelines. It is
unclear whether or not tax credit administrators have received
applications rom producers who have accessed crowdunding
as they may have accounted or that revenue in any number oways on their applications (e.g. as assistance, as a producer or
distributor arm contribution, as revenues rom sales, etc).91
The key considerations regarding crowdunding when it comes to
tax credits include:
s!SSISTANCE)FTHE#2!CONCLUDESTHATCROWDFUNDINGDOLLARS
raised via a Donation Model campaign should be reported as
assistance (much like receiving unding through a und l ike the Bell
Fund), that amount would become deductible rom the projects
eligible expenses.92 In addition, the CRA could conclude that
unds raised via a Lending Model crowdunding campaign which
takes the orm o a orgivable loan would also be considered
assistance or the purposes o tax credit calculations.
s2EVENUESFROMTHEECHANGEOFGOODSATAFAIRMARKETVALUE
The CRA could conclude that under a Donation Model or pre-
sale-based Lending Model, the exchange o incentives or pre-
sold copies o a product alls under the provision o exchange
o goods at air market value. In this case there would be no
implications regarding either eligibility or calculations or tax
credits. Nor would there be any legal issues under securities laws
because this would be considered a legitimate exploitation o the
producers rights or money (revenue). However, this particular
position could become complicated due to issues surrounding
how the air market value o certain intangible incentives (e.g.
acknowledgement in the credits, a dinner with the creative
team, a character named ater the contributor) is ascertained.93
Intangible incentives are inherently dicult to valuate. Moreover,
there might be some grey areas about the true air market value
o goods in the crowdunding world, which could dier rom
the value o the same goods in a retail, e-commerce or digital
distribution context.94
s,OANS A Lending Model campaign that ollows a traditional
lending agreement would likely be counted in the same way
as traditional loans, which would have no specic implications
when it comes to calculating eligible expenses or the purposes
o tax credits.95
s%UITCROWDFUNDINGAccording to tax credit administrators,
an Investment Model campaign would likely automatically
disqualiy a producer or project rom access to tax credits. There
are very strict regulations under the tax credit guidelines about
what entities are allowed to hold interest in a production.96
s0RODUCERORDISTRIBUTORCONTRIBUTIONI a production com
is structured in such a way that there is a parent company and
then a single production corporation or a specic project,
then producers could conceivably collect crowdunding dollarson behal o the parent company and count it as a producer
contribution rom that parent entity. Similarly, or companies that
have set up a distribution arm, the crowdunding campaign could
be done under the distribution arm o the company and any
monies raised would be counted as a distributors contribution.
I the CRA decides to sanction this way o accounting or
crowdunding dollars then it would not run counter to any tax
credit regulations and would be considered a legitimate way o
collecting and reporting crowdunding dollars.97
90 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.91 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.92 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.93 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.94 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.95 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.96 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.97 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
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30 Crowdfunding for the creative content industries in a Canadian Context
4.2.3 Broadcast and Distribution PartnersB iib v k fm
i mi i ii
i i. For the most part, though
broadcasters are cautiously observing the developments, they
generally agree that the money raised through crowdunding
is legitimate and do not currently have any reason to reject
a production on the basis that it is not a legitimate source o
unding. However, one consideration that broadcasters do take
into account is whether crowdunding would impact the ability
to access any necessary additional unding or the production,
thereby putting the project in jeopardy.
That being said, there are a number o other considerations thatmight have the potential to become barriers or producers utilizing
crowdunding when it comes time to engage broadcast and
distribution partners.
s/WNERSHIP i. In an Investment Model, where
contributors receive equity in the company or rights to the
product in exchange or their contribution, a producer would
likely jeopardize his/her ability to establish a licensing agreement
with a broadcaster. Broadcaster agreements typically come with
very specic and very strict limitations on who can own rights
to the product.98 They typically do not allow any private third
party investment.
sOURNALISTIC iii. One o the
major concerns rom the perspective o broadcasters is the
risk that crowdunding could pose to journalistic standards and
policies regarding editorial control.99Any campaign that has the
appearance o giving up or sharing a creators artistic decision-
making power with contributors could make broadcasters
nervous. Any perception that the content o a project was in
any way infuenced by contributors (e.g. advocacy through the
sponsorship o ideas) or that a contributor has a specic interest
in the content could be viewed very negatively by broadcasters
and those projects are likely to nd it dicult to engage a
broadcast partner.s%PLOITATIONOFRIGHTSProducers who use a pre-sale-based
Lending Model could encounter diculties securing broadcast
license agreements because the broadcaster could perceive
this as an exploitation o rights that diminishes the value o the
rights they would be purchasing.100 Broadcasters might eel that
the market or a production has already been tapped through
the pre-sale unding eorts. Similarly, it might be dicult to
secure a distributor advance i the producer is already engaging
in direct distribution via the pre-sale model.101 However, under
a Donation Model broadcasters and distributors may actually
value a project unded through crowdunding. On the one hand,
a successul crowdunding campaign provides the distribution
or broadcast partner with evidence that there is an existing
audience or the production. On the other hand, the production
will already have been promoted as part o the crowdunding
campaign which means that the broadcaster or distributor have
less work to do in promoting the production.
