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Louis CK's self distributed special up to 1MM revenue in 12 days (louisck.net)
323 points by thesash on Dec 22, 2011 | hide | past | web | favorite | 108 comments

Given various horror stories regarding paypal account freezes, seeing that much money in a paypal account (even when it isn't mine), gives me the cold sweats.

Of course, in his case the backlash to an account freeze would probably kill paypal (would be so widely reported that the feds would have to get involved, I'd guess), but still...

Unlike Notch and other indie game developers, Louis thought this out with advisers and lawyers, and no doubt notified PayPal of the plans. If they already know what he's selling and have his ID on file, they have no reason to temporarily suspend the account to ask those things.

(Random, honest question)... is this acceptable? Should one have to pre-clear it with PayPal if they think they might hit some non-specified limit upon which PayPal will seize your funds?

> (Random, honest question)... is this acceptable?

That's how it works everywhere. It's written into any merchant account agreement with any payment provider. If your average ticket size, average monthly volume, or the business you're in changes, you have to notify them and get approval because it changes your risk profile. Because Visa and MasterCard mandate a <1% average chargeback rate from their members, that carries through to every level of payment processing service to make risk management a core piece of the business.

3rd party processors make it easy to sell an item or two on eBay without having to fill out pages of work history and references as you'd have to in order to accept credit cards directly... because there's very little risk. If you scam someone out of $100 and they charge it back, that $100 is going to be too small a portion of the processor's business to impact their rate.

But if the next month you sell $100k of product, and they don't even know who you are or what you're selling, it's time to pull back and ask you who you are. PayPal will do this. Amazon Payments will do this. Google Checkout will do this. 2Checkout will do this. Heck, 2Checkout will also call a random sampling of your customers to make sure you're actually selling what you say you're selling.

So in exchange for not having to fill out a 6 page application up front and tie yourself to a contract with monthly fees, PayPal and every other 3rd party processor will suspend your account for a business day or two to get the information from you only when it becomes necessary, then set you back on your way to continue doing business.

Most people never think about things like chargeback rates and risk to the processor, so when their account gets suspended, they freak out and spam a blog post assuming someone's trying to steal their money. A few days later they always have to follow up that everything's actually OK... there's no conspiracy to lock accounts and earn interest on the balance (reserve funds are held in non-interest-bearing accounts), they really just want to make sure you're not something so risky it's going to hurt their average chargeback rate.

Paypal has frozen the accounts of many large people. Notch, for instance.

Yes, but Louis CK is way, way more well-known than Notch is. The dollar amounts might be similar, but Louis CK is regularly on late night talk shows and the like. The backlash would be far greater.

The dollar amounts are not similar. Notch is earning a hell of a lot more and he's not in the US.

He's making like $220k/day. Something like $70+ million total sales.

I doubt that $70MM is sitting around in his paypal account, though. IIRC, he had something like $350k frozen.

Really? Is there a source for that? Not that I don't believe you, but I'd love to cite this data myself. That's incredible.

Minecraft.net has a stats page: http://www.minecraft.net/stats

I’m pretty sure that someone somewhere on the web has recorded those numbers – but I’m too lazy to search right now.

Calculating the average is something I can do, though: On January 12, 2011 Minecraft had sold one million copies. Since then Minecraft sold another 3.4 million copies in 345 days – that works out to an average of a little less than 10,000 copies per day.

That works out to €150k daily revenue for 309 of those days (during beta, €15 per copy) and €190k daily revenue for the rest of the time (after the release, €20 per copy), resulting in a revenue around €50m for 2011.

Holy cow, seriously?

Apparently, yes: http://texyt.com/minecraft+persson+notch+indie+game+success+...

At the end, they note that sales were settled in to about $100k/day in September 2010, from a relatively brief peak of $350k/day. Amazing numbers.

Well to be fair CK has made $83k / day so far... I doubt that it'll continue...

