Ignore the piracy

Louis CK is responsible for much joy. If you don’t believe me, watch this and if that isn’t enough hunt down his appearances on The Daily Show. So you had better believe that if he had a digitisation angle I was going to post about it.

Fortunately, this week he ran an experiment. Rather than putting on a show and selling the video through conventional means, Louis CK decided to put an hour long show (of new material) on his website, having produced it himself. He didn’t put it there for free but for $5 you could download a DRM free copy. He knew this was risky and so wrote a plea on his site:

To those who might wish to “torrent” this video: look, I don’t really get the whole “torrent” thing. I don’t know enough about it to judge either way. But I’d just like you to consider this: I made this video extremely easy to use against well-informed advice. I was told that it would be easier to torrent the way I made it, but I chose to do it this way anyway, because I want it to be easy for people to watch and enjoy this video in any way they want without “corporate” restrictions.

Please bear in mind that I am not a company or a corporation. I’m just some guy. I paid for the production and posting of this video with my own money. I would like to be able to post more material to the fans in this way, which makes it cheaper for the buyer and more pleasant for me. So, please help me keep this being a good idea. I can’t stop you from torrenting; all I can do is politely ask you to pay your five little dollars, enjoy the video, and let other people find it in the same way.

This is what we would consider cheap talk. The proof would be in what actually happened.

Fortunately, four days later we found out. Louis CK posted the results of his experiment. The video cost $170,000 (but he claims this was paid for by audience tickets so we should leave them off the calculation as they are not part of the opportunity cost). But he did put in more effort in preparing material than he would have had he had a guaranteed fee from a big company. Website development set him back $32,000 because it had to work and permit lots of downloads; the theory being that if it went down people would turn to piracy. So that’s at least $203,000 in capital costs.

Of course, profitability lay in the revenue results. 110,000 copies were sold yielding $550,000 in revenue. With some charges to Paypal, Louis CK estimates that he had a profit of around $200,000. He wrote:

This is less than I would have been paid by a large company to simply perform the show and let them sell it to you, but they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use. They would have withheld international availability indefinitely. This way, you only paid $5, you can use the video any way you want, and you can watch it in Dublin, whatever the city is in Belgium, or Dubai. I got paid nice, and I still own the video (as do you). You never have to join anything, and you never have to hear from us again.

In other words, he traded off a little fortune for lots more fame. And I suspect he isn’t quite done yet on the sales; we haven’t even hit another weekend; which is when I’ll pay for, download and watch the special. Louis CK hopes he can deal this way well into the future.

The moral of the story here is that if you can make consuming purchased digital content easier than grabbing it freely, you can sell digital content. Of course, the larger question is whether if this were done regularly people would accommodate it and invest in learning how to more easily grab free content. Time will tell on that one.