How Obama's Legacy Can Help Hollywood Work More Democratically — and Creatively (Guest Column)
The JOBS Act, passed in 2012 with strong bipartisan support, allows for equity crowdfunding, as the founders of a new entertainment company celebrate their fans' ability to participate in the creation and the success of the projects they fund.
Resting quietly amid the deafening debate over President Obama’s legacy is a historic reform signed by Obama, passed by Congress, and likely to have a lasting positive impact on the economy. Already this act is taking root in Hollywood.
Congress passed the JOBS Act in 2012 with rare bipartisan support, just before Obama’s second term. There was no debate, disagreement or salacious tweeting about it, which perhaps explains why this Obama initiative has not gotten its due attention. The JOBS Act bill was put forward with support from both sides to amend the antiquated, sometimes unfair, and certainly arcane securities laws that have rigged our financial system — and its final piece, Title III, went into effect in May 2016. Title III, also known as the CROWDFUND Act, enables equity crowdfunding, giving the general public the opportunity to participate in early-stage financing and investing (with real equity), a domain that until then had been the exclusive purview of the wealthy elite.
Unaccredited investors — those earning less than $200,000 a year or with a net worth under $1 million — previously were prohibited by SEC regulations dating back to the 1930s from investing in private companies in return for equity. But these new laws give entrepreneurs and creators a powerful new way to raise capital, while at the same time rallying a community of investors, customers and supporters to be emotionally and financially invested in their success — within certain limits: People earning (or worth) up to $100,000 can invest $2,000 or 5 percent (whichever is greater) annually, and people earning (or worth) $100,000 or more can invest $10,000 or 10 percent (whichever is less).
"One of the great things about America is that we’re a nation of doers," said President Obama at the White House signing ceremony back in 2012. "We think big, take risks and believe that anyone with a solid plan and a willingness to work hard can take even the most improbable idea and turn it into a solid business.”
In a presidency that will be remembered for tenacious congressional gridlock, the JOBS Act is a shining example of both parties coming together to propose, refine and approve real reform for the betterment of the people of the United States.
Imagine the potential for entrepreneurs empowered by their legions of shareholders to innovate and create, all defining factors for success of our economic engine. Imagine shareholders getting involved, investing in something that impassions them and working as a vast, powerful community to further the growth for the company they own together. When investors also are customers who also are evangelists, the potential for an entity’s success is an order of magnitude greater, especially in the early stages when it matters most.
Nowhere is getting the crowd engaged more important than with entertainment. If the crowdfunding phenomena (Kickstarter and Indiegogo) opened a window into Hollywood, equity crowdfunding has the potential to hurl open the gates, giving fans the opportunity to participate in the commercial success of the projects they get behind.
Entertainment already is one of the most popular categories in today’s crowdfunding paradigm, with many movies, TV pilots and other projects being funded by the crowd. However, this new era of equity crowdfunding invites far greater participation, and that crowd participation can strengthen the overall quality and quantity of creative projects. After all, nobody would argue that two of the most powerful forces in Hollywood are money and fans — combining them is not just smart, but it also could change Hollywood forever.
This fan-driven movement can empower creators to take more chances and inspire creativity and diversity within an industry criticized for its over-emphasis on retreading existing franchises. In fact, it’s no fluke that one of the most successful JOBS Act companies in history already is an entertainment company — our company, Legion M, launched in 2016 and already is rallying an enthusiastic community of fans together to get behind movies, TV and VR projects.
With more than 3,100 investors already signed on (the minimum investment is $100), we are seeing firsthand the power of the ultra-engaged community that has united behind us, particularly across our private Facebook group and discussion forums. Legion M is uniting a legion of fans, affording them a voice, greater involvement and participation in the magic of bringing great creative content to the market. And when Legion M’s projects reach the market, this legion of emotionally and financially invested fans can help make our projects more successful. It’s powerful stuff.
So, while the new administration readies itself to repeal and reverse many of the initiatives of the previous administration, the JOBS Act with its unusual bipartisan support likely will live on and flourish, creating more jobs, wealth, innovation and creativity, all the things that make America great in the first place.
Scanlan and Annison are co-founders of Legion M and are Emmy Award-winning co-founders of MobiTV and New York Rock Exchange.