Results From Our CwF+RtB Business Model Experiment

from the cwf+rtb dept

Before getting into the “meat” of this post about how our CwF+RtB experiment worked out, I want to announce that we’ve “replenished” the store with some new t-shirts and hoodies. These are brand new — not the same t-shirts and hoodies we had before, which are sold out. You have a choice of either a t-shirt or a hoodie with the full Techdirt logo, or my personal favorite DMCA takedown t-shirt which says on the front:

The content of this t-shirt has been removed due to a DMCA takedown notice.

Consider the message on the shirt a good way to engage people in a conversation about the abuses of copyright law and the DMCA. The hoodies come with a copy of my Approaching Infinity book, while you can get the t-shirts without the book or with the book.

Also, we are doing one thing differently this time around. Rather than just waiting until we sell out to stop selling these shirts, we’re taking open orders for two weeks only and then will make the shirts and send them out. So if you want this shirt from us, you have two weeks to order. And that’s it. On to the post itself…

After seeing many musicians setting up various interesting/amusing “tiers” of scarce value worth buying, while also working to connect with fans, we decided to launch our own CwF+RtB tiers, at the end of July, as an experiment to see what we might learn. We knew that this sort of thing worked for music, but had no idea if it would work elsewhere — say, for a blog. It wasn’t designed to replace our existing business model, but just as an experiment to see what would happen — and what we could learn that might help others implementing similar business models.

I should apologize, as this post detailing the results is way, way, way overdue. We had most of the results and lessons within about a month, but this is a big post to write up and I kept procrastinating. No good reason why: there was just always something going on in the news that seemed more urgent and every so often I do like to catch up on sleep.

The quick summary: we consider the experiment to have been a huge success.

  • We brought in approximately $37,000 total due to this experiment, mostly in the course of that first month.
  • Nearly $12,000 came from direct sales to individuals of the tiers between $5 and $150.
  • As was revealed in an article at Wired, another $5,000 came from an individual, Didier Mary, who was working on a business plan and bought the Techdirt Reviews Your Business Plan package. The package included an Insight Community conversation, which recently concluded, about his business model idea. Didier has told us that “it was a great experience” and very useful to him in moving forward with his plans.
  • Another $20,000 came from larger companies, which purchased Insight Community packages after learning about them through this effort.
  • The effort also resulted in potential future deals, as it led many more companies to contact us to learn more about the Insight Community.
  • Other companies, with whom we were already talking about the Insight Community, contacted us after we launched this, with one noting that if what his company had been discussing with us was on the list, he probably would have just “clicked buy” right away (though, with that company, we’re still discussing a deal and have not yet completed it).
  • Ignoring the higher end Insight Community deals, the average amount paid by users was over $70. This was significantly higher than expected.
  • Sales came from 15 different countries around the globe. North America and Europe were obviously the biggest, but we also got sales from Asia, South America and Australia (no Africa). The international sales might have been bigger if we had launched international sales the same day we launched the overall effort. Unfortunately, we didn’t have all the details on that sorted out until a week later, and I think we probably lost some international sales that way. The US Postal Service does make international sales much easier these days — especially with its “one rate” boxes, but shipping is still really expensive, and many countries then add annoying tariffs on top of everything. This was annoying, but (unfortunately) unavoidable.
  • Our highest selling item was not the cheapest, second cheapest or third cheapest offering (contrary to the claims that people just want the cheapest item). Instead, the biggest seller — by a pretty wide margin — was the Approaching Infinity package, that included both a copy of my book and a t-shirt.
  • For quite a while, the hoodies (which we almost didn’t offer) outsold the t-shirts… but in the end the t-shirts barely passed the hoodies.
  • The Techdirt Book Club outsold the Techdirt Music Club by a factor of three.
  • No one bought the Day with Techdirt package, though we actually got a lot of inquiries about that, with multiple people who don’t live in California saying that if they were closer, they would have bought it. This is still available, though.
  • And, fear not, no one bought the $100 Million Silence Techdirt offer (still available as well!), though we did get a few people who were worried that someone would actually take us up on this — and one satirical offer from someone claiming to be from the RIAA, which made me laugh, saying the RIAA would pay up, but wanted to guarantee “exclusive rights” to the RIAA, such that it would be able to “pursue appropriate legal action against any and all 3rd parties that make use of this silence purposely or inadvertently” including, of course “the right to pursue similar action against any individuals who are also not reading Techdirt and therefore infringing on our own licensed agreement to be the sole recipient of a Techdirt-free world.” Brilliant.
  • However, the $100 Million Silence Techdirt offer did get the most traffic of any of the tiers, by a factor of three — though, it also drove many people to check out the other tiers.