No reason to bring weight into this. I don't think that PayPal is fighting against Louie's crotch belly.

I just noticed that Stripe's payment fee (2.9% + $0.30) is the exact same as PayPal's. Definitely not a coincidence.

PayPal has a micropayments option of 5% + $0.05, which would work out to be cheaper in this case (the video was $5).


Good catch, I didn't know about that.

I would say there is a 99% chance that the moment he requests to have the money transferred to his bank account, his PayPal account will be limited. In the screenshot it shows that there are already 43 disputes. While this is a small percentage, PayPal will use this to point to the possibility of many more chargebacks arising in the future.

Granted, he will eventually receive it (after 180 days). But, he will not receive it before then. This is a matter of standard operating procedure for PayPal.

Highly unlikely. 43 disputes out of ~201,000 payments is nothing. 0.02% of his purchases. It's a maximum liability to PayPal of something like $800 (including typical chargeback fees) out of a million dollars in revenue. Most of those disputes are probably just disputes, not chargebacks, anyway -- people clicking "item not received" because they weren't tech-savvy and had trouble with the download process or the video didn't play on their computer right.

PayPal isn't worried until your chargebacks are more than 1-2% of your volume. With a dispute rate that low on so much volume, he's helping bring down PayPal's overall CB rate with their banks (Wells Fargo and Chase), doing the company a favor.

Not only will Louis's account not be frozen when he withdraws the money, but his dispute rate as a percentage of volume is so low, the mails he gets about them will say "because your chargeback rate is so low, we are allowing you to keep the funds until the end of the investigation". I know this because that's what they send me, too.

This is standard operating procedure at PayPal. Louis CK is their optimal merchant in almost every way. Even if their business processes were so terrible as to want to close this account, which they aren't, it's not a company of fools -- this account is run by a celebrity selling a virtually no-risk product and brings in $50,000 a month in fee revenues for PayPal.

Apparently you've never been on the receiving end of PayPal's unending wrath. It isn't pretty when it occurs. If you haven't experienced it, you won't believe that there is even a possibility that they would do it to a legitimate business. You think that it only happens to people that are committing fraud, have excessive chargebacks, or are at the very least violating their TOS in some way. But the reality is that PayPal freezes accounts every single day that belong to entirely legitimate merchants operating well within the TOS.

The only thing he has going for him is his fame. This makes freezing of funds slightly less likely, though still not entirely implausible, solely because he could actually cause a large amount of negative publicity.

Do you have anything to back this up? Because all you've done so far is spread unsubstantiated FUD. It'll take more than a pointer to "PayPal Sucks dot com", please. Despite PP's 232 million registered accounts, and millions more unregistered buyers, that site's only found 887 people in 12 years with a negative experience to share.

I'm sure people have their accounts frozen every day. Most of them will have them unfrozen as soon as they fax over an ID and a bill, while the rest were actual fraud that needed to be stopped. When you're dealing with more total users than the population of the United States, that's to be expected.

Probability says that if PayPal were as irrational as you paint them to be, they would have no high volume merchants paying the bills at all, as 99% of them would be terminated for no reason. Is that really what you're selling?

As for me, I've been through everything PayPal can throw at you. I've been through everything the merchant processing industry can throw at you. I learned about risk and fraud management early when one of my businesses was targeted by a credit card scam ring that lost me my first merchant account. I had thousands of dollars held for, you guessed it, 180 days... while I was still on the hook to provide product and service to customers without their payments to cover it.

My PayPal account's had its ups and downs, I've seen every type of dispute, complaint, escalation, chargeback, and reversal possible. I've dealt with the risk department, faxed in documentation, argued over inane policies and seen the boilerplate autoresponse system first level customer support can feel like. But in the end, 11 years and 6 months after first signing up, I'm still with them, because they're no worse than anyone else in the industry. Hell, they're better than most of the industry, certainly less deceptive when it comes to fees. And I've managed my own fraud problem to the point that, as I said in an earlier post, they now send me mails starting with "as your chargeback rate is so low...".