98 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.99 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
100 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.101 Stakeholder interviews. Conducted by Nordicity. MayJune, 2012.
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31 Crowdfunding for the creative content industries in a Canadian Context
5. suMMary and conclusIons
Crowdunding is an emerging alternative nancing vehicle that has
experienced a recent boom in Europe and North America, primarily
driven by recent multi-million dollar record-breaking successes
on platorms in the US. Indeed, crowdunding has become a
signicant way or people to und their ideas and projects across
a number o industries. In particular, it has become popular in art,
lm, music and interactive digital media.
In the wake o the increased media attention or high-prole
campaigns and recent changes to securities laws in the US to
accommodate crowdunding, this new nancing model has
become more visible in Canada as well. A number o Canadian-
based crowdunding platorms have emerged and discussion
has been abundant among regulatory and industry bodiesrom
the tech sector to the creative media sectorregarding how
crowdunding ts into Canadas current legal, regulatory and
unding environment.
There are three basic crowdunding models: (i) The Donation
Model when contributors oer a contributionoten in exchange
or a small rewardwith no expectation o repayment, nancial
gain or ownership; (ii) The Lending Model where contributors
expect a repayment o their contribution in some orm; and (iii)
The Investment Model where contributors purchase securities be
they equity or other. All three models have their advantages and
disadvantages and some are better suited to the creative content
industries than others.
Current securities regulations in Canada make it illegal or
companies to sell securities through crowdunding, meaning
that an Investment Model is not currently easible or Canadian
creative content creators. Furthermore, an Investment Model
is not well suited to the creative content industry because (i) it
would complicate the nancial structure o companies or lm/
TV producers and (ii) it does not t the project-based business
structure o interactive digital media and small independent
production companies. The Investment Model also carries many
risks when it comes to accessing unding or building relationships
with broadcast or distribution partners because o restrictionsaround third-party investment and third-party ownership in unding
guidelines and licensing agreements.
Lending Models are not burdened by the same restrictions when
it comes to a producers ability to access other types o unding.
However, they come with additional administrative eort to
contract and manage the lending relationship.
The Donation Model, with a clear exchange o goods in the orm
o incentives, or the pre-sale Lending Model are the two best
suited crowdunding models or content creators in Canada.
While there are still a number o outstanding questions on how a
Donation Model might aect producers ability to access existing
unding sources. These risks become less signiicant when
the model is accompanied by an incentive program because it
becomes an exchange o goods or money in a dened market.
In addition, a pre-sale Lending Model is a simple exploitation o
project rights and comes with the least amount o risk, barring the
possibility that it might impact negotiations or broadcast licenses
or distributor advances.
There is certainly a demand or crowdunding among Canadian
creative content creators. However, the highest demand seems
to be among independent producers or interactive digital
media content developers working with smaller-scale budgets.
Crowdunding is typically most eective or raising smaller amounts
o money rom $5,000$50,000, although there are exceptions
to this general rule. In addition, emerging content creators who
cannot access or do not yet know how to navigate other unding
sources tend to be most interested in exploring this new unding
vehicle. Projects that deal with niche content or content with a
very specic grass-roots ollowing also tend to be more common
on crowdunding platorms. Crowdunding oers the additionaladvantage o direct audience building, audience engagement and
market testing with the ability to leverage social-media to access
those marketsall things that lend themselves well to projects
that need to access niche markets or want to harness the support
o a strong grass-roots movement.
That said, stakeholders in the creative content industries
whether content creators, legal experts or industry support
organizationsalso expressed a lack o understanding or how
crowdunding ts into the broader unding ecosystem in Canada.
There is a valid concern that guidelines surrounding tax credits
and other unding sources have not yet been established or unds
raised via crowdunding.Given the lack o clarity regarding legal, nancial and policy
issues related to crowdunding and the relative novelty o the
concept, producers exploring the potential opportunities oered
by crowdunding should adopt a philosophy o experimentation.
In addition they should proceed with caution, ensuring they are
aware o all the associated risks o engaging in this type nancing
activity beore launching a campaign.
