Hell Yeah for Kaleidoscope’s New Model

Justine:          Hi, it’s Justine Harcourt-de-Tourville. And we’re still at South Bay with our last podcast over South by Southwest series. We’re going to be talking with René Pinnell of Kaleidoscope and he’s going to be sharing some of his thoughts and some of his findings in trying to find the best financial models of creators and makers of VR.

                        In my eyes, this makes him a hero because funding is one of the hardest problems in the industry. So, stay tuned and let’s hear his thoughts as he gives it to us live at South by Southwest.

(INTRO MUSIC)

Justine:          So, welcome René. We’re here in South by Southwest 2019. And you just gave a great keynote, I hear, on the state of VR in funding. Do you want to give us a little heads up over that?

René:              Yeah, absolutely. So, thank you for having me on your podcast. Do you have a name for the podcast? What’s the podcast called?

Justine:          Well, right now, it’s just VRTL. V-R-T-L, you know.

René:              VRTL podcast.

Justine:          Yeah, virtual.

René:              Cool. I think it is. But we’ve talked before and you did a great interview before with me so I feel like I’m in capable hands.

                        So yeah, I gave a presentation today at South Bay. It was at the ungodly earthly hour of 9:30 in the morning.

Justine:          At South Bay, that’s not really fair.

René:              No, I was super impressed anybody came out. But today, we had a really neat crowd and lots of great questions. And what the presentation was about was it’s kind of an update on the research and design process that I’ve been under way onto the last two or three years.

                        So, we started Kaleidoscope as an organization with the mission to help artists raise money for projects. We knew because I come form a family of artists. I’ve been an artist myself and a filmmaker. And it’s so hard to be an artist. It’s so hard to raise money. You know, almost every artist I know struggles, and struggles more than I think they need to. I mean certain things need to be hard.

And I think it’s okay to struggle if you’re an artist early in your career, but I think there’s too many artists that I know that are at the top of their game creatively, amazing artists that still financially struggle.

Justine:          Well, when you’re trying to make an art, you’re right. It shouldn’t be so difficult to have messages or emotions or things that need to be heard especially against a society that’s full of science and technology, you need another voice, another vibe coming into your sphere.

René:              Yeah. Artists provide so much value to society. If you think about scientists, you brought up scientists, it’s like there’s lot of… probably not as lots as it should be, but there’s lots of research and development labs and out of the universities as well, where scientists and engineers dream of new technologies. And they can patent that technology. And so, when in 10, 15 or 20 years, that bleeding edge of technology becomes used in mainstream products and services. Those early developers and those early scientists can see profit from that. You know, they have something to gain. And artists, there’s no equivalent.

Justine:          Absolutely.

René:              Artists are doing that R & D for us. You know, they’re on the frontier. They’re the ones that are pushing not only the medium, whatever medium they happen to be working in, but they also give us perspective about who we are, our place in the world and how we ought to live. Artists are a reflection. They are a myrrh and that’s an incredibly valuable service. And they don’t right now stand to gain much from being at that frontier. And I think that’s fundamentally unfair.

                        So, we knew that kind of in our bones and that’s what we…

Justine:          So, you have done this scientist thing and have done research?

René:              Yeah. We’ve done research. We did research. We did a lot of research and a lot of conversations with a lot of smart people about this problem. So, we knew that. And we didn’t want to assume what the problems were with the funding landscape, which is we just knew it was hard to be an artist. So, we’re like, “So, let’s learn how the current system works before we even think about trying to imagine or be so presumptuous as to reinvent it.”

So, we spent about three years executive producing projects. We’d become friends with artists. We [formed] their project and then we’d sign on to executive produce it, and then we’d help raise the money. So, through that process, we raised a little over $4 million for some really fantastic projects. We helped raise over a million dollars for Spheres, which we executive produced with Darren Aronofsky and was directed by Eliza McNitt.

Justine:          And one at Venice, one in [4:50 inaduible] and…

René:              Beautiful, beautiful projects with a lot of tremendously talented people, Atlas V, [5:01 ianudible company or person name], Dylan Golden at Protozoa. All-star. Big projects. I love it.

It was amazing great experience. I was going on and on about that way too much. I’m really proud of that one. I’m proud of Battle Scar too. Battlescar is another project that we did that I just fucking love. I love the team behind it. It’s about two runaways in New York who formed a punk rockband in the ‘70s.