I'm not saying that PayPal's account-limiting decisions are always irrational or entirely arbitrary. I am saying that in many cases, where there is no obvious cause, these decisions are based upon criteria largely out of control of the merchant. In the vast majority of these cases, PayPal chooses to close the account and hold the money despite the availability of effective risk-control alternatives that would enable the merchant to continue operating without interruption.

PayPal uses a number of factors to determine the risk associated with particular transactions, and in turn the aggregate risk presented by the receiving account. They look at things like the age of the accounts sending money to the merchant, percentage of foreign transactions, the payment methods used (credit card, instant transfer, paypal balance, etc.), and many other factors. None of these are within control of the merchant. If, in aggregate, these factors happen to fall outside of the the norms, it increases the likelihood that your account will be limited without explanation - regardless of how many faxes you send them and additional hoops you jump through.

While PayPal may in fact have internal data to justify these decisions, they could just as easily achieve the same risk-management goals with far more merchant friendly measures, such as rolling reserves. In far too many cases, they simply close the account and hold the merchant funds for as long as the law allows.

That is my problem with PayPal.

Would not surprise me to learn that this whole "experiment" was a ploy to eventually have PayPal freeze the account and finally bring to its demise.

Louis C.K. strikes me as a guy with better things to do with his time.

Besides, the people having issues with PayPal have (almost?) always been using terminology implying that they were taking donations without being registered as a non-profit, or were taking money with the promise of a return in the future.

I'm not trying to defend PayPal here; I'm just pointing out that there is specific behaviour that is likely to invoke their wrath, and Louis C.K. does not appear to be doing those sorts of things.

The part that spoke the loudest to me: I never viewed money as being "my money" I always saw it as "The money" It's a resource. if it pools up around me then it needs to be flushed back out into the system.

Many of you know exactly what he means by that, and also subscribe to the same philosophy. I just thought it was a very apt way of putting it into words.

Kudos to him for redistributing his own wealth the way he deems fit. I admire that. But let's not try to push this way of thinking on everyone else (not saying that's what you're doing here) - for any given person the potential for abundance and wealth is so damn near infinite let's just call it that.

Edit - meaning to say there is no proverbial "pie" that you can only have a small slice of. Your pie is as big as you make it.

A million dollars and a public paypal email address (check the screenshot). I really hope he has a secure password.

Even if someone else were to log into his PayPal account, there's no damage they could do. They can't withdraw his money to another bank account; adding a bank account takes 3-4 days while you wait for PayPal to deposit some money which you confirm the amount of to prove ownership. All the 'hacker' could do is send the money to another PayPal account, which is trivially reversible as long as someone notices in less than 3-4 business days, before the receiving account can complete a withdrawal to a pre-confirmed bank account.

That's all assuming the account isn't immediately locked. If you log into a PayPal account from a different computer and far away location, they'll usually lock the account until you call in to say that's you and not a hacker doing so. At the end of the day, PayPal's core business is fraud detection, not payments. Anyone can do payments; they're just a software layer on top of two Wells Fargo and Chase merchant accounts.

Your PayPal account e-mail address should be considered public knowledge as soon as you put up a PayPal button. It's given out with every transaction and, if you don't use PayPal's encrypted button generator, it's in plain text in the payment form or URL.

All in all, horror stories aside, PayPal is a pretty secure way to store your money.

Paypal is very well protected from 3rd party attacks. However, it's very much susceptible to random but real plundering of depositor money by itself.

I'm more concerned about his having a secure, patched server and his website having no vulnerabilities. Non-idiotic passwords are hard to guess; SQL injection is easy.

I had a spirited debate yesterday with my 22 year old son about "Occupy" and increasing taxes on the 1%. Since this puts Louis CK firmly in the 1% (if he wasn't there already), it will be interesting to look at him as a case study.

At the risk of down votes, and converting this to a political argument...

