Note: Please read Update 5, as at this point I do not think anyone should pledge to an SMGO-run campaign until and unless they have fully documented the purported arrangement with PayPal, and it is clear that PayPal has confirmed SMGO has no way to access any funds itself.
At first glance, the story of trying to crowdfund more Young Justice seems as groan-worthy as you expect it to be. After half an hour or so of looking around, however, I think that The Mary Sue gets this story somewhat wrong, although they at least (following the “via” chain here) don’t seem to follow the lead of Blastr and Digital Spy in the use of “Kickstarter” as a synonym for “crowdfunding” as if “Kindle” were a synonym for “ebook”.
The Mary Sue’s reporter, in fact, has been on Twitter warning people against the plan: “It’s one thing to start a petition to show fans want a show back, it’s another to ask fans to give you money.” The problem here is that the campaign never actually asked for anyone’s money. In fact, it only asked for votes — effectively the petition she suggests.
Whatever you think of the idea behind it, you should know how Show Must Go On actually intends to work, so here’s how.
SMGO accepts user suggestions for potential shows to attempt to save or revive. At a certain threshold, suggested shows are put up for a public user vote on the SMGO website. If the show receives enough votes, SMGO will attempt to start a crowdfunding campaign for that show. What’s not necessarily clear from reporting, but is the crux of the matter here, is that the crowdfunding part doesn’t happen until and unless the studio in question that owns the IP in question enters into an agreement with SMGO to launch the fundraiser.
In the early stages of any campaign, SMGO does nothing except gauge expressed support for a potential fundraiser through its voting system, which then provides data it can take to the studio in question. For the sake of comparison, were a studio to agree there seemed to be enough interest to go forward with a crowdfunding campaign, SMGO would be functioning like the Rob Thomas/Kickstarter combination when it came to the Veronica Mars crowdfunding effort. Thomas didn’t go forward with that campaign until the studio signed off on it, and the money raised went not to Thomas or Kickstarter but to the studio.
Same here. Should SMGO convince a studio to move forward with a crowdfunding campaign based, at least in part, on its voting system, the studio would sign off on the campaign and enter into a contractual agreement by which all money raised by the fundraiser (if it were successful, since SMGO is an all-or-nothing system) goes directly to the studio. Just as in the Veronica Mars fundraiser. The only difference being how the different sites make their money. Kickstarter takes fees from the contributed money, whereas SMGO, presumably as part of the deals it would cut with studios, would make some percentage of the advertising money from online streams of the saved or revived shows.
So what about the Young Justice campaign? It had never reached the fundraising stage. The entire point of the story being reported this, and last, week is that when approached by SMGO the studio in question said they were not interested in pursuing such a crowdfunding effort. That’s it. Fans wanted more, SMGO tried to convince the studio to let them run a crowdfunder, and the studio said no.
No one’s money was ever even requested or solicited, let alone in jeopardy. All SMGO did was try to turn fan support into permission to act as fundraiser.
Perhaps SMGO needs to do a better job at explaining precisely how it works (although their website makes it pretty clear) or perhaps reporters just need not to give the wrong impression, but their model doesn’t put anyone at risk. Whether or not their model is something the studios will accept and work with is entirely another question.
Update 1 It’s true that SMGO’s video blog suggests that they intend to find a way to raise money anyway, and depending on how they proceed with that intent could make the entire SMGO process problematic. Right now, however, all we have is that declaration and no details. Indeed, if they launch a crowdfunder without studio approval, this becomes yet another wrong-headed attempt leading to yet another debacle. Barring details on what precisely they mean to do, it’s difficult to say. As a warning against potential missteps at this stage, The Mary Sue’s caution makes sense; it just didn’t seem (to me) to also reflect the intended business model of SMGO to date.
Update 2 Apparently the new plan is raising $10M in “billing agreements” which wouldn’t be triggered into actual payment transactions until and unless Warner signs on. This transforms SMGO from a vote-permission-fundraise model into a kind of suped-up version of the ridiculous Help Nathan By Firefly, which tried to solicit vague pledges to contribute money, to what was a lost cause, at a later date.
Left unexplained by SMGO so far is how this conforms to their repeated statements that SMGO itself never sees any money from its fundraisers, since presumably the only entity they have the authority to enter into billing agreements for is themselves. What was a smartly-conceived, if maybe unlikely to succeed model, becomes something less compelling and more troublesome.
So maybe The Mary Sue was right to raise the flag of skepticism as it regards SMGO’s post-”no” plans after all. I simply didn’t think (1) that the Mary Sue post was clear enough on what had, and had not, happened so far, or (2) that SMGO would so decidedly throw their not-insane or scammy model so totally overboard, as they now appear to be planning.
