The economy that we know is always the economy we used to have. To find out what economy we have and where our economy is heading, we have to look at the tension between technological change in the setting of past-bound rules of the road.
I have been looking at the niche industry of Anime as a kind of petri-dish for changes in the media economy. In the present essay, I am looking at two particular crowd-funding ventures for overcoming hurdles faced by two different types of productions. However, to explain why I find these ventures interesting, first I take a bit of a look at the evolution of the current status quo, and why they are ventures of more general interest in the evolution of our next economy.
A potted history of friction between technology and rules in Anime in the West
Anime fans outside of Japan have long turned to new technology to give them greater access than the traditional media economy could provide to them.
Long before bootleg movies were being pirated via torrent fileservers on the internet, anime fans were using personal computers to subtitle unlicensed Anime and sharing the result on VHS videotape. These "fansub" groups were early adopters of file sharing over the internet, and by the middle of the first decade of the 21st century, it was expected that many of the anime series going to air in Japan would have a fansub circulated in English, Spanish, French, and a number of other languages before the next episode of the series was broadcast in Japan.
But also, in the 1990's, the expanding number of cable television channels in US cable systems led to an increase in demand for content, and one of the sources of content were Japanese anime, dubbed into English.
Now, this was not the first wave of Japanese Anime on US Television screens. I recall as a kid in the 70's rushing home from the bus stop to catch Speed Racer on afternoon TV ~ in the after school re-runs slot after the Soap Operas were over and before the evening news. However, the only way to make money on anime in the US in the 70's and 80's was to have a long enough episode count to go into syndication.
Some Japanese anime, like Speed Racer, had the required episode counts for syndication. However, many Japanese anime were produced for a system with four, three month seasons, and an anime series produced as a "two-pack" to run for 26 episodes in Fall/Winter or Spring/Summer didn't have the episode count required. So in the 80's, For-US anime series like Robotech and Ninja Robots were formed by combining footage from multiple series and rewriting the scripts to form a portmanteau series, dubbed into English for US broadcast.
One innovation of several cable channels in the later 90's was to market anime as such, putting together programming blocks like Toonami in the afterschool time slot on the Cartoon Network, where individual series would have a run, and then be replaced by another. The TV exposure led to an increase in the market for home video. Throughout the VHS era, there was a tension between home video releases of anime that had been dubbed, often for television, and home video releases of anime that had been subtitled ... a tension that filled countless pages of Usenet and Web Forum argument between dub and sub fans. But then with the emergence of the DVD, the tension between the two was overcome with hybrid releases, and the anime niche was on a firm growth path.
And then, although it took a while for this to dawn on many in the industry, it wasn't on the growth path anymore. The boom in the anime home video market in the US peaked in 2002, the first year in the above chart. Its important to stress here that this is not the typical market graph, with the horizontal axis set at some base level to exaggerate the changes: this is an honest chart with a base of 0, and the evolution from 2002 to 2010 is the loss of over half of the US home video anime market.
And on the graph, you can see how the long term decline was partly masked by the ebbs and flows from year to year: in 2005 and 2006, which is the same time as Japanese manga in the US is experiencing the height of its own boom, one could imagine from the numbers that 2003 and 2004 were just a temporary setback. However, much of that was fire sales of accumulated inventory, and then the collapses started.
- In 2007 Central Park Media ceased releasing home video.
- Then Geneon, a subsidiary of a Japanese media company, was shut down.
- In early 2008, Bandai Visual, one of two US anime subsidiaries of the Bandai family of companies in Japan, was merged into the other one, Bandai Entertainment.
- In 2009 ADV restructured into a network of companies to get out from under a licensing deal gone bad, as Central Park Media finally went bankrupt.
- In 2012 4Kids, which had licensed and dubbed Pokemon, shut down due to lack of profitability.
- Also in 2012, the remaining US home video subsidiary of the Bandai Group, Bandai Entertainment, was shut down, despite still being profitable, for disappointing financial performance.
Who's To Blame and What To Do?
So in the second half of Noughties, the formal US anime industry was experiencing a sense of crisis. This was even as increasing numbers of young people were taking advantage of video internet streaming and internet filesharing to view anime, and anime conventions with cosplayers dressed as their favorite anime characters were booming.