According to my son, in order for the 1% to "win", many of the 99% had to "lose". This seems like a clear case where we (collectively, mostly 99%-ers) decided to "reward" Louis CK with a million dollars, and none of us "lost" in the transaction. We decided willingly to fork over $5 for great comedy (arguably worth more!). The only potential losers are the traditional distribution outlets - which got zero from the transaction (so neutral, not a loss).

So, Son, what do you think of that? Explain again why you think we should penalize Louis CK for this?

Don't vote me down, kid. (My son will probably read this. I suspect there are probably few father-son combos on HN.)

Edit: My son said he's not going to answer me publicly. However, he says "I reserve the right to vote on the comment".

So your son won't answer publicly, but here's my perspective:

It's not about penalizing him, or anyone else who are wealthy.

I don't consider myself rich - I live in a normal terraced house in a London suburb the same size as my decidedly working class neighbors, and I don't have huge piles of cash anywhere, though I do have some investments

But I'm well enough off to have it nice and comfortable, and I make several times what most of my neighbors do with according benefits in terms of how I lead my life.

Yet despite paying significantly higher taxes (about 10% points more than someone on an average UK salary), the net effect of the reduction in my spending ability from taxes is far less than the effect on my neighbors.

I won't even notice a 1% difference in my tax rate. I don't even know how much I spend on groceries each month - it doesn't matter and isn't worth my attention; I waste more than 1% each month on stuff from Amazon I probably don't really need. A 5% difference would be noticeable, but not painful.

For my neighbors, a 1% difference can easily mean the difference between making rent next month, or wait longer before fixing the car they depend on to get to work, or having to count the coins and watch every penny to even be able to make the paycheck last the whole month. A 5% tax hike for most of my neighbors would mean they'd be in big, serious trouble.

This is one large reason why many people believe higher taxes on top earners is justified. Whether in the US or UK, or most other places, the current tax bands most places means the burden of tax in terms of the effect it actually has on peoples lives is far greater on those who makes least to start with.

Yet people argued the economy would collapse with a new 10% higher tax band for people making even far more than I do..

Any argument about what's "fair" is arbitrary and based on personal value systems anyway. Why is a specific function of income to tax rate more fair than another? It boils down to your values. Personally I don't consider it fair that many of those who take all the shitty jobs I don't want to do, and who struggle to keep things afloat, carry a heavier burden than me. After all - without a well functioning society around me, there would have been no basis for me to achieve the relative wealth I do have.

In another vein, I'd also prefer to have less misery around me. I can pay to move somewhere where it's better hidden behind fences, or I can support changes that actually helps make life better for others, whether in terms of the tax system or others. The latter seems like a better investment.

This is what has always struck me as unfair and somewhat crude about a flat tax as well. A flat tax is only "fair" if you assume that everyone allocates their funds in relatively congruent proportions, e.g. that everyone spends about 10% of their income on groceries.

But past a certain point, groceries are more or less a fixed-dollar expense, and so the more you make, the less you pay for groceries as a proportion of your income. You can extrapolate this same idea to other critical expenses.

Thus, from the perspective of personal income alone, a flat tax--or a mildly "progressive" tax--is actually regressive, because although it affects all in equal proportion, the effect on the poorest is to forgo life's necessities, whereas the effect on the richest is to forgo some measure of luxury.

Of course, the use of personal income to fund investments and businesses muddies the issue, but the argument still remains, especially since the poorer masses far exceed the richer few in number.

Well it should be a flat tax with a rebate. Say $5k to everyone.

That does not address his problem. He is suggesting that a fair tax would have everyone taxed to the same marginal value, that is, where the last dollar the government taxes is worth the same amount to each person.

There is nothing inherently fair about a flat tax any more than there is something magical about round numbers. It just appeals to our irrational love for symmetry.

The primary purpose of income tax (unlike, say, the cigarette tax), isn't to reward or penalize people for making less or more money. It's to generate revenue for the government.

