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Summary:

Some bloggers have been likening popular funnyman Louis CK to Radiohead, pointing out that both have large passionate audiences and both hav…

Money In The Air - dollar bills - money flying

Some bloggers have been likening popular funnyman Louis CK to Radiohead, pointing out that both have large passionate audiences and both have experimented with their pricing. But so far, the popular funnyman seems to be having more success with his experiment than the English band did. CK offers the details in a public letter laced with insight (and profanity).

CK’s gambit was to record an expensive New York production and then to sell recordings of it via his website. He upped the ante by selling the videos for only $5 and letting people play it however and where ever they chose. With a season’s worth of his best jokes at stake, the comedian said the experiment was like a farmer betting his annual crop.

The bet seems to have paid off. CK reports that he has already grossed $500,000 in four days and hopes that people will keep paying so that he can make “sh*tloads of money.” He also says the scheme will produce a greater profit than what he would have made by turning over the production to an outside licensing company that charged users $20 a pop.

The actual numbers listed in CK’s letter go like this. Costs: $170,000 to produce and direct the video himself + $32,000 for a high quality website + unstated cost to rent “elite” Manhattan theater venue. Revenues: $500,000 from over 110,000 downloads minus PayPal processing fees + ticket sales from two shows at said elite venue.

The bottom line: $200,000 in profit (I’m not quite sure how CK gets to this number but that’s what he states in his letter).

The comedian’s account is interesting in itself but more so for what it might mean for other creative types. Has he hit a pricing sweet spot? Recall that Radiohead’s pay-what-you-want scheme for its 2007 “In Rainbow” album was hardly a smashing success after “what-you-want” for most people turned out to be exactly zero. According to reports, most people paid nothing at all for the popular album while those who did paid around $6.

But if pay-what-you-want isn’t a viable option, asking $20 for a digital performance is also likely to leave many consumers willing to forgo the purchase altogether or acquire it through other means.

With his $5 pricing point, CK may have found the right middle ground — a price that is higher than nothing but low enough to attract a mass volume. And what of the decision to impose no rights restrictions on the video? For now, it seems to have produced an outcome that is at least revenue-neutral. This may because the video is easy to swap but, at the same time, the price is so low that many will opt for the convenience of simply buying their own copy.

Louis CK’s account can be found here on his website.

  1. Very interesting piece — with equally interesting implications. I read Louis’s letter, though, and learned a couple of other things about the video sale this article doesn’t really cover. First, Louis not only sold the video for 5 bucks, he also imposed no geographic rights restrictions. So anybody anywhere was permitted to buy it … or share it. And second, Louis makes a vague promise not to “overmarket” to the customer names he’s captured. As he puts it: You never have to join anything, and you never have to hear from us again.

    That’s a bold claim.

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  2. The Radiohead album was “In RainbowS”… and it was hardly a failure.  Radiohead has always claimed that it was a successful enterprise.

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  3. The comparison to Radiohead is spot on.  Both are brilliant and brave.

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