Lessons Learned

So, what did we learn? Lots of things:

  1. This works! These sorts of models can absolutely work in connecting with fans and in making money.
  2. All of you, in our community, are awesome. Not just for buying, obviously, but because the overall response we got was incredible. This included many really, really nice emails that made us feel great, along with happy emails and Twitter messages from people receiving their packages, and telling us stories about wearing the clothes, reading the books, etc.
  3. It’s fun making people happy. Really. It really gave all of us here at Floor64 a great feeling every time we heard back from happy community members.
  4. Logistics and inventory management are more complicated than you expect. We sort of knew this ahead of time, but you realize it first-hand when somehow, somewhere copies of signed books go missing, and you suddenly need to ask for an author to send extras. Also, dealing with sourcing inventory from so many different people for the Book and Music club is doable, but takes a lot of time to manage. Though, I have to say, every one we worked with — from authors and musicians to publishers, agents and record labels really were fantastic. We didn’t have even the slightest trouble from any of our partners in this endeavor. Shipping out the products definitely was an effort, but we tried to make it fun, with a group of us working together to package up and ship stuff (and on this one, the team here, lead by Gretchen, did a fantastic job, going above and beyond to get everything organized and shipped).
  5. Having lots of options was a good thing because we weren’t very accurate in predicting what would sell. We came close to not offering the hoodies at all, but those were incredibly popular.
  6. You can’t keep everybody happy, but you should try! We had to set up a better process for “customer support” as we launched this (nice job, Dennis!) and then work with and respond to customers who had questions or (in a few cases) problems. A few times the problem was that we did not explain things clearly enough, and sometimes there were problems with shipments (or, in one case, a hoodie that was frayed). But we tried our best to make sure everyone was happy and hopefully succeeded (mostly).
  7. What you’re selling should match your audience. The Book Club sold really well. The Music Club, not as much — despite being awesome (seriously, the combined Music Club items are really, really cool, and the music is great as well). But, in retrospect perhaps that made sense, as the books in the Book Club directly related to everything we talk about here. The Music Club, while supporting artists who did things that we talked about here, was a bit different, and required people to like the music as well, which is a lot more subjective. Bundling together four separate musicians with different styles was, perhaps, not a great idea. On top of that, we perhaps did not do enough to promote the music itself to get more people to enjoy the work of those musicians. Finally, while some of the offerings were “unique,” others could be purchased elsewhere, which limited the “scarcity” of the overall package.
  8. Some promotions worked really well. The first promotion we did was offering anyone who bought both the music and book clubs together a choice of either lunch with me or a free hoodie. This helped motivate a bunch of folks to step up and buy — and resulted in a handful of lunches.
  9. Having lunch with people was really, really cool. I have to admit that I was a bit nervous going into the lunches from the above promotion, but they were all really amazing, often in very different ways. Each individual was really interesting and the conversations were quite engaging and thought provoking and fun. I’m pretty sure every lunch ended up lasting well over the allotted hour. I ended up learning a lot and had a great time at every one. I’m hoping to set up more ways to do things like that, if not the same thing.
  10. Even the tiers that didn’t sell, still generated interest in other things we were doing. A bunch of people contacted us about the Day With Techdirt package, and while no one bought it, many of them bought other packages instead.
  11. Not everyone who says they will buy will buy, but that’s okay. It was interesting to note that some people who told us they would buy (or even announced it on their Twitter/Facebook feeds) never actually did buy for whatever reason. That’s fine, of course. Everyone is free to do what they want, but it was interesting to note. Just because someone says they’ll buy, it doesn’t mean they will.
  12. Communicating directly with everyone can be difficult. While others here handled customer service requests, I started getting a bunch of emails personally from people who participated, sometimes with long and detailed questions. I tried to reply to most of these, but it was difficult, and I’m sure I missed a few.