I absolutely agree.

In last night's debate, my son's stance was that financial transactions were win-lose, and that in order for the 1% to get rich, the 99% had to be worse off. Therefore it is right to "penalize the 1%".

Louis CK seems to pose a counter-case to that logic. I'd argue that most, if not all, voluntary financial transactions are win-win. So "penalizing" is not appropriate. The 1% aren't inherently evil just because they are in the top 1%.

I agree with you about most/all voluntary transactions being win-win (it seems almost tautological), but the question then becomes, "How many transactions involving both the very rich and the poor are truly voluntary and non-coercive?"

That's only true if the monetary supply remains tightly constrained. As long as we are willing to tolerate inflation the 1% can become richer and the 99% can also still have access to money. Otherwise, in order for the rich to accumulate more wealth, it has to come from somewhere.

Actually, that doesn't put him in the 1%. That number isn't "income"; he will be able to deduct all his business expenses and donations on his taxes. He's in the top 96%, and will be paying a higher tax rate on that $220,000 than the 1% pays on their billions because it was earned through legitimate effort rather than off capital gains.

Paying taxes isn't a penalty. If we charged 105% tax rate, it would be a punishment, but at any rate less than that it's not. He still pays no taxes on the first couple thousand, 15% on the first bit and so forth up the marginal tax rate chart, just like everyone else. And this makes sense, because each dollar you earn is worth less to you than the one before (declining marginal value is one of the fundamental principles of capitalism, after all.) Taking away an extra 1% of the income of someone on the edge means they stop having a house, or go hungry, or can't get to work and then loose far more than 1%. It is why the multiplier on money given to poor people is greater than 1; they will spend more extra money than you give them because they don't have enough money to be able to make the money they could make in the first place. If the government took an extra 1% of Louis CK's money above $250,000, he wouldn't even notice.

If your son were, say, unemployed and living in your basement and you didn't charge him rent because he had no money, would you assume that when he got a job you wouldn't start charging him rent? Would failing to let him live rent-free for the rest of his life be "punishing" him for getting a job? While at the same time insisting that he pay you rent when he has no money and the alternative is that your son would end up out on the street also makes no sense, especially if the only reason you were doing so was because otherwise it would be unfair to his future self who would be punished by paying rent when his former self didn't have to.

But you keep telling yourself whatever you need to to justify historically low taxes that allow all the money to collect at the top to people who don't work while letting our infrastructure crumble.

The 1% is fine as long as they provide things that make people feel good, like providing entertainment, producing well designed gadgets or make beer. If they do things that aren't fun, like delivering fuel, sell food in a supermarket, run pension funds or making medicine, and make money doing so, they are evil and need to share their wealth . That's why Steve Jobs and Louis CK are good guys, and it's fun when Charlie Sheen brags about the money he is making and it would lead to death threats if Bob Diamond did the same.

The resentment discrepancy is not so much about "funness" as it is about choice. Fuel, food, and medicine are essential to modern life; I have to buy them whether I want to or not, and from a few suppliers, and at unresponsive prices. When I turn on a light I ship some money to David Koch, whether I want to or not. Financiers with whom I have no direct relationship get bailed out by my tax dollars, whether I want it or not.

Of course I actually have some choice in the matter. I'm still a rational agent, deciding it's worth my money to turn on the light. And I could forgo medicine. But Louis, Jobs, and Bieber are pretty pure entertainment expenses; their houses were built by the elective consumerism of little people who had a lot of choice. Society chose to bestow wealth on its Biebers.

The titans of industry and finance built their fortunes by understanding the system and playing the game well. (And, depending on your level of cynicism, by rigging the regulatory, legal, and fiscal systems.) So some of the 99% feel like a slow, massive wealth transfer has taken place without their say.

Whether you think the little people are justified or just naive, whether you feel Louis is a more or less respectable capitalist than Bob Diamond, you gotta recognize there's more to the 99%'s ire than whether a rich person is fun or not.