Justine:          Wow.

René:              It moves like cinema. The first episode premiered at Sundance a year ago, 2018. And the second and the third episode was only done this year. So, it’s a trilogy. It’s a three-act thing. Man, that’s going to blow your socks off.  

Justine:          Battlescar.

René:              Oh yeah. Huge tangent of…

Justine:          Okay.

René:              So, we spent three years of fundraising for these projects to see how it works. And it did work but it didn’t work very well. It was way too complex, way too long and it wasn’t repeatable. It’s too complex in a sense that you have to piece funding together from like seven or eight different sources, so you know…

Justine:          And that’s a lot of conversations, seven or eight times.

René:              Everybody has to have a different pitch.

Justine:          Right.

René:              If you’re pitching to a granting organization versus you are pitching to a company like Google. Are you pitching them from which department? There are like 10 different departments. They all want to hear a different thing. It’s completely overwhelming and its complexity and the number of things you have to get good at.

And all of that, it was too slow. I mean it would take us years to raise money for projects.

Justine:          Just for one project.

René:              Just for one project and we’d be raising for multiple projects so that they’d happen. I’ve been in development on one project for almost five years, and it’s an amazing project. It’s just one of those things that takes a long time to piece the funding together for things. So, it’s too slow.

                        And the final thing that was really challenging about it was that it wasn’t repeatable. You know, you’d spend all of this time in fundraising for a project, and you get to the end of it and you’re like “Sign this deal. Fantastic. Let’s get some money for the next project.” The rules of the game had changed, the people that you develop relationships with, and the company would move to a different department. What they were funding at all would change. Or if there are any funding at all, some companies would get in and some companies would get out. So, you’d be like starting from zero with your next project.

                        So, all that, add it up to just being unnecessarily hard. It’s like those didn’t seem like things that needed to happen. If you had a project that was fucking awesome and there’s consensus in the industry that it’s fucking awesome, like you should be able to raise money for it. It’s just piecing it together and having the business intelligence that you will know exactly that a particular company is going to fund a particular thing and know the exact right person.

Like you can build software to do that, but that’s such a hard problem. I feel like the best we could do is maybe a 50% improvement on the current system. That’s not radical enough like I think it should be much bigger.

Justine:          So, you’re saying this would help solve some of the problems that’s not necessarily you know. Usually, everyone says the problem with VR is all about the headset.

René:              It’s funding.

Justine:          Actually, part of the reason that content isn’t getting out there is funding. And so, what does Kaleidoscope wanted to do to help fix that?

René:              So, these are the problems. God, I feel like this is the longest winded way of saying what we’re working on. But I feel like you need the context.

Justine:          We need the context.

René:              So, that was the problem, right? We did that for like a couple of years and then we’re like, “Okay, we’ve got a good idea of how the current system works and the shortcomings of it, so let’s try to think of the solution.”

And so, the first thing that I thought of was, “Okay, let’s do deep-diving crowdfunding.” Crowdfunding has been around for a while. It’s pretty established. It has done a lot of good for artists. There’s a lot of things to love about crowdfunding.

Justine:          Was it the first VR piece that was really incredible El Cosmonauta? How would you say that in Spanish? The piece from Spain was crowdfunded.

René:              Which one?

Justine:          The Cosmonaut.

René:              The Cosmonaut. Oh, that’s another one.

Justine:          Nicolás Alcalá.

René:              Oh, the future lighthouse one?

Justine:          Yeah.

René:              Yeah. I’m ashamed to say that I haven’t seen that. But I know future lighthouse and we mourned their losing. Their losing, what the fuck is that? Their losing. We’re losing them.

Justine:          We’re bereaving, yeah.

René:              We’re bereaving their losing.

And then, they went out of business and that’s totally a sign of…

Justine:          A funding issue?

René:              A funding issue, right? Like the biggest problem that any artist faces is funding. And I think, for this industry to survive, we need to have totally increase in funding by an order of magnitude is that bigger projects, more ambitious projects can be developed.

Justine:          Yeah, so crowdfunding was one.

René:              Yeah. We looked into crowdfunding. There are lots to like about it, but ultimately, the issue with rewards-based crowdfunding, which is the majority of how crowdfunding works, is most projects can only repeatably raise around $50,000. So, your film project, your videogame project and immersive art project, it’s roughly, give or take, $50,000. That’s enough for a demo. It’s enough for a prototype, but it’s not enough to make a big professional thing.

Now, there are some outliers for sure and reward-based crowdfunding. But you know kick starters are really good about publishing their numbers. And if you look at them, the average is around there, which again is fantastic for a certain type of project at a certain stage of development, but it’s not enough to support a studio producing sizable meaningful work.

Justine:          Keyword meaningful.

René:              Yeah. So, that was the issue with crowdfunding. So, the next thing we looked at was maybe we’ll find a way to make investing in art entertainment projects the thing. Because if people are only motivated to chip in $50 to a kick starter, maybe if they could do that same thing, which is put $50 into a project and get that warm, fuzzy feeling of backing an artist that you like. But then, you add on top of that. And if it does well, you get a piece of the pie. You get some of that revenue.

We think that that’s a psychological or a meaningful difference and [11:00 subsidive] difference enough to get people to make those $50 checks into a $500 check. And that would get us to somewhere in that ballpark of that order of magnitude increase in funding that I think we need. The issue with that though…

Justine:          There’s an issue?

René:              There’s an issue. It sounded good, right?

Justine:          Yeah.

René:              It sounded really good.

Justine:          It’s a good word.

René:              I’m teasing you. I’m teasing you with all the maybe solutions because I think the final solution matches these up in some interesting ways. But the issue with just making it an investment is that shares don’t value or capture the impact that art makes on society or culture. Like if you look at the total value that a project generates, revenue is only part of the picture. The other part is how much does this move culture forward, how much does this advance the artform, how much does this change society in a good way, hopefully.

Justine:          That’s always intangible. It’s so hard to quantify.

René:              It is, and it’s hard to measure, right? So, if you start to say it’s missing part of the picture and the full picture has to include social and cultural impact, how do you measure that? How do you count it? How do you quantify it?

Justine:          The number of bumper stickers on a car?     

René:              I wouldn’t trust any kind of like…

Justine:          Measure.

René:              Yeah, almost any measure besides one, a market measure. So, the thing that markets are really good at… I’m definitely super skeptical of capitalism, but one thing that markets do really, really well is they are able to take complex sets of data and rationalize them into sort of an ultra, ultra compressed answer on the value of a thing, right?

Justine:          And easy to digest format is called numbers.

René:              Yeah, exactly. What’s the cost of the… so, that is actually a way to do it if you look at the art market business model.

So, in the market, you have a work of art or a painting or maybe a series of lymphographic prints and you have scarcity. There’s a finite number of them, right? Typically, in the art world, it’s one to maybe 100. It’s the typical range. But that scarcity and the fact that you have a market of people trying to figure out how much to value that work of art, in a sense, what they are doing is valuing cultural impact.

What do I think the significance of this artist is going to be 10 years from now? What do I think the significance of this specific art piece? And do I think it’s going to appreciate in value? And if they do, then it means that it has cultural impact because over a long enough timescale, markets are fairly good at establishing that.

You know, they have a way of picking artists out of history and over time getting the right. The problem is that for most artists in this model, it’s not on a timeframe that benefits them. Most artists sort of peak after they die. You know, Van Gogh is like completely poverty-stricken in his life. Orson Welles struggled for most of his life to raise money. But eventually, markets tend to get it right in their artworld, I think. But regardless, it was an interesting mechanism. And I was like, “Okay, that’s the piece of the pie that I haven’t had before. This is the way to value cultural and social impact.”

So, the question then became, what if you took this artworld market and you scaled it up? What if instead of doing just one to 100 limited-edition prints, you had 1 to one million or more? And what if owning those limited-edition prints entitled you to certain rights, certain rights that would maybe tickle your friends if you’re a fan? Like associate producer credit, like having the ability to attend the premiere, those sort of warm fuzzies. And then, you could also bundle financial incentives.

Justine:          Okay, so that’s kind of like the crowdfunding model, right? The little bonuses you get for…

René:              That’s like the rewards.

Justine:          Yeah, the fuzzy rewards.

