I’m taking a break from the holiday cheer today to talk about something that happened a couple of weeks ago that I think is just incredibly amazing. You guys know how famous comedians usually do specials on cable TV, right? I mean, most well-known comics have had a special on Comedy Central and/or HBO. Those specials are usually recorded by the cable company and distributed over the cable network so that only subscribers can see it. They usually take a long time to put it out, too. The comedian usually gets an up-front fee, but doesn’t have rights to the video after the fact. The up-side of this for the comedian is that they get their name and their jokes out there without having to pay the significant fees to record and edit such a special. The cable company then makes money by offering exclusive content to its subscribers, either keeping them as customers or recruiting new customers, and also from advertising sales (for some cable networks, anyway). And those who already subscribe to the cable channels get to see the special for “free” (not really since they’re paying for cable, but whatever, they feel like they’d be doing that anyway). For the rest of us, though, we usually have to wait ages to see such a video until it’s released on DVD, then pay about $20 or so for said DVD, or rent it (paying money for something we then don’t own and have to give back)…or else steal it off the internet, as a growing number of people seem to be doing. It works OK, but I’ve long felt that cable companies are really losing out by ignoring a growing population of people watching TV online and not willing to pay $100+ per month for it. They’re stupid, actually – people are stealing from them* rather than paying those crazy prices. Not to mention it kind of sucks for artists to lose control of the rights to their work.
So what can be done differently? A stand-up comedian that we like a lot in this house – Louis CK – decided to do things differently, as an experiment. He paid to record his own performances in New York (which took place in November 2011), directed and edited a special together, paid someone to set up a website for him to sell it, and sold digital copies for $5 (starting in December 2011). The rules were that $5 would get you a couple of times to stream the video from the web and also a couple of times to download it so you could watch it for all time. The downloads were totally open – no DRM or restrictions or anything; you could burn it to a DVD to watch as many times as you wanted or whatever. On his website, he simply asked people not to steal from him, because he knew that the non-DRM format of the video would make it really easy to pirate but that he’d tried to price it really cheap so no one felt ripped off. He was advised that this was a bad idea. He was advised that people would steal the video and no one would pay for it. That he’d never recoup the cost of making the video with such a low selling price.
You know what? All those advisers were WRONG. Four days after he released the video – four DAYS – Louis posted this statement on his website noting the financials so far. He said how much he spent to record and produce the video ($170,000) and how much he spent to have the website and e-commerce set up ($32,000). Then he shared how much he’d made from people spending $5 per copy in 4 days. That figure was $500,000. FASCINATING. Sure, a few people probably stole it and pirated it on the internet. But by and large? Most people didn’t. Most people bought a copy. I think this was for several reasons: 1) Louis offered it at a fair and reasonable price; 2) they knew the money was going directly to the artist and not to a big corporation; 3) it became available quickly (less than a month after the original show) and easily to everyone with internet access.
This is not the first time an artist has bypassed a big distributor to sell straight to fans. In 2008, Radiohead made headlines by offering their new album (at that time), In Rainbows, for download on their website at the price of whatever people wanted to pay – including free, if they chose not to pay anything. The internet went wild – they loved the idea. The critics and lawyers, on the other hand, warned that they wouldn’t make any money at all. If they offered the album for free, then obviously everyone would download it and no one would pay for it. Fortunately for the band, all those skeptics were wrong. Not only did people buy the album – paying for whatever they wanted, as suggested – the album made more money than all three of their previous albums.
Certainly, in both of these cases, the artists were already very well-known. They had pretty large fan bases that were prepared to support them. Even so, in both cases, the digital product sold far beyond expectations, and pretty quickly at that. In addition, a number of authors – even relative unknowns – have bypassed the traditional publishing route to self-publish to Kindle or other e-books for less than $1 a copy, and they’re making money, even without the marketing or editing of a professional publishing house. And a few well-known authors have gone this route with new books, seriously upsetting the apple cart in the traditional publishing industry. What’s the takeaway here? Well, to me, this demonstrates that people are perfectly willing to pay a fair price for a product they want. But they’re not willing to pay what’s perceived to be a significant mark-up on a creative property, especially when the majority of the price doesn’t go to the creator.
Yes, some people will always steal things. They will take whatever they can get for free, legally or illegally. But given the opportunity, a fair price, and the knowledge that the actual creator is benefiting from the sales more than a faceless mega-corporation, most people will pay. Most people who I know that pirate material do it because they feel like there’s not a better alternative: they’re not willing to pay $1200 a year – or more – for cable, but they still want to access the programming that’s being aired when everyone else gets to see it. They don’t want the show spoiled for them in this age of the internet, where many websites, tweets, Facebook posts, etc. spill the details of the previous night’s episode almost immediately and unavoidably. They’d buy just that programming if it were available at a reasonable cost, but it’s not. And so they steal, pirate, torrent, whatever. In that scenario, everyone loses. But more and more artists are trying the direct-sell method, leaving out the middle man, and they’re doing it successfully. Maybe HBO needs to learn a lesson here?
*I’m not defending those who steal music, movies, TV shows, etc. Dave and I do not do that. We believe in paying creators for their creations. So we play by the rules…but it’s hard sometimes. And we know many people who do this and feel little guilt, because they believe the megacorporations are ripping everyone off. It’s not a terribly uncommon thing, and I applaud the artists and innovative companies who are trying to think of ways to fix the situation rather than making it worse.