I think there is a different angle to look at this whole "99% vs 1%" thing. One must be careful not to take the 1%v99% too literally. I think much of the Occupy anger is (or at least should be) directed towards people who have used questionable methods to obtain and maintain their wealth (more on that in a minute.) The disparity isn't against the creators, individuals like Louis C.K. who have produced something of value and has earned profit because many others have been willing to trade money for the entertainment he provides. That's pure capitalism, exactly how it should work, and he shouldn't be excessively taxed. Also one must keep in mind that income tax (which is how Louis will be taxed) and capital gains tax are two very different beasts.

Now on to the "1%" Occupy is mad about. Now the problem we have here with some of the larger corporations and individuals, is that they are in a position to better be able to "game" the system. Using the "double Irish"and the "Dutch sandwich" to bring the corporate tax rate to effectively 0%. Bankers making, well, bank. I recommend reading this rather enlightening article about Goldman: http://www.rollingstone.com/politics/news/the-great-american...

We as people on both sides of the 99% vs. the 1% debate, must develop an understanding of Capitalism vs. Corporatism, as I believe there are many many people with an over simplified view of capitalism, who are duped into supporting whole heatedly "corporatism", under that guise that what you are supporting is, in fact, capitalism. Capitalism=good, corporatism=bad, but don't let somebody sell you corporatism under the guise of sweet sweet capitalism. Capitalism is what Louis C.K. does. Corporatism is what Goldman Sachs does.

About the wall street traders. They say the service the provide to society is making the markets more liquid. To a degree they are right, but if taken too far, it can spiral out of hand, and lead to a tragedy of the commons if no-one keeps them in check. allow me to explain. Many day traders don't make money by "investing" as you or I would in our 401k or what have you. We like to pick companies, hope they grow long term, and make some profit for us. If you're a sell side day trader, you make money on trades, not investments. Your profit is in the margins, the fractions of pennies of made by the banks when trades take place. This means you profit the most when lots of trades happen. When do lots of trades happen? When the market goes up real fast, and down real fast. I think traders have systematically (if unconsciously) learned this, and make money by skimming pennies off our investments. This should allowable (to a degree) as it goes back to the providing liquidity to the markets thing. But it can often go too far. Now, are they providing something of value, or just taking our value, and should they be taxed accordingly? Not to mention the seemingly revolving door between wall street and it's govt regulators. There is clearly something afoot, and we the people are left in the dark.

I like it. Taking care of the people who helped you make it super seamless to buy, quick to download, advised you on drm issues. Donating to charity is an excellent way to gain real life karma. That man is a real class act(well not on stage).

The most inspiring thing about the whole story to me is how he was able to generate a massively successful marketing campaign simply by being authentic, and engaging his fans directly. I think this follows a lot of the "Thank You Economy" concepts that Gary Vaynerchuck promotes to a T, and I hope that other artists, companies, and brands take note of how powerful that strategy can be after seeing this success.

It's funny that one of his segments in this special is about how he's a bad person -- he has charitable thoughts toward others, only so he can use them feel good about himself without having actually acted on those thoughts.

In reality, he is probably in the top 10% of best humans ever.

I take for granted that during a show he says bad things only for the sake of entertainment. I never thought that most of the things he says about himself are true, as I guess a lot of people do.

Making people laugh is hard. One of the way is to point at things that are true. This is also one of the purpose of satire, make people think through a liberating laughter. But people might get offended, so a good way to avoid that is to point at yourself instead.

> I take for granted that during a show he says bad things only for the sake of entertainment.

Indeed. In the Beacon Theater show, he tells a story about an asshole kid in his childs class, and about shaking the kid up a bit when he was volunteering at the school one recess. During his AMA on reddit, someone asked him if there had been any fallout from the school/parent on that, and he simply replied that the kid in the story was entirely fictitious.

