Licensing and Business Models for “Lunatics!”


We had the idea for the story of “Lunatics!” as far back as 2003. But it
wasn’t really clear what form it would take. Making it into an “online
TV series” was always the way I visualized it, but I didn’t see how that
would be possible.

Prior to this, in 2000, I also discovered the world of free-software
and Linux. I was very impressed with the quality and culture of free-software
projects. Comparing the success of GNU/Linux software to the constant
mired, limited, and politically-complex world of space development
really made me want to understand how free-software got made and how the
same principles could be extended into other fields of endeavor.

I was therefore an extremely early adopter of the concept of “free culture”.
Remember, the founding of Creative Commons was two years in the future
and Lawrence Lessig’s book, “Free Culture” would not come until two years
after that. This was still a very cluttered and poorly organized collection of ideas
at that point.

In 2000-2001, we had worked on a free-culture game project (“The Light Princess” 2000-2001)
on SourceForge, although it ultimately didn’t work out, due to problems with the software
design. But the artistic side of the project had been extremely promising, and I learned
a lot from directing that project.

With a film project, we wouldn’t have to deal with the same kinds of
programming problems, and could focus entirely on the creative part of
the project. In that sense, a film would be easier. I certainly was
intrigued with the idea of developing a series like this as an
open-source, free Creative Commons licensed project. I could see clearly
how releasing under a By-SA license would save trouble and cost on the
production side, since we would be able to use existing free-licensed
materials in our project.

But it still would be too big to do on a volunteer basis. The only way we could do
something this big would be if there were a business model of some kind to support it.
I didn’t see one, so I just kept that idea “on file” in the back of my head.
Occasionally Rosalyn and I would toy with the idea as we talked about
characters, settings, and situations for “Lunatics!” to amuse ourselves.
We considered different modes the story might be told in — a fiction
blog, for example, or a comic. But I still loved the idea of doing it as

Free Culture Catches Up

Ever since “The Light Princess“, I paid close attention to developments in both
free software multimedia tools and in free culture projects — especially film.
In 2005 and 2008, the Blender Foundation released its first two “Open Movies” —
Elephants Dream” and “Big Buck Bunny“. I covered both of these for FSM,
and was extremely interested in how they had been produced (a combination of
foundation funding for Blender and pre-sales of the DVDs, acting as an early
kind of crowd-funding). I also discovered “Morevna Project” through a colleague,
and my small involvement with that project showed me how far free-software
multimedia and project management tools had progressed. It made me think that,
at least on the production side, it wouldn’t be too difficult to set up an open source film (or series)

But it was the release of Nina Paley’s “Sita Sings the Blues
in 2009 that really pushed my buttons. Paley had made that film
expecting to sell it conventionally as an art film, going to festivals
and so on. She didn’t expect to make a whole lot of money at it, and she
had a problem — which was that, in defiance of common sense, the
80-year-old music she had drawn on was NOT in the public domain. In her
exploration  of that legal problem, she discovered the free-culture concept after
having produced her film, and then she decided to release the film under the CC By-SA license.

What was really exciting was that her film broke what to me had seemed like a hard rule:
it earned her money AFTER being released under a free-license (not in exchange), and it earned
more than she spent, even though she made her film without the
advantages of a free-culture license (because she didn’t know she was
going to use one at the time). To me that was very solid evidence that
this business model must be pretty robust. Naturally, I had to know how
that worked!

The Creator-Endorsed Sales Model

Karl Fogel from,
had helped Nina Paley with her license problems. Already being
interested in free-culture, I had browsed Fogel’s site a few times by
then, mainly for the discussion about the origins and purpose of
copyright. He had come up with a really clever insight — and an idea
that turned that insight into a business model for free-culture projects
that didn’t really require copyright at all to make it work.

In brief, the insight is just this: Fans WANT to support artists.

It’s only the publishers and distributors they resent the cost of.

So, if I can find a way to do an end-run around the record label or the
online store and get my music directly from the musician, I’m going to
do that — because they’re basically just standing in the way. But I
regret knowing that if I pirate the music, the artist won’t get
anything. That seems unfair.

This is critical because if you just want to coordinate an activity that people already want to do, you don’t need a law
or enforcement — you just need a signal.

Fogel’s idea was just to create a trademark whose use would signal to buyers
that the money they paid was being shared with the artists who produced
the work. There are details beyond that (e.g. how much are they sharing
and how do you certify this?) but those are not so hard to work out.
Nina Paley designed the trademark logo herself. Here it is:

Now all artists have to do is to tell their fans to look for
merchandise with this mark to know that they are supporting them with
their money. This costs FAR less to implement than the copyright
enforcement regime and obviates the need for a great deal of what modern
publishers do (which in the 21st century is more about gate-keeping
than about pressing discs or printing books).

Now, does this actually work?


We can see that in the way that Paley’s film has succeeded. Indeed, it has
made quite a bit more than she would have made through the traditional
proprietary publishing industry. That’s partly because of lower costs
from intermediaries, partly because of the novelty of a new model, and
partly because the basic principle is correct — fans are happy to pay
artists if they have a well-established way of doing it.

