business news in context, analysis with attitude

by Kevin Coupe

Talk about shortening the supply chain.

That’s exactly what the comedian Louis C.K. has done with his latest concert video. Instead of putting it on HBO or Showtime, he instead decided to put it on his own website, sell it for downloading at a low cost, and see what happens.

Here’s what his website says (with the curse words edited and the unconventional spelling left intact):

“People of Earth (minus the ones who don't give a &#$@ about this): it's been amazing to conduct this experiment with you. 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?

“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.

“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.

“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.”

Louis C.K. says that he reserves the right to do business with a big company again, but that doesn’t sound like it is likely anytime soon:

“I'm really glad I put this out here this way and I'll certainly do it again. If the trend continues with sales on this video, my goal is that i can reach the point where when I sell anything, be it videos, CDs or tickets to my tours, I'll do it here and I'll continue to follow the model of keeping my price as far down as possible, not overmarketing to you, keeping as few people between you and me as possible in the transaction.”

There’s a great lesson there for any marketer ... especially retailers in almost any venue, who should be concerned that suppliers will use the same logic to disintermediate them from the shopping experience, going directly to the shopper, keeping their prices as far down as possible and keeping as few entities as possible between them and the customer.

And retailers should be thinking about how they are going to connect with the shopper in more intimate and meaningful ways ... because that may be one of the most effective ways in which they can defend their competitive positions.

What’s really eye-opening, and most interesting, in many ways, is what Louis C.K. says he has learned from the experience:

“I learned that money can be a lot of things. It can be something that is hoarded, fought over, protected, stolen and withheld. Or it can be like an energy, fueled by the desire, will, creative interest, need to laugh, of large groups of people. And it can be shuffled and pushed around and pooled together to fuel a common interest.”

I love that. It ain’t comedy, but it is profound.

One other note. I knew who Louis C.K. was, but had never watched his TV series or concert shows. But it just so happened that I heard him yesterday on NPR talking about his comedy - and this entrepreneurial enterprise - and I immediately went online and bought the concert video. I haven’t watched the whole thing, but the pieces I have watched are just laugh out loud funny. (Dirty, in some cases, but really, really funny.)

Louis C.K. has a new fan...of his comedy, and his approach to business.
KC's View: