This would never work. If anyone is going to "kill hollywood" they need to address the massive costs associated with producing a movie not the money raising. If movie production could be taken down from $100m to $500k then that would be the game changer, but even that ignores huge barriers and reasons Hollywood exists.
To "kill" Hollywood people need to address the costs, not the money raising. Crowd sourcing $1m is close to impossible, crowd sourcing $1m on a regular basis is even harder and crowd sourcing $10m+ on a regular basis? never going to happen. Even if it was achieved once or twice, as soon as a movie doesn't meet expectations the idea will fall apart, if costs are reduced to much lower levels, losing a crowd sourced $500k because the movie sucked is much more palatable than $10m.
Studios inflate production budgets so it appears the films lose money in order to cut out investors/producers/etc from net profit participation. The studios make their money on distribution and by charging exorbitant rates. A lot of money goes from one pocket to the other of the same company at these exorbitant rates. Here's how to cut:
- Studios charge production overhead fees in excess of 35% reducing significantly the amount of money spent on the actual production
- Studios charge interest in excess of 20% on all expenses incurred in development, production and development
- Producers are required by the studio to contract with vendors they either partially own or have pre-negotiated rates with the studios
- Example, Technicolor pays Universal $25 million at the beginning of the year to be the exclusive lab for all Universal productions. Then Technicolor charges inflated rates to Universal. The $25 million offsets this and the result is the production budget is artificially (i.e. criminally) inflated.
- Example, studios may make a producer pay 40 cents a foot for negative film processing vs 15 cents normally, or up to $4 per foot for release prints vs $1.50. (this data is old)
- A fair system using digital cameras and related technology (e.g. visualization, digital 3D mapping), along with digital distribution to cinemas, should reduce the production and distribution cost of a major film to a few million. +advertising
Same things happens with marketing. The studios will advertise a film through their TV network, all while controlling the prices and limiting net profit participation for the outside investors and producers. All this is a clear case of financial fraud and is known as - http://en.wikipedia.org/wiki/Hollywood_accounting
Because everyone keeps letting it happen. It's not illegal (yet) and the actors go for it. Acting is like gambling... Lots of people dream big, but only a few actually make it. Most of the dreamers are willing to risk everything for that chance. They'll sign any contract that gives them a chance at making it, and they think not signing a bad contract will mean they'll never work. (And that's probably true.)
The music industry works the same way, in regards to the actual content producers.
I don't think Hollywood as a monolithic creatures should be killed by another monolithic creature, even if it's a lot more efficient.
I think Hollywood can only be killed by a thousand cuts. Make websites, companies or tools that do one thing very well, and better than that part of Hollywood. Then, when enough of these companies are built to replace every part of Hollywood, this whole cluster of companies can end up killing Hollywood.
Two major budget components are people (lots of highly skilled professionals) and set construction.
Props and wardrobe could be revolutionized with cheaper CNCs and apparel machines and better and cheaper creative content design software - which is being currently done (Zbrush + DIY CNCs), but someone still has to design the stuff.
Here's a possible implementation of your idea that could help get the ball rolling.
1. Get a group of wealthy investors to select a well-known director and film that they would like to support. Ideally the people in charge of the creative side would be open to trying alternative business models.
2. Try to work out a reasonable budget to produce the movie. The overall cost should be much less than usual due to the complete lack of middle-men.
3. The investors provide funding to create an awesome trailer for the movie.
4. Using this trailer, the movie producers crowd-source funding for the movie. If this funding falls short, the investors are obligated to cover the difference. However, if the funding exceeds the movie's budget, the investors are rewarded accordingly.
5. The movie is completed and released into the public domain.
This is indeed the single biggest problem -- the cost of producing and marketing a broadcast/theater quality feature is spectacularly high. Technology will help, but we need to see it come down by 1-2 orders of magnitude.
Other film industries around the world routinely put out more movies with less production costs than hollywood. Might not be the exact quality but many have been getting better to the eye the last 10 years alone.
I took a look at my recently watched movies (specifically the low publicity / small names) and they all have budgets (when listed) of at least a few million dollars. Hell, this movie called "Rise of the foot soldier" had a budget of $4m and only did a couple of hundred thousand income: http://www.imdb.com/title/tt0901507/ and it had no big names, or maybe this is just "Hollywood accounting"?
To "kill" Hollywood people need to address the costs, not the money raising. Crowd sourcing $1m is close to impossible, crowd sourcing $1m on a regular basis is even harder and crowd sourcing $10m+ on a regular basis? never going to happen. Even if it was achieved once or twice, as soon as a movie doesn't meet expectations the idea will fall apart, if costs are reduced to much lower levels, losing a crowd sourced $500k because the movie sucked is much more palatable than $10m.