Anyway, that’s the basic summary. This really has been a lot of fun and quite educational at the same time. We’ve still got lots of things planned and will be trying a few new things as well, but thanks to everyone who participated and a big thanks to all the authors and musicians who partnered with us, along with the team here at Floor64 for helping to make this all work.

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Comments on “Results From Our CwF+RtB Business Model Experiment”

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thublihnk (profile) says:

I find no. 11 really interesting because it really shows that in monetizing online content (newspapers come to mind) you can never rely on people to buy your product, even if they in a poll (or another kind of feedback space) say that they would.

With that in mind I’m seriously considering the DMCA takedown shirt, but I’m pretty strapped for cash right now.

Anonymous Coward says:

Here is just another question: If you have 37k gross, that is maybe what, 10k net? After all, that work cost someone something, the shirts weren’t free, etc. Now, how much would it cost to run the ads on techdirt to promote it all?

I am thinking a bottom line statement (rather than a topline) might be more revealing.

BobinBaltimore (profile) says:


Mike, thanks for sharing the results. A few questions:

1. What was the number of people who actually make a purchase between $5 and $150?
2. What was the distribution of purchases among the packages/items offered?
3. If you have the means to do so, it would be interesting to know the percentage conversion for those actively expressing interest by email, Twitter, FB, or clicking through. Tough to track in total.
4. Were the business plan review and insight community packages discounted for this offer, or are they basically just your standard services offerings? It appear to me that they were an experiment within an experiment, basically using this marketing event as lead generation.
5. What was your net revenue on this (at least on the $12K portion…not asking you to disclose your margin on standard business services)?
6. You note that the $70 average (within the $12K) was higher than expected. Can you share what your overall expected metrics were for this experiment? Curious as to how you developed those, how accurate they were, and how you would adjust your predictive model going forward.

Nick Coghlan (profile) says:

Re: Thanks

The article at least answers your first question: $70 average value for purchases excluding the ‘higher tier Insight Community packages’ and $12000 total for purchases of the $5 to $150 tiers. Since nobody bought the $1000 Day With Techdirt and the $5000+ tiers are the Insight packages, the $12000 total and the $70 per user average can be combined to determine that there was most likely just over 170 distinct customers for the merchandise tiers.

Suzanne Lainson (profile) says:

Re: Re: Thanks

Yes, I would have run those numbers. I haven’t had a chance to do it yet, so you saved me the time.

I haven’t yet gone back to see what people were getting for an average of $70 (I don’t remember what was offered in each tier), but I will sooner or later. Or someone else will, and post it here.

I know what musicians usually pay for and charge for t-shirts, hoodies, etc. so it’s always helpful what others are doing.

Anonymous Coward says:

Re: Re: Thanks

Nick, I did the basic math, too. But I am curious about the actual number because it goes to the incremental cost of the sale (at least in the case where you had to pay for marketing) and informs which packages are ones worth pursuing in future (along with my question #2). If, say, there were actually 350 purchasers, this tells me that the lower end packages in the $5 – $150 range are more popular (or a better market fit). I would then look at my margin on those very carefully and see how to expand those types of offerings or offerings in that cost range. If theya re more popular, but I’m making a margin near 0, then I’ve got a problem.

Doing the easy average math doesn’t really provide much helpful info.

Alex Hagen says:

Interesting, but needs context.

That is very interesting, thanks for posting that info Mike.

