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Vancouver, British Columbia, Canada
Founder of SoKap, crowdsourcing and crowdfunding go to guy, indie filmmaker, father, mustard maker, meat lover, pseudo vegetarian, devout humanist and overall good moralist.

Oct 27, 2009

A proposed method for star salaries within crowdfunding

Star Salary Cap System (Actor Value)

One of the largest issues with independent film today is the issue of stars making too much money on the way in and not being able to deliver at the box office. In the past stars could use DVD, broadcast and other deliverable methods to sell themselves as brands. That is now not the case as results show that stars are not delivering results in the box office.

The Biracy Project is considering implementing its own salary cap system with performance based bonuses for the stars that are selected to be in the project. We will prove that past empirical data, crowd wisdom and fractional ownership will drive the stars value upwards, or additionally create new faces in the emerging star world.

These numbers are merely assumptions and by no means the final equation. Outlined here is the process, equation and assumptions for revenue on a single project.

PROCESS
Once a script has been selected the director will select a number of stars for his/her wish list. This wish list will have 4 stars on it for this example. This will be a voted on process by the crowd as the director will present his list to the fans. The results will be kept secret from the fans until there is an accepted agreement. For this example we will use 1,000,000 users and the actors will be Jim, Ed, Tony and Bill. Of the million users only 600,000 vote and here is the breakdown

Jim – 250,000
Ed – 150,000
Tony – 125,000
Bill – 75,000

We know that the average box office ticket price in the domestic market is now 10 bucks so we will us this formula to build part 1 of the equation known as FAN TOTAL (FT) Since we are going to allocate 50% of box office revenue to exhibitor and there are no distributors we are using 5 dollars as the gross revenue from box office receipts. Fans are divided into 3 categories

f1 – fans that voted for the star that accepts the offer – value is 10% of gross on voters or $0.50/vote

f2 – fans that voted but not for that star – value is 5% of gross on voters who did vote but not for you or $0.25 per vote

f3 – fans who did not vote – is 2% of the rest of the fans within the site or $0.10 per member.

In the case of Jim his FT score would be as follows
F1 - 125,000
F2 - 87,500
F3 - 40,000 FT – 252,500

The next piece the puzzle is to combine the FT with the empirical score that we will call BT or Box Office Performance Total. This will be achieved in this manner.

Only Domestic Box Office results will be part of the equation and only films that have been delivered in the past 24 months by the actor will count in the process. Here are the variables I am using.

B – budget
BO - Box office

We are multiplying B X 3 to properly determine marketing costs, exhibitor fees and overheads that are not accounted for in the budget. We then apply this formula across the films multiply it by 10% and divide it by the number of films in the 2 year period.

Here is an example of how we would apply this formula.

Jim has done 3 films in 24 months.

Film 1
B(3) – 5M(3) – 15M
BO 12
BT1 - -3M

Film 2
B(3) – 25(3) – 75M
BO - 90M
BT2 - +15M

Film 3
B(3) 3(3) – 9M
BO - 3M
BT3 - -6M

(BT1 + BT2+ BT3) * 0.1 /3 = BT
BT = 200K

If we take BT + FT and divide by 2 we come up with an aggregate value called AV or Actor Value

In the case of Jim it would
252,000 + 200,000 = 452,000/2 or 226,000

The base pay offer for Jim as an actor should be 226,000 + no > 10% of total gross receipts of the project across all distributions.

This offer and evidence will be made to the agent of the actor. If the actor says no then we are entitled to tell the members of the site that they are not cooperating.

Of course prior to making the offer the director would have to have the talent agree “liking” the project. This will give the agency no alternative other than to admit their egos to the fans that support them or take the gig and make the independent film as well as support it in distribution.

Comments? If so go sign up with us at BIRACY and then submit your comments on the BIRACY FACEBOOK PAGE

Thanks

Dave