2014 Prediction: Crowdfunding Will Change as Platforms Adopt ‘Felicia Day Model’

/ Dec 30, 2013

Crowd005

Over the last few years, crowdfunding has been a hot route for aspiring creators, entrepreneurs, and established filmmakers alike, generating over $5.1B in funds in 2013 across various platforms worldwide — up from $1.5B in 2011 according to Statista.

This year alone, we saw big celebrity-driven campaigns like Rob Thomas’ Kickstarter to bring back “Veronica Mars” ($5.7M) as a movie, Zach Braff’s “Wish I Were Here” Kickstarter ($3.1M), and James Franco’s Indiegogo project “Palo Alto Stories” ($300K).

YouTubers like Frederator (“Bee & Puppycat”: $872K), Freddie Wong (“VGHS” season two: $808K), My Damn Channel (“Love Me Cat“: $20K), and 5-Second Films took to the various platforms as YouTube’s program for funding original content halted and criticisms of the economics on YouTube caught a flurry of negative attention.

And while crowdfunding certainly isn’t going to “die” in 2014, I give you two, yes, two predictions about how audiences will financially drive content creation in 2014.

Prediction One: Crowdfunding, the way we know it, is going to shift to a new, more sustainable business model in the new year. This will spark a new trend, one I’d like to call the “Felicia Day Model.”

Let’s first define it.

The “Felicia Day Model”: n. A direct-pay financing model, using PayPal or other pay-to-view mechanics, to fund content creation in a sustainable, ongoing, and longer term way by inviting fans, followers, and supporters to voluntarily contribute. This approach is named after Felicia Day, who employed this strategy in 2007-2008 to fund the first season of the now wildly successful franchise, “The Guild”, using a PayPal donation button.

This year, we’ve seen early signs of this approach from YouTube itself with the release of its Paid Channels offering on May 9, 2013. The program, which launched with a select few dozen channels and individual creators — most notably The Young Turks, was designed to bring creators an additional revenue stream in addition to the video portal’s staple ad business.

Overall, the program has become an afterthought since the initial rollout (though I think it’s likely to gain a second wave of momentum in 2014).

Nevertheless, YouTube’s decision to expand to paid subscriptions signals that there’s an opportunity for emerging direct-pay businesses like Patreon and Subbable, two new platforms focused on building revenue opportunities for creators, to fill that gap in a bigger way in 2014.

Both Patreon and Subbable, each founded by YouTube creators (Jack Conte and the Vlog Brothers, Hank and John Green, respectively), puts the funding of creator-selected content in the hands of their fans. The platforms have already been adopted by veteran and emerging creators like Joe Penna AKA MysteryGuitarMan, Meghan Tonjes, Andrew Huang, and Wheezy Waiter.

In a statement to VideoInk, Hank Green said: “The internet is the land of free, so I’m generally wary of any system that forces payment in exchange for access to content. It fragments your audience and sacrifices connection and growth for money. Of course, in situations where money is necessary and not available, it’s a completely viable option, especially if the audience sees the value the content provides and how it’s not cheap to make it. But I’m much more interested in services that ask for payment… rather than require it.”

Another major player leading this trend is Vimeo, first with the release of TipJar in September and with the platform’s forthcoming rollout of a pay-to-view infrastructure in Q1 2014.

In an interview with Beet.tv in September, Vimeo CEO Kerry Trainor spoke on the release of TipJar — a funding program that allows a creator “to invite their audience to contribute to their work voluntarily either before or after or during a video much like you might tip for a performance in the real world.”

He also previewed Vimeo’s upcoming “Pay-to-view model,” which is set for mass rollout in Q1 of 2014. “This model builds upon what we see in the VOD or pay-per-view world today. Creators will place a paywall on the content and viewers will have to pay to access it.”

Ahead of the official launch, Vimeo has already been using a recoupable grant program in partnership with Toronto Film Festival as a testing bed for indie films.

“We’re really big believers in direct distribution,” adds Vimeo president Dae Mellencamp, also on Beet.tv, noting early traction from the Toronto Film Festival collaboration: “We’re having a great success in the number of creators that are uploading and sharing their work, the way they want, where they want, and how they want. We’ve also seen the willingness of consumers to purchase and [watch] on their television, on their mobile device, or tablet and on their desktop.”

This early traction lends a prophetic eye into what is in store for 2014 with Vimeo’s PPV strategy, and shows that perhaps the appetite for pay-to-view digital distribution can form legs in the New Year.

“Our aim is to make that the easiest-to-use pay-to-access system and have it be the most flexible in terms of pricing, duration, in terms of times that people have access, and geography,” says Trainor.

As a premium platform, Vimeo is among the first players we’ll see making moves like this in 2014.

Prediction Two: Major MCNs, especially those like Maker Studios with their own video players and owned-and-operated sites, will start to adopt the “Felicia Day Model” as they siphon more audience from YouTube to “premium” programming offsite.

In fact, Maker Studios has already started to embed the Blip player into its various “channel” sites like Polaris and for some of the network’s flagship creators like Epic Rap Battles. It’s been said for months that Machinima is increasing its focus on its OTT business (where subscriptions and pay-to-view models are inherent). An OTT platform from a network like Machinima would be a ripe testing ground for VOD and digital pay-per-view models given its hyper-engaged audiences.

Part of this movement off of YouTube will be supported by higher CPMs, premium sponsorships, and multiple display advertising opportunities that aren’t available on YouTube. But I predict a particular focus will end up being on having a gated area for private, premium content, where creators (and their networks) can monetize via subscriptions and flexible pay-to-view plans — a hybrid strategy that blends both Subbable’s and Vimeo’s models.

2013 has seen pivotal deals and acquisitions. But this rapidly maturing industry still suffers from stunted monetization. Crowdfunding has simply been a deer path for creators as they hunt for a paved freeway to revenue. Direct-pay, pay-per-view strategies like the “Felicia Day Model” will start to define the space in 2014 as platforms like Vimeo and Subbable, and content providers like Maker Studios, work out the best models for funding and distributing content to communities across all platforms.

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