Crowdfunding Guide for Media Professionals
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Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA Creative Funding for Creative Media Crowdfunding Guide for Media Professionals In association with: Creative Funding for Creative Media January 2014 Future Media Lab. & European Crowdfunding Network CONTENTS Foreword V Crowdfunding: An Introduction 3 The Procedure The Legislation What’s in it for Media Companies? 5 Opportunities Financial Advantages Platform Advantages Publicity Opportunities Viability Expectancies Challenges & Risks The European Crowdfunding Market Getting Started 10 Case Studies 13 Lindsey Hoshaw: a crowdfunded freelance journalist De Correspondent: a European “Huffington Post” HOLO Magazine: magazine innovation MATTER: journalistic innovation On the Local Level 16 YouScribe Crumb Magazine MO* Magazine Gonzaï Magazine N4 Luks no.2 Poetry Bus 4: Issue 4 Appendix 19 List of Tools List of Crowdfunding Platforms Additional Resources 24 Introducing: EMMA and ECN 25 Contributors About the Future Media Lab. 26 III Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA FOREWORD A crowdfunding guide for media professionals The Future Media Lab. aims to help media professionals explore new opportunities to develop their business. Innovative ways of funding quality journalism and other media projects are one way to achieve the extra bit needed, as many examples across Europe proof already today. Therefore the Future Media Lab., in cooperation with the European Crowdfunding Network and the European Magazine Media Association, runs a series of highly interactive, inspirational and educative workshops that aim to bring participants up to speed on how to use crowdfunding within their own business context. Crowdfunding is a collective of cooperation, attention, and trust, by people who network and pool their money and other resources together, usually via the internet, in order to support efforts initiated by other people or organizations. It is not easy to introduce new ideas, products and services in today’s media industry: there is always a lack of funds and issues with market acceptance. Crowdfunding can help tackle this problem by enabling media professionals to raise funding and simultaneously receive feedback from the audience on the product features and the demand for it. This practical guide aims to provide an introduction to how crowdfunding works and how it can be applied within Media brands and also the media industry. The Crowdfunding Workshops offered journalists live a close and by the Future Media Lab. offer media representatives WORKSHOPS and journalists the opportunity to gather both practical trustful relationship with knowledge on the innerworkings of crowdfunding as well their audiences. This is as the experiences shared by people that have already gone Crowdfunding for the ideal starting point for through this process. MEDIA PROFESSIONALS crowdfunding. The Future Media Being tailor-made for Lab., in coorperation media professionals, Oliver Gajda Max von Abendroth with the European the Future Media Co-Founder & Chairman Executive Director Crowdfunding Network Lab.’s crowdfunding European Crowdfunding Network European Magazine Media Association and the European workshops are run Magazine Media Association, runs one-day workshops by crowdfunding experts who use case studies and on crowdfunding geared specifi cally towards media interactive sessions in order to share best practices. professionals. These workshops aim to provide They offer a great opportunity for learning more about www.europecrowdfunding.org www.magazinemedia.eu participants with the knowledge needed to start a how crowdfunding can be a viable option for media successful crowdfunding campaign. businesses. More information on the workshops available online: www.futuremedialab.info IV V Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA CROWDFUNDING An Introduction Crowdfunding is new, modern, innovating, and defi nitely a direct agreement between an investor and an entrepreneur, trending! It fi nds its origin in the 1990s, expanding quickly with the goal to help entrepreneurs to gather enough capital in the art, fi lm, literature and music to fulfi l their dream. Projects and industry. It has come into its own after businesses are fi nanced with small the world fi nancial crisis of 2008 with The global crowdfunding contributions from a large number of global funding levels rapidly growing market grew 81% in 2012, individuals. Why this rising popularity? and estimated to have reached some 2 to a total funding volume First of all, it is one of today’s most billion Euros in 2012. Crowdfunding can of more than 2 billion viable means of funding new ideas, be defi ned as a collective effort of many small business and job creation around individuals who network and pool their Euros. Europe. Secondly, crowdfunding is a resources to support efforts initiated by highly democratic tool that is posed to other people or organisations. It is based have a dynamic impact on community, on the idea of crowdsourcing: consumers decide the outcome start-up and consumer fi nance by allowing value creation on of a project which is still under construction. Crowdfunding is many levels, not just fi nancial. The Procedure There are three participants involved the full amount is collected before interest. in a crowdfunding procedure: project the deadline. Otherwise the individual 4. Equity-based: crowdfunders receive owners, funders and crowdfunding investors get their money back. equity or equity-like shares; the platforms. Projects searching for However, some donations and reward funder becomes ‘a shareholder’. funding are posted on an internet crowdfunding platforms also provide The crowdfunding platforms have platform, clearly communicating what the option to opt out of this threshold, an intermediating function. They are it is about, the total amount of funding in which case the raised money will be the link between project owners and necessary to realise the project, and the distributed no matter if the goal was consumers/investors via offering the deadline for collecting the money. The reached or not. projects on their websites, which goal is to convince individual people There are four general funding allows the interested audience to pick to invest in the project via the creation models: and choose which, they believe, have of a ‘pitch’: an attractive introduction 1. Donation-based: crowd funders potential and are trustworthy. The to the project (usually including a donate money to campaign platforms have three ways to gather their video). During the crowdfunding owners and do not expect to revenues: via payments for publishing campaign, project owners make use of receive a tangible benefi t from the projects on the website, via receiving a social networks to convince potential transaction. percentage on the total amount of the investors. Individuals can choose 2. Reward-based: investors get a non- collected funding or via a percentage on independently which project they like fi nancial return (but the perceived each investment. Sometimes additional and the amount of money they want value of the return is really professional services are offered to spend on it, directly via the online important). alongside, especially with equity-based crowdfunding platform. Generally, 3. Lending- or debt-based: funders crowdfunding. investments are only transferred from expect a future repayment; the the platform to the entrepreneur if credit is repaid, mostly with 2 3 Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA Creative Funding for Creative Media January 2014 Future Media Lab., ECN & EMMA What’s in it for The Legislation MEDIA COMPANIES? There is no harmonised European legislation on crowdfunding. regulation of the management of reclaimable funds and Crowdfunding is subject to a variety of regulation meant for certain e-commerce rules, but usually platform operators other commercial activities, such as banking, investment circumnavigate such restrictions by cooperating with a Opportunities funds or e-commerce. Existing European legislation for these regulated third party on the relevant activities, for example areas are harmonised, but bring very high compliance costs with an online payment provider. An enabling pan-European The category ‘Journalism, Books, Photo and Publishing audience of a journalistic piece to a community interacting with them. As a result, crowdfunding platforms usually revert regulatory framework could smooth the development Arts’ is in the top 10 of the most and sometimes even contributing to national legislations in each EU Member State covering significantly and help economic growth through resulting popular, and thus most active, readers. The concept has already activities below the EU harmonisation levels. This means the innovation and entrepreneurial activities. The European categories for crowdfunding. The funding probabilities in Europe been used to proof that readers regulatory framework for crowdfunding Commission has established an internal Through crowdfunding, you can are willing to pay for quality is different depending on the model in working group on crowdfunding not only gather funding with low are about 50/50, with lending- media! use in each of the 28 European Member EU regulation induces a and launched a