So you made 37 grand in 2 months. Sounds decent, but to put that in perspective, we have to know how does it compare to your normal income levels. Considering that it would take $100 million for you to quit Techdirt for a year, you must be raking in the dough, so it is hard to believe this was more than a small blip.

Also, it would be interesting to see what the normal levels are after the huge “novelty” spike dissipates. You get credit for being one of the first with this kind of idea, and that certainly got you a lot of attention and probably a lot of sales and referrals. The 30th person to do this won’t have that advantage. Your sales in a year will more accurately portray the broader possibilities of this kind of marketing.

Anonymous Coward says:

Re: Interesting, but needs context.

I think it is also a good question as to the cost to do this sort of thing. Advertising on this site I assume isn’t free, traffic levels are reasonable. So that big CWF thing at the top of the page is nice, but what would the income be from having some other sort of advertising in that spot (as their use to be)?

Also, in the processing of the goods, how much time and money was spent for shipping, etc? How much were the raw materials?

There are more questions than answers here.

Dark Helmet (profile) says:

I'm just bad when it comes to follow through sometimes...

“Not everyone who says they will buy will buy”

*Raises Hand*

Definitely me. And for no good reason. Being busy doesn’t excuse. I’m assuming whatever is offered at the CwF+RtB link are still available, and I’ll pick something out because I definitely want to support. Let me know if that isn’t the case.

And call me out personally if you don’t have my order by the end of November. And do it harshly. And step on my cubes and call me a woman…

cybearDJM (profile) says:

Great experience, indeed

All the comments on the “unLabel”, being positive as well as negative feedbacks, are effectively helping us to keep on working on our project and make it better, simpler and more focused.
I also received direct comments from groups or artists that expressed their interest… amazing!!!
I presented the project @ Womex ’09, and got in touch with other “labels” or managers working in the same “disruptive” directions… as well as some institutions that want to know more… encouraging!!!

I then would like to thank Mike, his team and all the commenters for their help.

BTW, if you like World Music and or (World) Jazz, you should check our page for Womex.

Didier J. MARY

mobiGeek says:

Re: Re: Re:

I’m particularly interested in the apparel sales since that is most comparable to what musicians do

I’m totally unsure of what you mean by this. If you mean “musicians sell t-shirts at concerts” and compare this to the CwF’s approach, then you are missing some key factors to CwF.

Most musicians see t-shirts as a “must do it” or as part of the template of holding a concert. Frequently, they outsource the entire t-shirt operation to a group that has little knowledge of the artist’s fanbase.

Instead CwF is about connecting. Knocking out a templated item is not connecting.

I have not bought a concert shirt, at least not a large-venue shirt, in over a decade. They are often cheaply made, ridiculously overpriced, nothing more than the album cover, and I have no feel that they are actually representing something that the artist themself had any expression in.

I’d happily pay $25 or $30 for a decent $8 t-shirt, but I’m not willing to pay $45-$50 for a lousy $4 t-shirt with a quick-n-dirty album art scan job (scam job?).

I am quite happy with the quality of the Techdirt shirt. I look forward to the opportunity to buy more swag, though the next purchase I make will be less comical (see above polo shirt thread).

Suzanne Lainson (profile) says:

Re: Re: Re: Re:

I’m totally unsure of what you mean by this. If you mean “musicians sell t-shirts at concerts” and compare this to the CwF’s approach, then you are missing some key factors to CwF.

What I am asking is how many people bought apparel from Techdirt and what were the wholesale prices that Techdirt was able to get them for the items. I should be able to figure out the retail price based the original offerings.

It’s very straight forward question. I check prices for apparel all the time looking for the best quality for the least price because it is a standard offering for musicians.

Even if you are saying that Techdirt can charge more because it’s from Techdirt, that’s fine. So much the better if the markup is high. That’s relevant to the discussion.

Musicians compare notes all the time about this stuff: who has the best wholesale prices, who does the best printing, who offers the best customer service. If we are talking about how to do business in these times, that stuff is really helpful to know.

mobiGeek says:

Re: Re: Re:2 Re:

I’m not saying that Techdirt commands a higher price because they are Techdirt.