Who was to blame? Well, the thing about blame games is that quite often most sides are telling stories that are partly right but incomplete. One clear change was the disappearance of anime from daytime cable time slots. This was, of course, not a case of animation disappearing from cable television. However, over the long term, it was a better deal for a US cable channel to own its content than to license it over some fixed period. At the same time, the tendency of much anime to tell a story with a beginning, middle, and end did not fit the programming needs of US cable networks as well as the episodic Situation Comedy set-up in which the basic set-up is reset for the start of most episodes: just because Homer Simpson happens to have been trapped in an alternate reality Universe at the end of one Halloween special episode doesn't mean that he will start there at the beginning of next week's episode. Indeed, unlike live action family sit-com's, in the animated sit-com you don't even have the issue of the child actors growing up over the course of the show.
And with anime slowly but inexorably disappearing from the TV screens over the course of the Noughties, the existing base of anime buyers were not refreshed by fresh cohorts of fans who started out just having to own a copy of their favorite show, with some then moving onto exploration of other shows.
One main focus of the blame game from the industry side was Piracy. "If you people would patronize the legitimate licensees rather than bootlegs from the internet, we wouldn't be in this mess." In the mid-Noughties, there were a number of response to this charge, with complaints (among others) that Overseas Licensees ... :
- ... take years to release a title, the bootlegs are up in days;
- ... cut and chop and change titles, the bootlegs contain the original material;
- ... only make series available in limited areas, whether North America, France, Southeast Asia, while the bootlegs do not discriminate on the basis of country of origin;
- ... charge outrageous prices for material that bootleggers distribute for free;
- ... expect people to blind buy series, when in Japan they can watch the series for free on broadcast TV and "try before they buy"
The industry's answer to this, including several fits and false starts, was legitimate internet streaming, and in particular, "simulcasts". The idea was to license the material for streaming in advance of broadcast in Japan, subtitle the material and have it available, ideally, an hour after Japanese broadcast, and pay royalties based on advertising income or subscription fees. And streaming has been a substantial success at least partly answering many of the complains of the bootleggers. In the ideal (often not met), when a simulcast is an hour after the Japanese premier broadcast, there is no time for a "fansub" group to get a bootleg copy of the Japanese broadcast, translate it, and subtitle it, so the ideal simulcast can be available more quickly than any fansub. Advertising-funded streams are "free to watch" as in free beer, and the most popular subscription site costs in the range of $4-$7 per month including ad-free access to all of the shows on the site, so anyone following four series would be paying $0.25 or less per episode ~ and someone "marathoning" catalog titles at the same time could well be paying under $0.10 an episode.
On the other hand, while Crunchyroll, the most popular US-based streaming site, has made some progress in terms of the region restrictions compared to the commercial status quo, it still falls short of the bootleg ideal of no region restrictions at all. And streaming by home video distributors such as Funimation has primarily been restricted to access from North America.
A central problem for expanding international access is the flip side of the low cost per episode for ad-free streams and the even lower advertising rates for streaming advertising. Even though over half of the cost of simulcast streaming are royalties paid to the original creators, most international streams generate a relatively small share of total revenues for the anime production. And that small share of revenues makes it difficult to justify spending a lot of money on having lawyers revise the standard terms of licensing contracts to better fit the interests of streaming anime. If a simulcast might hope to get 2,000 views from subscribers from a country, with royalties of perhaps $0.05 per view, that $100 in expected revenue might not be worth the contracting costs to add that region to the contract.
The situation is even more difficult for providing access to "catalog" titles: titles from previous years, or even previous decades. Given the wide availability of bootleg copies of most anime, a large portion of the potential audience for catalog titles have already seen it. Add on the fact that much of the online discussion and "buzz" revolves around the biggest hits of the current season, and the potential audience for the catalog titles is much smaller than for this season's simulcasts.
Even for Crunchyroll, with more than 200,000 subscribing members and distinct ad-supported viewers in the millions, the substantially smaller portion of that audience that will watch a catalog title means that catalog titles are primarily promotional streams from home video distributors, to raise the profile of a new release or freshen up the sales of an existing release. Since the home video distributors originally licensed the series for the North American market for distribution on DVD, and sometimes BluRay, they never obtain wide international streaming rights, so most catalog titles announcements on Crunchyroll are "for our North American members only", accompanied by a predictable string of complaints from some of the approximately 40% of Crunchyroll's membership from outside of North America.
It is even more difficult for old series that have never been licensed. While a site with the subscriber base of Crunchyroll can afford to subtitle their simulcasts, for catalog titles, they tend to rely on the subtitles provided by the home video distributor. Avoiding the cost of subtitles and reducing the per-series contracting costs with package deals for a number of catalog titles at once are key parts of the commercial viability of streaming catalog titles. Previously unlicensed series must be able to attract a large enough audience to cover the cost of commissioning the subtitles
Finally, for series that are made available for streaming but without a physical release, there is the question from the home video buying public, "is this going to get released?" For the avid fan, a box set on their shelves displays their support for the series is far more satisfying than an entry in a watched episode history, and insures against expiration of a streaming license. For the collector, a box set on their shelves is the point. For the videophile, the highest quality streaming video does not have the quality of a well produced Blu Ray release.