He's also apparently said before that when he tells the story of a stupid person he meets (like the guy on the airplane who gets pissed off that the internet, something which the guy had only discovered minutes earlier, was broken/slow - an example of fast entitlement), he's actually talking about himself.

What a great contrast to anyone defending SOPA.

What about taxes? I see that he broke that money into 4 parts, but none of those parts contained taxes.

Those donations put a pretty big dent in that evaluation, he may be near the clear.

My guess is that the bonus to those who helped produce it is probably a business expense, as is the production costs. The charitable gifts are probably tax-deductible, although AMT can hit you there.

That's a good point. I hope someone stops him before he becomes another famous tax evader :)

He's probably going to pay taxes on the 220k he's keeping for himself.

This is awesome. I love stuff like this. Wasteful distribution companies being cut out and still hitting a wider audience for less money.

I hope he merely forgot to mention the 300k for uncle sam & co. presumably he has accountants. i hope, for his sake.

Which 300k? I don't think you understand the US tax system. Most of the $1M is not taxable profits given the breakdown he's given.

Is the video subtitled or captioned? The website says nothing and I did not want to spend $5 without knowing in advance. I've emailed to the support email account listed on the website. But I'm sure it'll take time for someone to give me an answer through the email.

Am hoping someone here could chime in and give me a quick answer.


Follow up: I got an email from the support team. They said they plan to add captions or subtitles after the holidays.

I'm hopeful. Just passing along to those who depend on captions.

Anyone got a better idea of what he would get for a HBO special (including DVD rights), just for contrast?

This doesn't help much, but an excerpt from his previous news update when the special hit $500K:

"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."

So somewhere north of $200K.

On his 12/13 post, he gave a floor. Presumably it's in the same ballpark as well.

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

among all the SOPA news today, seeing this is refreshing. I'm so glad this model worked for him, and I hope others follow in his foot steps. Distribution is over valued.

a little off topic, but ... all that money on his website and you can't get a permalink to a news article? what the?

"the first 250k is going to pay back what the special cost to produce and the website to build. "

I agree that it's a strange setup for the website but all the money didn't go just to building it. I bet (hope) that most of that money was what the special cost to produce and not much was spent on the site.

Cost of the website was 30k.

But... What's an "MM"?

I know you're not serious, but MM stands for "million." "M" stands for "mille," French for "thousand."

So MM is a thousand thousand, or one million.

Awesome dude!

So the lesson reinforced here, again, is that once you're already famous for something, the Internet makes it easy to sell things to fans directly. We already knew this. But it's great to see it happen.

We already knew this.

We needed people like Louis CK to know this, and now he does, and so (presumably) will other artists otherwise fearful of such an open approach.

Just wow.

I wonder if he's charging too much, given that he's giving away 1/3 of his profit.

This is a weird thing to say. If he kept the whole $1 million, would the $5 still be acceptable?

The price of an artifact (especially one with zero incremental cost to produce) should be dependent on the value created, not the need of the producer. The fact that people spent $10 to have the privilege of travelling to see a fraction of this show, and then went away saying good things about the show implies that he charged too little.

He only charged too little if his goal was to extract as much profit as possible from his customers.

Right. Based on what he has said (and done), I don't imagine that was his goal. I imagine several goals: to entertain people, to make a reasonable profit, and show he could successfully develop and distribute his own content unencumbered. Did $5 maximize those goals? That's what I was wondering with the original (brutally downvoted) OP. Suppose he charged $1, 5x as many people saw it, and he made the same amount. Would that have a been a better price point?

It's a little naive to expect a linear relation between dollars and viewers. Charging $1 would have increased sales, but probably no more than 10-20%.

I didn't mean to imply such a close relationship between price and volume with my example. What I meant to ask was, if more people saw it but he made the same amount, would he like that more?