They commanded a higher price (at least from me) because they reached beyond simply printing a brand on the shirt and slapping a price tag on it. They offered other things with it and made the brand far more meaningful with as simple a thing as a moniker to go with my forum postings (something that cost them nothing). They interact with their community (heck, directly with me from time to time).

Suzanne Lainson (profile) says:

Re: Re: Re:3 Re:

They commanded a higher price (at least from me) because they reached beyond simply printing a brand on the shirt and slapping a price tag on it. They offered other things with it and made the brand far more meaningful with as simple a thing as a moniker to go with my forum postings (something that cost them nothing). They interact with their community (heck, directly with me from time to time).

Sure, I get that. I’m not sure why you assumed musicians wouldn’t be coming from the same perspective. The smart ones are.

R. Miles (profile) says:

Re: Re:

This is ridiculous. How are we meant to judge whether the experiment was a success or not when Masnick won’t tell us his costs? This is just so typical of the freetards.
WTF? $37k in two months isn’t enough to give you a determination of success?

You probably don’t even make this in a year (gross), especially after all the deductions (net) of 401k, etc.

Yet you use the term “freetard”. Einstein would be proud as you support his “infinite stupidity” theory.

BobinBaltimore (profile) says:

Re: Re:

Hmmm….I’m often a critic of Mike’s “free, free for you and me” but anyone wanting to be successful in their chosen arena has to have an open mind. Freetard is a bit strong, even fore me.

On the surface, and even a few feet below it, this looks like a successful experiment relative to what he was intending to try. I do question whether the $20K sold in business plan review and Insight Community stuff represents income truly directly attributable to the experiment, or whether they were just displaced sales that would have happened anyway. Even disregarding those (which may be unfair), $12K gross isn’t bad given the economy, the limits of this community and no outside advertising.

All that said, I do find it very strange that Mike is not disclosing more information about exactly what worked, what didn’t, what his predicted results were (and how he calculated them) and how the actuals compare. These are EXACTLY the questions Mike would himself ask of other models. I understand he may not want to disclose the net (especially on the business services that he sells in his “day job”) but how about the package sales numbers, distribution, what worked and didn’t, and how he will improve the next time.

My hope is that he’s working on a follow-up to provide more info.

Suzanne Lainson (profile) says:

Re: Re: Re:

All that said, I do find it very strange that Mike is not disclosing more information about exactly what worked, what didn’t, what his predicted results were (and how he calculated them) and how the actuals compare.

Yes, if you view the purpose of this as a true experiment for the benefit of all, you’d put up how many people bought what packages. Academic studies do provide those charts somewhere.

I guess the grey area could be this:

If this is a public experiment, give us as much info as you gathered.

If this is a money-making or promotional business for Techdirt, then yes, I can see why more info isn’t being disclosed because you don’t really want to share the margins. Your goal for your public isn’t info, but for them to be consumers in this.

But again, having some info is better than no info. The reason I ask is that if this is successful, then having as much info as possible allows other people to copy it. Which is kind of the issue. If you want others to copy it, you tell them how to do it. If you don’t want others to copy it, you don’t give them a complete how-to.

And I suppose with the academic studies, you in fact want people to copy the experiment to see if the statistics are consistent across multiple audiences to validate the concept.

Interesting stuff to think about.

pjhenry1216 (profile) says:

music club = awesome

I wouldn’t sell the music thing short. If you split it up, you probably would have sold more. To be honest, the artists don’t really go well together except for those with quite eclectic tastes. I purchased it based off of not just Amanda Palmer’s signature, but Neil Gaiman’s as well. I’m happy to say that I enjoyed the other artists too. I hadn’t even heard any of their things until after I received the package. The music box was a nice touch, obviously not something to be repeated exactly as such, but it was creative. The handwritten lyrics was also nice too. It creates a kind of connection with the artist to have something you know they did personally, even if they did it quite a lot.

