This week, writer/director/standup comic Louis C.K. released his latest standup special online through his own website, charging just $5 for anyone to download the video with no rights management restrictions.
That means, if you purchase and download the video file, you don’t have rights to redistribute it, but you can make as many copies as you want, write it to DVD to watch there, store it on as many devices as you want, that kind of thing. It’s a very open way to release a video, more generous than the right you receive in purchasing the average DVD.
Four days later, he’s announced that this experiment in online video production and distribution is a success.
The experiment was: if I put out a brand new standup special at a drastically low price ($5) and make it as easy as possible to buy, download and enjoy, free of any restrictions, will everyone just go and steal it? Will they pay for it? And how much money can be made by an individual in this manner?
The show went on sale at noon on Saturday, December 10th. 12 hours later, we had over 50,000 purchases and had earned $250,000, breaking even on the cost of production and website. As of Today, we’ve sold over 110,000 copies for a total of over $500,000. Minus some money for PayPal charges etc, I have a profit around $200,000 (after taxes $75.58). 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.
As of today, the video has over 130,000 buyers. (Disclosure: One of those buyers was me; I’m a big fan and saw the tour that concluded in the shows taped for the special.)
As Louis explained it to Terry Gross on NPR, setting the purchase price low and eliminating the hassles of DRM made buying the video — rather than downloading it free from a torrent — an easy purchase for people.
I believe setting the purchase price at a fixed low price, rather than allowing fans to choose their own price, was particularly smart. It reduces the number of questions a person has to answer while making the purchase, thereby simplifying the purchase. And it establishes a non-zero value for the item, so anyone can know it’s not worth nothing.
Could anyone replicate this success? It depends on their existing fan base. Louis has a built-in audience for the special based on his years as a standup and a writer for many TV shows, and especially on his current series on FX, Louie. The show’s second season premiere had an audience of 1.6 million viewers (cite), which was a high for the show at that point but was on a particularly competitive TV viewing night. If we consider every one of those viewers as a possible buyer of the standup special, then he’s had an 8% conversion rate — not an impossible rate.
Looking at his fan base another way, the people who are his most devoted fans would likely be those who follow him on social networks, like Twitter. Louis C.K. currently has 809,261 followers on Twitter, each of whom received several tweets over the last few weeks about the launch of the new standup special. The videos purchased come to 16% of the Twitter follower fan base.
This is only a few days since the show became available, and while we’d expect the purchasing rate to die off over the next week, if Louis runs ads for the special during the TV show when it returns for a third season, there could easily be another bump in sales.
Louis C.K. has dedicated fan base, and while it’s not massive on the scale of Lady Gaga or other pop stars, it’s still large enough that having only 10% of fans respond to an offer means a solid return on his investment — and, just as importantly, control over the production and distribution that he’s never have working with a media corporation.
Back to my question: Can anybody replicate this? If you have an established fan base of about a million fans and can communicate with them easily via social media, mailing lists, or other means, and if what you’re offering is a quality product, this model should be replicable. If you have fewer fans, then you need a way to convince non-fans that your product is worth purchasing, which means more marketing on your part. But the distribution costs are so low, and the potential upside so high, it certainly seems worth a shot.