JH: Well put.
Obviously, at the starting phase, folks are more likely to be able to go through each potential project and decide if they want to invest. However, if it gets anywhere near as large as the stock market, how does a filmmaker stand out from the crowd? (Obviously, if he was already finished with his film, he could put up a trailer that would encourage investment, but many filmmakers need an initial investment to allow them to shoot the film in the first place.)
BG: Well, the site is about transparency – meaning that everything is an open book, and people can make decisions based upon a ‘what you see if what you get’, rather than just some gobbledygook or rows of financial data. Because the site gives users the ability to upload video clips and music clips and photos, they can give people a very clear idea of what they want to do. Even if a film-maker doesn’t have the money to shoot a trailer, he can always edit something together filmed from his video-enabled phone or a cheap video camera. If he can’t work out how to take a photo and put it on the site, and doesn’t have a friend or partner who can do that, well frankly people might wonder whether he is the right person to be investing in anyway.
JH: Of course. It all comes down to how professionally present yourself, which is a recurring theme here at MicroFilmmaker Magazine.
I noticed that you mentioned that folks who list on your site either need to hire a lawyer familiar with Media Moghul’s listing practices to list it for them or they can list it themselves. Of course, if they do it themselves, they do need to have a lawyer look over the contract. Obviously, the first question, would be about the cost of hiring one of your recommended lawyers. For a specific example, let’s say a filmmaker wants to make a film that he’s written himself, he currently owns exclusive rights, and is willing to sell 40% of his IP for a $100,000 budget. What would something like that cost to be set up by one of the recommended lawyers?
BG: We’ve found lawyers who will do the paperwork for a few hundred dollars!!! But it depends upon the specifics, and the territory. And in some areas some people may need to lodge or obtain certain paperwork from the government, and the government has certain fees for those things, and the lawyers would charge more for helping to sort that out. I know that sounds like a lot of hassle – but the legal headaches involved in a traditional investment are at least 20 times higher and far more complex, so the site is actually providing something that is staggeringly easy compared to the old methods. The paperwork is probably similar to what you’d have to complete to take out a very small loan from a bank. And in case anyone is wondering why the need for lawyers at all – simply to ensure that everyone knows that everything is 100% above-board, and that nobody gets ripped off, which in this day and age of internet scammers is a very high priority.
JH: Now, suppose the same filmmaker decides to follow the DIY procedures. He will still need a lawyer to look things over. Let’s say the filmmaker has a friend who’s a divorce lawyer. Is this something that’s cut-and-dried enough that any lawyer could look it over, even his friend who doesn’t specialize in entertainment law, or would it need to go to an entertainment lawyer? If it would need to go to an entertainment lawyer, what sort of cost would be associated for this type of service?
BG: As per the previous question, it depends from one situation to another. If the filmmaker is clued up enough to know exactly what rights he wants to sell, and how much he intends to give them away, and has the normal permissions from everyone else involved in making the film (actors, crew etc), then all he needs the lawyer for is to ‘witness’ his Identification documents and signature etc. So yes, his divorce lawyer friend could probably handle it. Although I’d probably recommend he goes to a lawyer who specializes in entertainment law, because its always good to get some advice and feedback from someone with experience.
JH: Now let's look at payment options. You mention in your guide to setting things up that all sellers will need to create a Paypal account, where the funds of folks buying IP shares will accumulate. If a seller doesn’t sell enough shares to raise the needed capital, he/she need only refund the entire amount to all investors. To my understanding, Paypal subtracts a percentage of any incoming funds like a tax to use their services. If this is so, even though the percentage is only 2.5% to 3%, this would easily add up on 5,000 shares of one’s IP at $10 a pop if a seller has to refund all the money that was originally paid to him. Is there some special allowance that you’ve worked out with Paypal that wouldn’t make this a costly mistake if a seller must refund shares?
BG: If a seller decides to refund a buyer, Pay Pal actually will refund their charges for the transaction, so no-one loses out.