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32 Crowdfunding for the creative content industries in a Canadian Context
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c thht th
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Htdc vi aitina
incntiv in-kin t th j
cntit
sina gna p (..
tchny, am, mic,
tai vic, ihin,
htahy, hitaity,
, in, fm, at an
cmmnity)
ga dnatin M
(a-a)
A--Nthin nin
5 tta nin amnt
ina Aitina
3- paypa
a ny ai i a
jct i cc
Cntit can t-t
th a an mak an
annym natin
Minimm cntitin v
Iavi gna p ga Ctmiza $ mnth a
yay citin
$00 t-
A ccin, an
cnin ta
tin. Ctm can h
cnin camain n
thi n it cat
a -it it.
Acct n via a maj
cit ca an INTerAC
ict aymnt nin.
sKa Cativ jct
(.. in, mic, fm,
ihin, , ahin)
ga Hyi lnin M
(-a) an
Invtmnt M
(mtina iht)
A--nthin
nin
din naiin m
sKa cha jct
n a 5 hich i
ai t ct a
an tn icn
din ititin m
sKa cha jct
n a 10% n th
in ic
vic
Aitina 3%Cit/dit
ca tanactin
ony at jct
ct that can n
d a ititin at
u a mic-icnin
(ahicay y city) an
-a m
Ha an aitina dititi
Mat h cat
can icit mtina
m ack t makt th
ct in thi icn aa
at a mtttn t
a inivia t iv t
t a jct an cct a n afiat h
th camain
pjct n can a t
vita tnt an ai
y in th xitin
that thy n
H xc n (v
iina nin a) nti
th jct n iv
th cmt jct
TAble 2 CrowduNdINg plATorMs IN CANAdA: sAMple lIsT
appendIX acanadIan crowdundIng platorMs
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33 Crowdfunding for the creative content industries in a Canadian Context
patm c Jiictin nin Man stct
tct Aitinaat
Cvnt Cvnt i cnty in tath m an th i n avaia inmatin at th tct th at
Haict gna p Nt cif dnatin M
(a-a)
A--Nthin nin
7 tta n ai
jct that ith
ach xc thi
nin a
Aitina paypa
tanactin
n/a
nwav gna p, c
n Init, Mti an
it Natin jct
an ca
ony n t
Canaian
jct initia-
tiv
dnatin M
(a-a)
pjct civ any ana n ai, itht
tictin
nav cct 4
n ai i a jct
ach it iina nin
a an 6i th jct
nt ach it a
Aitina 4
tanactin
wi ny at fn j
nt cmani (.. i nt
t naiin n
atina ct)
nchan Chaita anizatin an
cia chan jct
ony avaia
t Canaian
jct
dnatin m
N incntiv,
natin
pjct civ any
an a n ai,
itht tictin
sma Chan n
cha a 10% t
jct n n any
n ai
o th a vic
avi, jct matt
xt h vi at
jct ith avic an
C nin a n a a
jct ach it nin
Minimm natin $
pjct n hav t
chaita anizatin
aif n
pim
Vnt
eqity invtmnt
hih tch tat-
Nt cif Invtmnt M Nt cif dataa accit inv
bin qity-a
cnin t a ntk
accit invt
AtMakt-
Canaa
Cativ an atitic jctony avaia
t Canaian
jct
initiativ
dnatin M
(a-a)
A--Nthin
nin
8.5cmmiin n n
ai i a camain i
cc (inc any
tanactin aymnt
cin )
Aitina $n-tim
fx ( acknchck)
pjct hav t a t
f in Canaa
Atit that i nt ach th
nin a in th att
tim t h achiv 25
m thi nin a a
ivn th tin t -anchthi camain
A jct n a jc
a ackn chck in an
t vnt a
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34 Crowdfunding for the creative content industries in a Canadian Context
patm c Jiictin nin Man stct
tct Aitinaat
Kivni Inmatin Kivni i nt cnty avaia n th Kivni it (a Jy 2012).
Iaci gna p,
tani ct
ga Hyi lnin M
(-a) an
Invtmnt M
(vn-hain)
A--Nthin
nin
$100 a fx ,
im t th jct
n i th jct
ach it a
15cmmiin n
a m a ct
ft ctin n
510%cmmiin
n th main m
qnt ctinn
d a an -cmmc
atm fnih ct
Inivia h - a
ct an th iht t a
vn n vy ctin
n th ct 10 ya
rvn ha amnt a
ntiat n a ca-y-ca
ai
u a it-a -m. by t $n
t aant thi itin in
in th ct nc it i
cmt
Iaci ha a ntk
cativ, a an i
vic vi that jc
cat can acc
Iaci tain nn-xc
ititin iht th
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c Mi
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