I was thrilled about this idea, because now I had a business model. I would
need to study it, estimate its limits, and see if it could work for our
project, too.

There was one problem, though, which is that it is
only really useful after you’ve released, just like normal copyrights
and royalties. And that means that if you want to do something big and
expensive, you’re going to need some kind of financing. And
unfortunately, although I could see how this Creator Endorsed model was
going to be brilliant and effective, being able to convince risk-averse
investors that it was a good idea is a whole other thing.

Starting Up

It immediately occurred to me that a series (of any kind) was going to be
better for free-culture business models, because then the audience is
not only paying you for what you’ve already made, but they are also
wanting to encourage and enable you to make more.

In a way, the Blender Open Movies are themselves a kind of series: funding
Elephants Dream” was pretty hard, but money came easier for “Big Buck Bunny“,
and in 2010, they were able to raise much more money to support “Sintel
(€400,000 or about US$600,000). So it seemed like there was evidence to support this theory.

But the trick is to get it started. In some ways, a 3D animated film has
exactly the wrong dynamics for that — it’s highly front-loaded, with a
lot of expenses up front in creating models. On the other hand, it
suited my skills better and it would work very well for our “Lunatics!”
project. And of course, the flip side of being front-loaded is that the
costs would fall off as the series continued.

It still leaves the problem of getting over that initial hump. We’re not independently
wealthy (in fact, we’re far more likely to be censured for being too
poor to aspire to something like this than to be resented for wealth),
so there’s basically no way we’re going to be able to pay for it all out
of pocket. The only way is to raise money one way or another. I did
have an idea about that, of course.

I had worked in 1999-2003 on a project we called “Narya”, which
today would be called “a crowd-funding platform for open source hardware
projects” — although those bits of jargon didn’t exist then. We did
not manage to get that off the ground for technical reasons that aren’t
of much interest here (although I did document the design concepts in a
series of articles for Free Software Magazine in 2005-2006).

So when I first heard about Kickstarter in 2011, I knew exactly what it
was and exactly what it was for. And I knew what I wanted to try to use
it for.

Proving a Principle

Now, those of you know me from my Free Software Magazine column
probably realize that I’m a bit of an idealist. I’m not quite as
radical about it as some, because I don’t really believe in the
artificial line between “pragmatic” and “idealistic” concerns.

This has come up in discussions about free software between the purists (who
really like the term “free software”) and the pragmatists (who prefer
to say “open source”).

My insight though, is this: You don’t have any freedom in a thing that does not exist.

So if there is no way you can actually afford to make a free version of
something (software, art, films, whatever), then it’s only reasonable to
think that you must have a non-free system in order to have that thing.
You can’t “lose” a freedom you never had.

On the other hand, if there exists a free way to make something, then you can place a much higher value on the free version.
And I do. And if you value freedom, it’s imperative to know this.

This means that to me, it’s very important to ascertain empirically what can
be done with free production models. Without knowing that, we may
settle for bad compromises (which I believe the proprietary publishing
industry to be — but this belief depends on my belief in the existence
of alternatives — something that can be objectively tested).

You can tell I’m a scientist, because the phrase “can be objectively tested” makes me slightly giddy. I immediately think,

“Let’s go test that sucker!”

Proof in principle really only requires one example. But there are always holes:

Is it repeatable? Maybe it was just a fluke that Paley’s film succeeded?
Maybe it would actually have done just as well in the proprietary model?
Maybe Amanda Palmer could only crowd-source her album because she had
already benefited from record-label promotion? Maybe the Blender Open
Movies can only exist because of the support by big foundations? Maybe
it can only work on a small scale, because otherwise no one would take
the risk?

Plugging those holes in the theory means creating
more examples, and examples of different types. Plus it’s going to be
fun to try it.

So, part of my motivation for producing
“Lunatics!” in this way has been this idea of putting free-culture
business models to a harder test.

Artists Should Be Paid

No real artist wants to make art primarily to get paid. On the other hand,
without being able to earn money for your work, it’s not possible to be
a professional artist. Where does that leave us?

Well, either we need to have a business model that works for artists, or we need to get used to only having amateur artists.

There’s no question that the power of the Internet to connect people has also
created an enormous upset to proprietary traditional publishing models,
and therefore to that system of paying artists for their work. I regard
that system as terminally broken. A few people with a long history in
the system are still making money, but this is a terrible time to try to
break in — that system is collapsing in on itself.

We need new models if we want to have both a free Internet and artists
who can support themselves on art. I think that’s possible, and I think that
with some refinement, the models I’ve described here will do it. But
somebody has to lead the way —

Somebody has to be crazy enough to go first!

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Terry Hancock is the director and producer of "Lunatics!" and the founder for "Lunatics Project" and the associated "Film Freedom" Project. Misskey (Professional/Director Account) Mastodon (Personal Account)