René:              Yeah, the fuzzy rewards so you can pull the best part of crowdfunding in and the fact that you can reach out to a large number of people, we’ll get to that in a second, with financial incentive. Both in terms of the kinds that exist in the art market where, by owning this limited edition, if you believe the work of art is going to have a greater cultural significance in the future, that should appreciate and increase in value. So, an investment value like any other investment asset, it has depreciation potential. And then, the other thing is that since it falls in the private property law, you can make money from owning that print in the same way that I have a painting, I could rent it to you or I could lease it to you. You know, you can do that with…

Justine:          You could trade.

René:              You could trade, yeah. So, you can do all these things that potentially give you a source of revenue from that ownership as well. So, that gets the best of all worlds, which is I get the warm fuzzies, I get a potential investment asset and I could also get something that could also bring in revenue in the meantime, which starts to look like something that is really potentially interesting. It’s a long chart but…

Justine:          And you’re moving culture forward.

René:              And moving culture forward, yeah. So, basically from a practical sample, and what we plan to do is build this as a major future set on top of the Kaleidoscope platform where projects will apply to our review committee. They’ll select probably initially pretty small number, probably like five to 10 projects that this review committee thinks are artistically amazing, culturally relevant, and at least a decent percentage of them probably like 50 percent will have revenue-generating potential, where the other like 20, 30 or 40 percent will be projects that have no revenue, potential projects that are even like bizarre super artistic things to social justice documentaries that we want to give away instead of sell.

Justine:          So, transformative experiences.

René:              Yeah, things that are not focused on…

Justine:          On money.

René:              On making money and in fact, would be inappropriate to charge for and we want to make sure… And what excites me about this model is that even those projects, it’s not charity. If you buy a limited edition prints and one of those things that has no potential to generate revenue, fine. But if in 10 years we’re still talking about that project and that artist has gone out to do amazing fucking things, you’ve owned one of the pieces of their work and that can appreciate in value.

So, it gives you an actual economic incentive to put money in the things that are fucking weird, art projects that are socially relevant, interesting stuff. And that’s the part that really jazzes me and gets me super prompt.

Justine:          Wow. Another thing that I like, René, that I know Kaleidoscope really cares about, including all that mix when you were talking about the review committee, one thing I know you look at, which is a little unlike our Hollywood white male executives that are all over the place, is you do include gender diversity and different types of not-the-same-segment that we’re used to hearing from. You want to give a little insight into that?

René:              Yeah. So, diversity in all things is super important to me. So, diversity in terms of who’s creating the art. The diversity terms of our review committee like who’s judging that art, who’s in the position to make any kind of decisions that will impact artists. We want diversity in the types of content that’s made. We want diversity in the sense that some projects really are amazing and are totally commercial. I mean we want projects that have no commercial potential. We want things that are documentary. We want things that are fantastical. We want diversity in terms of the full stack of the company.

Justine:          Like the mediums and the way the actual presentations are done?

René:              Yeah. And what [19:08 inaudible]. I just believe that fundamentally you’re going to make better decisions when you have that mix of ideas and that mix of backgrounds and those mix of people. You’re going to have less blind spots. And that’s a big thing when you’re judging artwork because it’s so subjective, right?

Justine:          Right.

René:              And if you don’t have a lot of diversity in those decision-making bodies, you’re going to miss great projects. So, I’m doing it for moral reasons but I’m also doing it for entirely practical reasons which is like…

Justine:          And good economic thought too. I mean diversity is proven. You know, the more diverse your team, the better results tend to be. So, I mean it’s an economically sound decision as well.

René:              It is. I don’t know if you have ever done much research about the wisdom of crowds but it’s this fascinating phenomenon that the more diverse and large the decision making body is and actually the more it’s made up of non-experts, the better the results are.

And it’s like famously born out with things where you have like people out of a county fair judging the weight of a cow, and you’d think that if you took the average of expert opinions, cow owners, that result would actually be more accurate. But in fact, they’ve found with many variants on this experiment that’s it’s the opposite. People that know nothing about cows, little children, old people, city people, random people, people that know more a lot about cows, you know, if you mix it all up like that, the average of their guesses of the weight of the cow is better.

                        So, yeah, I mean diversity is not intuitive almost at how important it is and how effective it is.

Justine:          Well, that’s why I think it’s noteworthy that you do include it into your process. So, after you go through the review process, what is the one tangible people or investors get to take home? What will they be receiving?