I hope you keep the music club or some form of it around for awhile. Try to pick up new artists, etc. Maybe even have a cheaper music tier for those that don’t want to dish out so much for an artist they haven’t heard of, but possibly just help various artists get their name out there. It’d be really neat if you could get Trent Reznor.

I enjoyed the music club greatly. Definitely one of the best and well-remembered purchases of the past year.

Anonymous Coward says:

Also, it would be interesting to see what the normal levels are after the huge “novelty” spike dissipates. You get credit for being one of the first with this kind of idea, and that certainly got you a lot of attention and probably a lot of sales and referrals. The 30th person to do this won’t have that advantage.


If you offer people something they want, they’ll buy.

…unless they can pirate it.

Anonymous Coward says:

Re: Re:

If you offer people something they want, they’ll buy.

…unless they can pirate it.

What Mike should have written is: If you offer people something they want and give them a reason to buy, they’ll buy it.

However, if the only reason one has to buy something is because he/she can’t pirate it…I’m not all that sure that something is going to sell.

Wanting != willing to buy.

I can’t pirate a Ferrari…I’d love to have one…am I willing to buy one? err…No

I can’t pirate a data plan for my cellphone…I’d love to have one…am I willing to buy one? err…No

I can’t pirate a ticket to Game 6 of the World Series…I’d love to go…am I willing to buy one? err…No

The question, of course, is what am I willing to buy? Well, you’ll have to grease the skids a bit to get that outta me…just like anyone else who is trying to sell me something. Do a little work, find out what I’m willing to buy, give me a reason to buy it, and I just might.

Suzanne Lainson (profile) says:

Re: Re: Re:

The question, of course, is what am I willing to buy? Well, you’ll have to grease the skids a bit to get that outta me…just like anyone else who is trying to sell me something. Do a little work, find out what I’m willing to buy, give me a reason to buy it, and I just might.

Yes, I think along the same lines. There are a ton of things I want, but I don’t have unlimited cash, so I’m pretty frugal.

The challenge for music is that it isn’t a necessity for most people, so if you don’t have the money, you don’t buy.

Music-related merchandise may be fun to have, but again, not a necessity for most people.

Being part of a music community and paying a subscription or going to a show might be important enough for some to spend for it. For others it might be not be as important, so when funds are tight, it’s not on their must-do list.

Business-related offerings can be an easier sell in troubled economic times if they appear to offer the promise of more income. Techdirt might have the edge over some music sites in that a lot of readers probably are participating for direct or indirect business reasons.

I’ve thought a lot about pricing. I’ve been a sports marketing and a music marketing consultant. I know my advice is helpful. But deciding what to charge in both industries is a challenge because I can’t always guarantee a direct payoff to someone who takes it.

For example, if I can guarantee that an athlete I work with will get a pro career based on my advice, I can easily charge $10,000+ because that athlete’s sports earnings will more than cover it.

Why is a Harvard degree worth more than a degree from another school? It isn’t really about the quality of the education, but the status and networking opportunities that come with it.

So when we talk about “reason to buy,” I like to explore what those reasons might be. The psychology of selling in the art or entertainment market can be different than selling in the business market.

Art says:

Regarding point 11. I rarely make impulse purchases over the Internet, even when I’m willing to pay and feel the purchase would be worth it. Registering and getting my credit card to type in the damn number takes just a bit more time than I’d want to. By contrast, when I’m in a book or music store, I can’t seem to avoid buying something, because I’m already there and the tangible goods are present. A physical presence can be an RtB.

Also, I didn’t know about the experiment until two days in, when I saw “shut Techdirt up” emblazoned on the front page, I clicked through. The book club was the only one that appealed to me, but it was sold out. If it hadn’t been, I probably wouldn’t have bought it. But if you had added a limited number of extra book clubs to meet demand, having been previous unable to buy it, I probably would have swooped in. However if you do the book club again, I probably wouldn’t buy it, because it would seem less scarce.

All in all brilliant experiment though.

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