Wake up, media moguls: Louis C.K. no-DRM video makes $200K

Louis Szekely, the comedian better known as Louis C.K., has declared that his experiment selling an online video with no copy-protection restrictions is a success.

In the four days after putting "Louis C.K. Live at the Beacon Theater" for sale at $5, the stand-up comedian has made a profit of about $200,000 so far, he said in a statement yesterday. As a result, he said, he hopes all his future work will be distributed the same way.

Today's online entertainment world is a largely bipolar. On the one hand is legally sanctioned content that's locked through encryption. On the other is material that's been decrypted from DVDs or otherwise shared in violation of copyright law.

Szekely has--at least in this one case--found a middle way.

His production company keeps most of the revenue rather than sharing it with services from Apple, Google, Netflix, or other corporate powers. Pirates have as easy a time as they would with a music CD, because there's no encryption to crack. But paying $5--the cost of renting a recent release on iTunes or a pretty ordinary game for your smartphone--is low enough that plenty of people can afford it.

Szekely's costs for the operation have included $170,000 to produce the video, $32,000 to build the Web site, PayPal charges, and a week of his own time to edit the video. But over the first four days of sales, the 110,000 copies sold have brought in revenue of more than $500,000.

Here's how Szekely describes the bottom line:

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).

Szekely gets more than just the money out of the deal, too. He gets plenty of publicity, too, and exposure to a lot of potential new fans. There are clear business benefits from a viral video such as Louis C.K.'s rant on Conan O'Brien's talk show ("Now we're living in an amazing, amazing world, and it's wasted on the crappiest generation of spoiled idiots!")

The new video's success bodes well for Louis C.K. fans who want more of the same:

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.

It also could mean a new movie, since Szekely said earlier this week that sufficient financial success would fuel that particular project.

So, you might think this is all wonderful, right? A maverick comedian has shattered the business world's assumptions about how digital rights management (DRM) restrictions are a necessary part of doing business, right? He's proved that fans now can send a smaller amount of money direct to the performer without an overbearing corporation standing in the way and bleeding off the profits?

Alas, it's not as simple as that.

First Szekely has the benefits of being famous already. Not only is he well known in stand-up, he's the star of "Louie," a TV show about a fictionalized version of himself.

A budding artist isn't likely to have a fan base willing to buy 110,000 videos in four days. Music label and movie studios play a legitimate role in finding new talent and bringing it to market.

Second, Szekely has the ability to produce his own content. He edits his own video on a MacBook, something that gets easier with each passing year but that's still very hard to do well. And a stand-up comedy video is much easier to produce than, say, a full-blown movie with actors, props, gaffers, and baby wranglers. Here, too, studios aren't just some kind of parasite.

Last, he's got novelty on his side. Don't be surprised if other performers, impressed with Szekely's success going directly to fans over the Internet and with the degree of control he had over his video's content, try the same recipe.

Given today's pitched battle of DRM vs. piracy, Szekely's move was notable. But the more people try it, the less interesting it becomes. It won't be enough to attract the attention of Terry Gross on NPR's Fresh Air, who opened her Louis C.K. interview yesterday with a discussion of the video's unusual distribution.

The video may even be something of a singular success.

But I'm not totally pessimistic here. Szekely's move might still lead to a better world, where Amazon doesn't tell me I've already downloaded a book to the maximum number of devices (which happened to me two days ago) and FX doesn't tell me I can't watch any video from "Louie" because I live in the wrong country (which happened to me today).

The big companies that produce content do real work, and those who distribute it have real costs. But Szekely has shown that at least some artists need not be beholden to those businesses.

In other words, the Internet isn't done disrupting the entertainment business.