René:              That’s a really good question. So, when somebody buys one of these limited-edition prints, first of all, we’re still designing this, like today marks the first day of our open solicitation for feedback on this idea, which is why…

Justine:          Oh, it’s the debut.

René:              It’s the debut. It is. And I’ve been like having private conversations with people about this, but I haven’t really started to openly talk about and advocate and think this is a good idea on the record. And so…

Justine:          Thank you for being so brave.

René:              Yeah. Well, it took me three or four years to get to a place where I’ve felt like I had enough insight and knowledge to even prescribe something. But we don’t have all the designs so I’m going to say that is a cavea. But the way we’re imagining it being designed is that there’s a commissioning phase for projects. So, this is a project that has been produced that’s raising money and you buy some number of limited editions prints of a project. And essentially, what you get in the first version is just a legal document. It’s the equivalent of…

Justine:          That’s a really sexy artwork.

René:              No.

Justine:          Legal draft.

René:              No, it’s a legal draft. It would be something that is modeled after probably something that looks a bit like a licensing agreement mixed up with a certificate of authenticity from the fine artworld, mixed up with equity and investment contract. But we’re going to try to make it human-readable, we’re going to try to make it very short and we’re going to try to make it very explicit in terms of you own the legal copy of this project that is in production or you own it now but you will receive all these benefits as soon as it’s completed.

And that would be the thing that you walk away with. Eventually, we’re going to probably do something in the blockchain space to make that legal document have that much more trust. But you know, legal fiction has got us pretty far in society and there’s a lot of weight and power than just the document. I think the first version of this is that people will buy these limited edition prints, get a contract, and proving they own that limited edition print and then be the recipient of certain benefits as soon as the project is done.

                        Now, once the project is done, people would be able and should be able to buy and sell those limited-edition prints. So, we’re going to be building a market where people that participated in the commissioning phase can sell their copy of it. And at that point, once a project is done, there will be other digital assets that are associated with it.

So, once the project is finished, as somebody who owns a limited-edition print, you’ll probably have things like early access to it. So, you’ll maybe three months before it’s released in the general public, you’ll get a copy. You’ll also probably I mean encourage the artists to do special features that’s just available to people with a limited-edition print.

And then, there would also be things that are not transferable, that are only something that you get if you are in the commissioning phase like credit. So, if you commission a piece, you would be included in the credits somewhere along the lines of an associate producer credit. And that’s nontransferable because it’s just not practical and it will also give somebody an incentive to put the money on a commissioning phase.

                        I forget what your question was. I could go on about this for like three hours.

Justine:          Well, in a way, I think when we say print, the first thing I think of is the animation sells. I mean like you could buy an original sell of…

René:              Yeah, a physical print.

Justine:          Yeah, a physical print.

René:              And the film industry, the reels of film that you’d [ship up places[, they’re called prints.

Justine:          So, we’re getting a virtual print.

René:              Yeah, a virtual print that is sort of like an empty frame in a commissioning phase. And then, once it’s done, you get to fill that empty frame with the actual artwork and owning that original.

I think sometimes it’s easier to wrap your head around this when you think about the fact that we’ve been grappling with these ideas ever since we had mechanical reproduction. So, as soon as we had like high quality prints, basically, it started to blur the lines of what was an original anyway. So, there’s this idea that form that you have an original then you have a limited edition print and you can have an open edition print.

Justine:          Right.

René:              Not all these things can co-exist. You can be looking at the same painting in these different mediums, but they have different value, right? Like if it’s one of a kind, the original, that’s worth something. If the artist makes a limited-edition print that’s worth something else. And then, an open edition that you can pick up an artbook or something is the lowest [25:10 sphere] of that.

                        And you put all those three exist, it’s the same media, right?

Justine:          Right.

René:              So, with digital entertainment or any form of art that you mix up are basically digital, I think that same idea will bear a lot of fruit where you have probably the original, the master that comes with certain rights that the artist owns. Then, you have limited edition set of prints that comes with a different set of bundled rights and privileges. And then, you have something that the general public can consume, which I imagine to be a reproduction, or a rental of those limited edition prints hence the ability of those people generating revenue from something they own.

Justine:          That’s exciting. But what happens then after people, artist have come to you, they’ve been reviewed, they’ve been selected and commissioned? Two things, what do they have to do to be chosen? Like what kind of… do they have to have an idea on paper? Do they have to have a pilot? I mean what’s the best thing to be selected?

