Crowdfunding The Tunnel One Dollar at a Time

The Tunnel is a low budget Australian project in the midst of pre-selling film frames to raise the $135,000 cash budget, with plans to release the film for free online via file sharing later this year. It’s exciting to see this happening on my home turf, and interesting to hear in person the reasoning behind their strategy.

Now, if you’re thinking that ‘selling frames’ sounds familiar, you might remember the case study I did on the UK filmmaker Casey Walker’s My One Million Dollar Movie,  who is selling frames for $10 a pop. The similarity between strategies is merely coincidence, as the filmmakers behind The Tunnel, Enzo Tedeschi and Julian Harvey, were unaware of Casey Walker’s earlier efforts when they decided to do this. And, apart from the ‘frame’ sale, their strategies are significantly different.

Enzo and Julian consider The Tunnel to be the first of several under “The $135K Project.” This is a strategy to crowdfund low budget films by preselling the frames. A ninety minute movie = 135,000 frames x $1 per frame = $135,000 budget.

The beauty of The Tunnel’s approach is in a word ‘simplicity.’ They chose a low price point in order to mitigate the sense of consumer risk. A film frame is a kind of cool original purchase, and anyone can afford to pay $1, right? What’s the worst that can happen - you lose a buck? Somehow the ring of $1 = 1 frame talks to us on a psychological level that any other price would create pause for thought.

Enzo points out that many other films that use crowdfunding techniques unintentionally create confusion through the complexity of multiple options. It takes quite a bit of mental effort for would be purchasers to determine exactly what they are getting for their money, and if it’s too hard, people simply walk away.

Now, $135,000 is not a lot of money to make a feature film. It helps that The Tunnel is a horror, which is a genre that works well on miniscule budgets. It also helps that this is only the “cash” component, and they have some in-kind/subsidised support from a network of industry people including Zapruder’s other films. However, more than anything, a low budget should be considered a matter of sheer pragmatism when you take into account the state of the Australian film industry.

We simply can’t afford to make films with budgets in the millions.

When Enzo and Julian first conceived the idea of The Tunnel they fully intended to make it through traditional funding channels. They had some support from private investors, however, when they began meeting with potential partners and distributors, and ran the numbers, they realised how unlikely it was that their film would be able to pay back investors via this route. As Enzo put it:

"We can’t in good conscience ask for 100k from someone, telling them it’ll make a profit.” 

Enzo knew from previously working on Food Matters (a documentary that sold 120,000 dvds) that sales and distribution can be done very easily and profitably via the web.

He’s also aware that the greatest obstacle for Australian films is the sheer lack of public awareness. On a tiny (or non-existent) marketing budget our films can’t hope to compete against the barrage of Hollywood campaigns. Or at least, not via the traditional route.

These two key insights led them to crowdfund the film from people who wouldn’t need a profit return, and set the film loose via torrents to gain as much awareness as possible.

“Word of mouth is gold,” Enzo says. 

Enzo and Julian realise that many will download via torrents who otherwise wouldn’t risk their dollars to see the film. A small proportion of those will help spread the word, and be upsold to purchase a high quality DVD and merchandise. Without “investors,” any money made at all can be considered profit.

And, they’re still in conversation with traditional distributors. They hope their film will get a cinema release and widespread distribution, but are of the opinion that if the film gains enough online buzz then the ‘traditional’ partners will come knocking, and they are hesitant to lock into a deal now that won’t serve the film.

Thus, this is the new indie film model that they propose, The $135 Project:

• Tell stories that are achievable on a tiny budget 
• Pre-sell frames to cover the production costs (low price, low risk, nice & simple) 
• Get the biggest audience possible by releasing for free online 
• Upsell a proportion of the audience to purchase dvds / merchandise / tickets 
• Negotiate traditional distribution as a last port, after the film has proven itself, and retain non exclusive self distribution rights so the filmmakers can still distribute direct to audience. 

There’s a lot to like about the simplicity of this plan.

"The Tunnel" - Teaser 1 from thetunnelmovie on Vimeo.

However, in practice there is room for improvement – as always!

Planning? 
The team came up with the $135K business model eighteen months ago, they opened The Tunnel for investment mid June 2010, and then started shooting the film a mere five weeks later. Anyone else have a problem with this time line?

It seems to me that they must actually have some financial backing in place for them to be shooting prior to even raising 10% of the budget. This might be in the form of a loan, or a gamble – someone giving them money for production with the expectation that the crowdfunding scheme will work to pay it back. Or expectation that a distributor or funding body will ride in to the rescue.

I’m also surprised that so many elements are still undecided at this late stage:

a) They were still working on the script a week before shooting. Call me biased (I am a writer), but getting the script right is usually the easiest place to get bang for buck, and I can’t help but think less of filmmakers who undervalue it. Having said that, one of my favourite horror films, Blair Witch Project , was shot without a script, so what the hell do I know?

b) The business plan isn’t properly fleshed out in detail, and while traditionally there are elements you wouldn’t need to get specific about till closer to release date, with this type of early audience involvement you really need to have those factors in place early.

c) While they plan to make money from merchandising, they haven’t yet decided the ins and outs. Initially they considered using Zazzle POD, but after ordering a couple t-shirts they decided it was too low quality, and too little profit. The alternative requires cash up front for manufactoring, which they don’t have. Seeing as they have several thousand people purchasing frames, it seems odd to me they haven’t yet worked out the upsell options to capitalise on the interest immediately.

d) As mentioned, shooting when they haven’t raised the money yet – either a recipe for disaster, or they’re not being entirely honest about the finance.

While you have to admire people who jump in and get things happening, my thought is that proper planning is a foundation that shouldn't be skipped. What do you think?

I’ll continue this case study Wednesday, taking a look at The Tunnel’s marketing, social media, and community management – what they’re doing right vs what needs improvement.