Crowd-Funded Angel Studios: A business born out of bankruptcy

Part 1 of this discussion appeared on my blog three days ago if you haven’t viewed it. In continuing the conversation about Angel Studios, this post takes us back to 2016 when VidAngel (the previous name of the company) was shut down by a massive 62 million dollar copyright infringement lawsuit brought by Disney , Warner Bros., LucasFilm, Twentieth Century Fox, New Line Productions and MVL Film Finance. It was the biggest copyright case in decades, according to Salt Lake City Fox reporter Ben Winslow.

Seven years earlier, in 2013, Idaho farm boys Neal and Jeff Harmon co-founded VidAngel in Provo, Utah. They saw where they could fulfill a need in the streaming space and earn a living by offering family friendly viewing from top brands. Excluding offensive content on their streaming platform was VidAngel’s bread and butter. For a monthly fee, households in their smallish Utah territory got the most coveted Hollywood entertainment without nudity, sex, violence or otherwise offensive material.

The problem was, they stored the content on their private server and edited the branded material (without obtaining permission) before passing it on to consumers. Uh oh, that’s not good. As much as I sympathize with the Harmon Brothers’ moral sentiments, I don’t blame the studios on principle. Copyright protects the fabric of an intellectual property. I do cover the basics of copyright in my book but it’s not rocket science. Tampering with the content for profit is a form of theft.

In a public statement made in 2020 after a Federal bankruptcy judge settled the case for 9.9 million, VidAngel CEO Neal Harmon said he offered to pay the studio alliance many times. But, and I guessing here, not before they altered and profited from the copyrighted material. The studios refused and forced VidAngel out of business. Maybe the brothers thought it would be easier to get forgiveness than permission. Who knows.

But the Harmon Brothers were just getting started. VidAngel’s loyal customer base and affiliated church communities donated enough money to pay off the damages and bankrolled the sibling duo in a new venture. They re-emerged as co-founders of Angel Studios, an LLC., in March 2020 with a whole new business model. One they developed during their 5 year legal battle.

The brothers began a grass roots crowd-funding campaign to raise funds for creative content producers in alignment with their moral and spiritual convictions a few years ago. Their first big project became writer-director Dallas Jenkins’ The Chosen. According to Jenkins (son of co-writer Jerry B. Jenkins of the Left Behind novels). The Chosen started as a one-off Christmas Special for his church. But it was so well received they expanded it into a streamed series based on the life of Jesus and his apostles. The rest, as they say, is history.

There are two morals to this story, in my opinion. The first is, don’t tamper with copyrighted material, especially if it’s owned by one of most powerful media communities on earth. Secondly, millions of people feel underserved and unheard by the Hollywood elites and, I think, those people feel entitled to intellectual property that’s streaming. It’s kind of the same blindness to the realities of business that had practically destroyed the music industry.

Angel Studios’ crowd-funding model IS genius. From what I understand Jenkins’ executive producer Derral Eves is a co-founder and was/is the brains behind their unique crowd-funding model, which is already being used to raise millions for several other family friendly projects.

The final insight here is a cliché, even though it’s true. Never underestimate a person with passion.

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