René:              So, yes. Everything we’ve been talking about is this far out like next thing that we’re building, like we do a lot of other stuff at Kaleidoscope. We’re always trying to find opportunities for artists. So, at South Bay, we have showcase where we’ve selected several projects that are presenting work and development.

Justine:          And a chic house, I hear.

René:              And a pretty cool house. We host a lot of events and then we’re going to do the first event with Riot this summer, which is a marketplace event. And all of that side of the business, the majority of what we’ve been doing up to now is just about connecting artists with industry people that can fund their work. So, we still do that.

And doing that has a review process where artists submit their work to be accepted for those opportunities. And we’ve put together a review body of about 120 people now that review all the projects that are submitted for these opportunities. And what we look for is different depending on the opportunity, but there are definitely consistencies. One of them is it’s really important to have a project video. Something that people can watch and get of what your thing is in a couple of minutes. Either that or you have to have like really amazing people on board like very, very well-known talent.

Justine:          So, we’re talking beyond the story board.

René:              Beyond the story board. You need to have something that’s like a couple of minutes that people can watch and like feel like they’re in the story.

Justine:          Okay.

René:              And have it be pretty close to the visual fidelity that the finished project will be. It doesn’t necessarily have to be in VR.

Justine:          Okay.

René:              With the exception being if it’s your first VR project, it has to be in VR. Like if you’ve done a couple of projects that have done quite well in VR, that checks the box of “Okay, then you know how to make VR. I don’t need to worry about that. I can just watch a video and get the gist of it.” Yeah, but if it’s your first one, you have to have something really, really good in VR to convince anybody that you’re going to be good at making VR.

Justine:          How much do you think people, it’s a range, but you have to spend them or raise themselves before they can even get to a commission to be adjudicated?

René:              It depends on how much of their project they can create themselves. So, there’s definitely some artists of guys like Coen, Daniel Ernst. I mean there’s a ton of artists that can do most of the work and prefer to do most of the work themselves. In which case, requires a bit of money.

Otherwise, you’re typically going to have to spend 10, 15, $20,000 for developing it, like getting the concept art together. If you’re trying to get a talent onboard, that just takes time. you’re going to have to pay somebody like $5,000 to a broker or a deal. Even if the deal is you’re not paying the artist any money upfront but just to have them go to the hassle of like signing a piece of paper. You’re going to have to pay them another $5,000.

So, yeah, it’s hard to do the developmental work for under 10 to $20,000 unless you can do it all yourself. But if you’re actually hiring people to work on it and sort of going that route, it’s going to cost about that.

Justine:          Okay, so they have done that, and they’ve invested hopefully what they need to, and they’re selected, then what happens? What do you envision?

René:              Well, it depends on what the opportunity is that they submitted for. But the goal of everything that we do is to help artists get money. So, that side of the business is trying to achieve that through professional networking where we try to provide opportunities in events and moments where those relationships can form, and artists and potential funding sources can get to like each other and trust each other. And that’s how deals get done.

Justine:          And how do you envision the platform? Because I think you’re in the early stage of developing the platform physically. What’s going to happen there?

René:              So, right now on the platform, the main thing that you do is professional networking. So, the goal of it right now is to kind of like attending one of our market events where it’s bringing interesting people together. So, everybody on the platform is vetted. They have to apply. And that review body or review committee that I mentioned earlier, you know, they select new members. And then, on the platform, you can make a beautiful profile for projects that you’ve worked on. And that’s a good tool for getting in front of potential industry people and starting conversations.

So, that’s essentially what we do with the platform now. And in the future, we’re going to make a posting in discovering these types of opportunities that we already do a lot easier and hopefully do a lot more of them. Both ones that we manage as well as other people manage basically any opportunity that would advance an artist or a project, giving the community a place to submit those and add those and then, for artists and projects to apply and informed of those opportunities might be. So, that’s one feature set that will I think make the platform a lot more valuable.

And then, eventually, we want to allow artists to make money directly on platform with something that we talked about I the first part of the conversation. That’s probably the most giggly and…

Justine:          Get your print.