Changing the Rules of the Game: A Kickstarter Funded Release.
The hurdles that are face, are, however, not physics. This is not Climate Change, where a tweak to business arrangements or a change in the law doesn't have a snowball's chance in hell of changing the impact of a certain concentration of CO2. These problems are all tangled up in media rights, which exist by virtue of legal rules, and, in their original form, to support the ability of creators of original works to make money from that activity.
Crunchyroll actually started out as a quite popular Pirate Bay. It was started by a group of people to provide a "YouTube" for Asian media, which meant, in part, a system for streaming subtitles as part of the content. As YouTube itself learned, when you let people upload video content, a lot of people will upload video content that they don't have the rights to. The original rules for Crunchyroll were to refrain from uploading content licensed overseas ... which was a common rule of thumb used by many early fansub groups ... but in their original incarnation as an upload site, enforcing that policy was a Sisyphean task.
Crunchyroll, however, was never able to make money as a Pirate Bay, because they hosted their own videos. The successful video streaming bootleggers recruit volunteers to upload content to somebody else's free video site, and then they embed that video in their own site, gaining a tiny trickle of revenue per viewer from banner, click through and pop-up advertising. However, since they do not do anything except provide an indexed database of anime hosted elsewhere, a tiny trickle of revenue is all that is required for the most popular bootleg sites to be a useful source of revenue to the site owner.
Crunchyroll, hosting their own streaming, was never able to cover the cost of bandwidth as a Pirate Bay. They sought and obtained venture funding, and went to Japan to make their case for licenses to stream content. A few Japanese content owners were willing to play along, and on January 1, 2009, they pulled the plug on all member-uploaded content and switched entirely to content uploaded by the creators or their agents.
One of the early series that Crunchyroll was able to offer with wide streaming rights was "Time of Eve". This started late in 2008, before Crunchyroll went all-legit, available worldwide outside of Japan shortly after a Direct to Internet Streaming release on Yahoo Japan. The six episode series was able to gain a DVD release, and then with slight changes to connections and a new ending was a theatrical movie release in Japan. (Note that in the meantime, episodes 2-6 have been restricted to subscribing members only, so you can go to that Crunchyroll to get a taste of the series, but only subscribers can view the six episode series at the site).
The makers of Time of Eve were not satisfied with the prospect of licensing Time of Eve out to home video distributors overseas, who would only license the title for their specific markets. But overseas fans continued to ask when there was going to be an international Blu Ray release. So they eventually decided to take it to Kickstarter, launching a Kickstarter project for a Blu Ray release of the Time of Eve Move three days ago, with an $18,000 dollar goal. They hit their goal in 24 hours. They added French, Italian, German and Spanish subtitles as a stretch goal, which was easily met. They then included an English Dub as a stretch goal if they could raise $50,000. They met this goal in less than 3 days after the Kickstarter was launched
There is no guarantee that the success of Time of Eve can be repeated. Time of Eve had many advantages. One is that its a thoughtful consideration of the social impact of realistic androids, required to display "halos" in public so people know that they are androids ... but not in the Cafe that is the setting for Time of Eve. Another is the wide availability of the series on release, so it has the kind of established fanbase to drive news of the Kickstarter into social media. A third is the nature of the production itself, which was a very small "boutique" studio working on the project, which is very much the kind of venture that many people feel comfortable in supporting in a Kickstarter.
However, crowdfunding is one answer to the challenge of how to finance an international release with worldwide availability, when the home video distributors that can afford to license and distribute a release overseas will necessarily be focused on a specific geographic market.
Trying to Make Unlicensable Classics Licensable.
Sam Pinansky had a different objective in mind. Sam Pinansky has established a career in Japan as a translator, among other things. Sam studied as a research physicist, and originally got his start translating as a member of a fansub group. After finishing a post-doc in Japan, he was able to stay in Japan by making the leap into professional translating, which has included translating subtitles for the new legitimate streaming.
Sam has been thinking for a while about the challenge of releasing series that are impossible to release under the normal rules of the game. These are classic anime, from the 70's and 80's (and maybe someday 90's and Noughties) which were never licensed for overseas release. They have no official English subtitles or dubs available. They were originally released before fansubs were commonplace, so they had little profile or exposure in the West. Based on the audiences attracted by streaming release of anime of similar vintage, getting finance for a simulcast would be challenging.
