Louis CK's 'Experiment' Brings In 110k Sales, $550k Gross, Over $200k Net… In Four Days

Business Models

from the nice-work-if-you-can-get-it dept

So that was fast. Yesterday we wrote about comedian Louis CK’s experiment in direct to fan sales, offering up his latest comedy special for a simple, convenient $5 download with no DRM (and also being human and polite in talking about it). All we’ve been hearing since the sale went up on Saturday was about how everyone’s buying it, and it appears plenty of people were curious how it was going. Louis has put up a statement explaining all of the results in pretty great detail. However, before we get to the numbers, he makes a really good point at the beginning. He points out that originally he had no plan to share the results, and that it’s natural to try to hoard such information. But somewhere along the way, he realized something really important: people aren’t just interested in buying his work, they’re buying because they’re interested in the experiment as well:

It’s been 4 days. A lot of people are asking me how it’s going. I’ve been hesitant to share the actual figures, because there’s power in exclusive ownership of information. What I didn’t expect when I started this was that people would not only take part in this experiment, they would be invested in it and it would be important to them. It’s been amazing to see people in large numbers advocating this idea. So I think it’s only fair that you get to know the results. Also, it’s just really cool and fun and I’m dying to tell everybody. I told my Mom, I told three friends, and that wasn’t nearly enough. So here it is.

This reminds me of Andy Richard’s thoughts on transparency, and how that helps connect fans even closer. It’s all something of a virtuous circle, it seems. Do cool experiments, be awesome, be polite… and be transparent. And people will want to support you.

On to the numbers. I love the fact that Louis didn’t just reveal the topline revenue, but walked through the expenses as well:

First of all, this was a premium video production, shot with six cameras over two performances at the Beacon Theater, which is a high-priced elite Manhattan venue. I directed this video myself and the production of the video cost around $170,000. (This was largely paid for by the tickets bought by the audiences at both shows). The material in the video was developed over months on the road and has never been seen on my show (LOUIE) or on any other special. The risks were thus: every new generation of material I create is my income, it’s like a farmer’s annual crop. The time and effort on my part was far more than if I’d done it with a big company. If I’d done it with a big company, I would have a guarantee of a sizable fee, as opposed to this way, where I’m actually investing my own money.

The development of the website, which needed to be a very robust, reliable and carefully constructed website, was around $32,000. We worked for a number of weeks poring over the site to make sure every detail would give buyers a simple, optimal and humane experience for buying the video. I edited the video around the clock for the weeks between the show and the launch.

For what it’s worth, Louis is pretty famous in comedy circles for his ability to come out with an entirely new “hour” of (amazing, brilliant, hysterical) content each year — and once he’s put that into a special or a video or an album, he never performs that stuff again. Lots of other comics will reuse old material or it takes them a lot longer to develop an hour of material, but as he explains here, he views it almost as if he’s a farmer and this is his crop. So it definitely was a risk to do things this way, but certainly a calculated and not a particularly crazy risk.

Okay, let’s jump down to the bottom line:

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.

I’d actually argue that he did much better than he explains as his net here — because he already admitted that the cost of production was paid for by tickets sold to those shows. So by not counting profits until he’s covered the cost of production, he seems to be doubling the revenue needed to cover production. This makes the results even better than what he suggests.

And while he says that the $200k (which, again, I think miscalculates the actual bottom line) is “less” than he would have been paid if he’d simply sold the show, there are a few other mitigating factors, beyond what he lists above. He focuses on how it would be worse for the fans. But I’ll take it a step further and suggest that going that path would have been worse for Louis as well. First, this isn’t done yet. While there’s definitely a huge spike in sales at the beginning, and it will only go down from there, I wouldn’t be surprised to see a decently long tail of support here. Second, and more importantly, this whole experiment — including the transparency here — likely has both widened his fan base considerably (even though it was already quite large) and, more importantly, deepened their loyalty to him.

In other words, it may not make as much now, but chances are this pays off even greater sums down the road. Many of the people who found out about this and bought the download are likely now to be more interested in watching his TV show, seeing him live or purchasing future specials that he releases like this (or in new, even more creative, ways). In other words, by doing this kind of experiment, by being polite, awesome and human… and then being transparent about this, it’s likely that his earning power from these efforts only grows. That’s pretty cool.

Two final thoughts on this, as responses to a couple of the common arguments we hear from folks who can’t get their minds past the traditional business model. First up, we always hear claims that “people won’t buy stuff if they can get it illegally for free.” It would seem that iTunes, Netflix and many other examples have long proven that false, but here’s another example.

Second, just last week, we discussed the claim by some that people who pirate do so because they claim that “all artists are rich.” I still have never heard that argument used by people who download unauthorized content, though I guess it’s entirely possible that some have made such a ridiculous argument. But I actually think Louis CK’s success here (not unlike Trent Reznor’s success with various business model experiments) shows how off-base that is. By any imaginable standard, Louis is doing okay for himself. But, nearly every comment I’ve read from folks who paid their $5 (like myself) to happily download and support Louis, is that they’re all freaking thrilled beyond belief that he’s brought in this much cash from this experiment.

I’m sure there may be some resentful jerks out there, but as Louis himself noted, the people who chose to buy are invested in this experiment and want it to succeed. No one begrudges Louis the money he’s making from all of this because we all feel he’s earned it. And it’s not that he earned it by locking it up, screaming about “pirates” and using a legal sledge hammer to attack fans — but he’s earned it by being polite, by being awesome and by being human. It’s a lesson a lot of other content creators still need to learn.

Filed Under: awesome, business models, human, louis ck, polite