René:              …technically challenging thing. So, it took us a long time to come up with an idea that we like enough to start to pursue. We’re going to do the first version of it probably this year but it’s going not be largely off platform and largely just with paper. And then, little by little, we’re going to try to build that into a more robust feature that can be opened to more and more artists on the platform. But initially, it’s going to be a very limited number of handpicked projects that will pilot this limited-edition thing and prove that it can work.

Justine:          Well, that’s exciting. It really is exciting. Can we go back into the very beginning part where we talked about the research you found? And have you found research? Because it’s a terrible time for VR in some ways and it’s a great time for VR in other ways. And what I mean the terrible part in some ways, it has a lot to do with the shifting and figuring out things about funding, which is clearly the hardest part. But on the other hand, plenty of people are able to do this. And there’s a lot of ways to see VR. It’s not only that you have to watch it with headset. There’s LBE. Do you have anything you’re doing in that kind of space as well?

René:              Yeah. So, I actually think they’re in a really pivotal moment in the industry right now, where the first set of projects that are going to make a lot of money are in production now.

So, we’ve seen a couple of projects do really well and make multiple millions of dollars. Probably not much above 10 million, so I think the delta for a really successful project is somewhere between one and 10. That’s still not bad money especially if the project cost half a million or a million dollar to make, it’s decent profit.

And we’ve learned a lot about what makes a successful project. Then, I know a lot of artist in a lot of studios that are in production on work that I really believe have a real potential to generate serious money. And one of the bright spots and one of the ways that I think people do that is through location-based exhibition and entertainment centers.

                        If you produce something that is 10 times more exciting than going to a movie, and I’ve seen VR that I feel like does that, I think you can get people to go to these new VR centers and spend a lot more money that they’d spend on a movie ticket.

                        I think that’s one model. And I think another model is that if you put it right, if you can get a lot of people through at a relatively low-ticket price. And then, there’s definitely some models that I’ve seen that are working on how you can get a hundred people at a time similar to people seeing a movie. So, I think there’s definitely going to be ways to make that work.

                        And all of this is really encouraging because as soon as we start having a few of those experimental centers really take off. And we’ve seen a couple, like Dreamscape is really doing well. I’m really intrigued by Two Bit Circus what they’re doing. Meow Wolf is blowing up. Right now, it’s mostly on the non-technical immersive side. It’s more like immersive spaces but they’re building in lots of technology and they’re opening up new branches in Las Vegas. They’re opening new branches in, I think, DC and like everywhere. I mean the scale of Meow Wolf is like shocking, but I can say that immersive entertainment a hundred percent. So, I think, in general, the trend of people spending money to go have massive immersive high-quality experiences. I think that’s only going to increase. And I think that’s only helps our industry.

So, one of the really important rights to bundle into this limited-edition print is the right to make money from exhibiting that. So, one of the people we see selling these limited edition prints too are owners of these location-based exhibition centers, where you spend a thousand dollars perhaps on a limited edition print now gives you the right to install it on a computer at your center and make as much money as you want. You keep whatever you make. You own that. You get to install it.

Justine:          Well, that’s a good investment.

René:              It is a good investment. That’s one model. Another model is how to be more like a lease and the amount of money that you generate is based on the actual usage of it. So, you could definitely structure it that way as well.  

Justine:          So, like a percentage of the profits would go back to you.

René:              Yeah, exactly. I mean the really common one of the LB space is having a certain money amount that you spend in a minute. I think like 12 cents is kind of like the going rate per minute now.

So, you could definitely make those business models work too. But the point is that these limited-edition prints ought to be an easy vehicle to manage that process of selling to location-based centers. Because not only would that location-based center get the right to monetize it in one form or another, but they could also have that be an investment asset where they hold onto it and then they sell it when it’s run with the course, right?

                        So, like most location-based entertainment, you’re going to need to change your lineup in order to stay fresh, right? So, it’s called the refresh. In cinema, most movies hold a matter of weeks. I don’t know what the cadence is going to be for VR and AR entertainment centers, but it would be something, right?

Justine:          Right.

René:              So, after three or six months, rather than just take a loss on that, you can actually sell it perhaps for more. So, it’s like a pitch we could make to that sector of the industry to help put money into the projects.

Justine:          That’s perfect. Alright, René Pinnell, thank you so much. And as a one text into another, it’s nice to see you and talk to you.

René:              Thank you for having me on your show. It’s been an honor and a pleasure.

Justine:          Great.

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