So what Sam has done is to establish a partnership with the original Japanese rights owners to support them offering a combination streaming site and crowdfunded finance site, AnimeSols. Rather than the "pledge whatever level" system of Kickstarter with special benefits tied to passing certain thresholds, the AnimeSols crowdfunding system is based on specific pledge levels for specific benefits.
The targets are all quite similar to the target for the Time of Eve Kickstarter, though the boxsets are 13 episode boxsets featuring one 3-month broadcast season from each series. Several have targets of $16,000. The Magical Girl show "Cream Mami" has a target of $19,000. The science fiction / giant robot show Tobikage, which provided some of the material for the US portmanteau series "Ninja Robots", has a target of $19,500. The "Black Jack TV" anime of the renegade physician has a target of $22,000 for a 13-episode boxset.
Of course, for these older series to meet their targets, it is not enough to just say "tell everyone that they can support Creamy Mami!!!". The site also provides free streams of the series that it is raising funds for. Each series releases "new" episodes once a week, with a different series featured each day. The hope is clearly to attract some people to enjoy the retro anime, and then to convince some of them to kick in support for their favorite series.
None of the series on AnimeSols have roared through their targets in the way that Time of Eve has done. The best performer to day, a little over a week since launch, is the magical girl series "Creamy Mami", which has received pledges for about 20% of its target. Black Jack has reached 12% of its goal, and the giant robot series Tokibage 7%. Several dedicated Kickstarter watchers have declared the venture a failure based on these rates of support. However, I wonder whether they underestimate the difference in having additional episodes added to the series weekly. That gives people a reason to keep coming back to the site, and some of the people coming back to the site as viewers are surely going to become fans of the series.
A strong point of AnimeSols is the device support. It is an "HTML5" streaming site, which means it is not limited to PC's, but can be viewed on iPads, on Android devices that support the video standard (one of mine does, one of mine doesn't) and a range of other devices, and systems. A weak point is region restrictions. Given the target of producing DVD's for distribution and the complexity of existing license terms for these older anime, the site is focused on North America only at this point. Expansion to other areas hinges on the success of the North American version of the site, and though North America is the largest individual international market for anime, the success of this venture is very much up in the air.
Reflections and Considerations
First, I want to answer one response before it has a chance to be posted. "But look at music, I know of a band that ..." ...
Music is different. While when I grew up, the "make it rich" dream of musicians was a stream of hit records, then a stream of hit albums, then a stream of hit CD's ... with concerts with tickets prices as events to promote the sale of the recordings ... a total collapse of earnings of recording in Music doesn't imply a collapse in income in Musicians. It rather implies that Musicians have to return to their original means of earning an income, from ticket sales for the live performance.
Nobody would sit for the 9 months it requires to watch an episode of anime to be written, storyboarded, background illustrations drawn, keyframes produced, and especially the slow process of inbetweeners producing the motion between the keyframes. Its not a performance, its a production. If its not possible to arrange for a benefit for the product, we have to shut down the work on that production.
And if the only productions that we can work out how to fund are HBO big event series and big Hollywood Blockbusters, then those are going to be the only productions we get to see. How to finance anime on a sustainable basis is far from being about only how to finance anime, its how to finance niche media productions of all sorts.
And so it is in this light that I ask you to consider the media production model presented by Time of Eve. Produce a work of art on a seat of your pants budget. Distribute the work by internet, generating a small amount of money to continue production in the process. Leveraging the profile in Japan into a home video release, then into a theatrical release, is challening enough.
But how to fund an international home video release, on your own terms rather than the terms of existing overseas distributors? Go straight to the audience you built with the international streaming of your production. 966 backers at an average support level of $66 and you not only have an all-regions international release, but can afford to release it in both its original Japanese with subtitles in five languages, but also an alternate audio track with an English dub.
As interesting and impressive as Time of Eve is, Sam Pinansky's effort may ultimately be more important. If it works ~ it is very early days at present, and there is no way to know whether it will or not ~ Sam will not just be building an audience for the work of a particular creator. Sam will be building a community that shares his interest, and if it grows to just a few thousand people actively contributing, it will be a community that can take a number of "impossible" releases and make them possible.
Crowdfunding on its own can be just a new form of venture capital funding. But on its own, it is easily be dominated by celebrity and the fads of the moment. It may well be that where crowdfunding turns into a creative force is when it is married to a community of interest that sees what is not, and insists that it ought to be.