Update 3 That said, as the afternoon progresses I’m not sure that skepticism bears up as details emerge on just how the new SMGO plan will work. Here’s what I know so far based on talking to them.
Even under this new plan, SMGO never has its hands on anyone’s money, just as in their original system in which a crowdfunding campaign wouldn’t even be launched without advance approval from the studio in question.
What SMGO intends is to launch a campaign seeking, as said, $10M in pledges, with these pledges taking the form of “billing agreements” with (as SMGO explains it, anyway) PayPal itself, not with SMGO. In effect, the billing agreements are held in escrow by PayPal, and are not converted into actual payment transactions until and unless both of two things happen: the goal of $10M worth of pledges is reached and at that point the studio agrees to the pitch.
As SMGO tweeted after their meeting, the studio isn’t convinced the intended goal can be reached. SMGO’s plan, then, is to attempt to prove the studio wrong, but still without any supporters ever actually parting with their money until and unless the studio signs on after the fact. Under its arrangement with SMGO, PayPal would neither collect funds from pledgers nor release funds to any recipient until the studio provided them with its account information, bypassing SMGO coffers altogether.
(Consider, as a comparison, if such a campaign were attempted via Kickstarter. If the $10M pledge goal were reached, $10M would move, via Kickstarter, from the accounts of contributors to the account of SMGO, regardless of whether or not the studio had decided to come on board. Here, all pledged money remains with the contributors even if the goal is reached, only to be transferred to another party if the studio signs on.)
Provided that SMGO is describing the arrangement accurately, then, in essence SMGO wants to collect pledges for money that would go directly to the studio via PayPal if the goal is reached and then the studio agrees. Failing those two criteria — reaching the goal and then studio sign-on — the billing agreements between pledgers and PayPal are cancelled and therefore no actual payments are made. Fundamentally, it turns out, this is the same plan with which SMGO began, except that rather than the studio approving the pledging process in advance, SMGO hopes to use a potentially successful pledge campaign to convince the studio to come on board as a result of those pledges. With either method, no money changes hands until and unless the studio signs on.
None of this weighs in on whether or not it’s a good idea to do it this way, but it does make it clear that there’s still no money changing hands until and unless the studio comes on board, and that even then the money doesn’t pass through the hands of SMGO.
It’s possible that the new plan is naive (and if knowingly so, then perhaps a somewhat cynical way to generate more press for SMGO) or doomed to failure or rejection, but it certainly doesn’t appear to be a scam, or to put pledgers’ money directly at risk. Unless the studio comes on board, in which case money goes to what the pledgers want, the only thing the new plan actively raises are hopes, in whch case it’s hoper beware.
Update 4 As of Tuesday morning, SMGO still had not posted the details of their arrangement/agreement with PayPal regarding disbursement of funds only to the studio, despite launching the Young Justice funder Monday evening. This is a problematic lack of transparency, as the “payment agreement” pledgers enter into via PayPal very specifically states that it is with “SMGO, Inc.” — so, barring the public being able to examine the purported PayPal arrangement, there’s nothing right now except SMGO’s word that they can’t access anyone’s money should the “payment agreement” (pledges) ever be converted into actual payments.
Update 5 After 11 hours of communications silence in public, longer in private, SMGO has started to address questions regarding its purported arrangement with PayPal. What preliminary/partial information I have in hand — portions of email communications between SMGO and PayPal last year — does not yet support their claim that they have an actual arrangement in place, only that there was obviously a pretty involved and convoluted discussion about SMGO’s model.
As publicly described by SMGO, I think their model suggests pledger protection, if industry naiveté. As of this update, however, I’d urge any potential pledgers to wait for firm documentation of SMGO’s claimed arrangement with PayPal, and a firm documented statement from PayPal that the “payment agreements” which currently are being formed between the pledger and, as indicated during the PayPal transaction, “SMGO, Inc.” nonetheless cannot ever be touched by SMGO itself.
Update 6 For what it’s worth, between those early email discussions between SMGO and PayPal and the latter’s Crowdfunding Application Guidelines, I think I know what the setup would have been under SMGO’s original model wherein fundraisers didn’t happen until the studio already had signed on. In that case, PayPal’s crowdfunding processes allow for different recipients of funds disbursement, and differing levels. With the studio on board for the funder, it would have provided its account information to PayPal and would have been the designated payee, with SMGO itself simply acting as, in effect, the payment trigger.
The problem currently is that the Young Justice funder doesn’t involve the studio at this stage, and so the only account information — barring the still-absent documentation showing otherwise — that could possibly be tied to the “payment agreement” being formed with pledgers is SMGO’s.