I know this is a deeply nested comment so that might not be the right place to put it, but this is the idea I'm trying to get at. Louis CK is performing an experiment about the production and distribution of entertainment. I think that's great, and I'm thrilled at his success both because I think he's quite good, and I think the current model(s) are very broken. The existing model seems to have a funnel effect: e.g., in music, labels pick bands to invest in, and those bands get a disproportionate share of the spoils. So I guess my question is, what price for content like this best for me, the consumer, in that it stimulates and supports a diverse landscape of content and performers? Is $5 the right price?

You couldn't know that without information about demand elasticity on his product. Decreasing the price could have increased the profit he extracted from his customers.

I'm not sure I actually feel good about paying those $5 knowing that most of it won't end up in Louis's pocket, actually.

If I wanted to donate to charities, I'd do it myself. I don't want to, I believe there are better ways to use money - so I feel that money is kind of wasted.

More importantly, I felt good about paying $5 because I felt I was giving $5 to Louis CK to support a great effort and an awesome artist. The fact that he's keeping only 22% of it makes me feel like 78% of it was rejected. If so, I might as well have kept my $5.

Honestly, right now what I'm thinking is that I'll probably get the next version off BitTorrent. I'm not happy paying for a download with 80% of overhead, especially if that overhead is voluntary. Most of the $5 should end up in Louis' pocket, and if it doesn't, I don't feel like throwing it down the drain, I have better uses for my money.

You gave the money to Louis, he spent it however he felt like, which includes giving to charity. Where's the problem?

Imagine that Louis takes the $280k and buys a yacht. You may not agree with Louis that a yacht is a particularly worthwhile use of $280k, but the effects of the purchase are localized: Louis gets a yacht, the yacht company gets $280k.

Conversely, charities are designed to have broad effects on the world. Often these effects are undeniably good, but not always! Some charities give out bibles, some campaign for the right to abortion, some campaign against abortion, some give food to the poor without regard to local economies, and some campaign for free software. I challenge you to find any one person who agrees with all of these things :)

Now, I don't believe that the charities that Louis has chosen are doing bad work!

But if you are going to be donating 28% of someone's purchase to charity, it would be courteous to explain, ahead of time, exactly which charities are going to benefit -- because not everybody is going to agree.

This is a disturbing trend of on-line entitlement that really needs to be nipped in the bud.

Here's the thing: you bought the video from Louis CK. What he does with the money is his business. He's not "donating 28% of your purchase to charity", he's spending _his_ money.

It stopped being _your money_ when you bought something from him.

If he decided to spend 100% of his money on hookers and blow, what business is it of yours? It's his money, not yours. It doesn't become yours again just because he decides to tell you how he spent it.

It seems like he feels he paid his $5 as "charity" to support this experiment, and now feels cheated because he realize that the experiment would've been successful at a lower price point, and so part of his money was spent on something other than his purpose.

So the issue here is that he made his buying decision seemingly not because he thought $5 was a fair price for the product.

Which doesn't really make it any less ridiculous...

You give your son $100 as a birthday present. He spends $20 on himself and throws the rest in the bin. That's his choice, but next time, will you give him money? I wouldn't.

There was a study where some students where given varying amounts of money. Half of the students were instructed to spend the money on themselves. The other half was instructed to buy something for a friend or give it to charity. Those who spent it on themselves had the least improvement in happiness - no matter what the amount was. Think about it... maybe Louise CK actually made the best investment he could for his own happiness.

Except that's a terribly inaccurate analogy. This isn't a $5 gift, it's a transaction for a product. He's not throwing away the rest, he's paying bills and donating to charities.

How you came up with "throwing $80 in the bin" is beyond me.

Just wanted to add to this (not that it's needed to make the point): Louis C.K. isn't your child.

Charity apparently equals to throwing money in the bin, according to his pov.

He's not throwing away the rest, he's paying bills and donating to charities.

Indeed, one can think of it just more purchase, only he's buying a better[0] world.

[0] Modulo your opinion of those charities.

Do judge all people with what they do with the money they earn, or just famous people?

Do you not shop at a store because you've seen the cashier going into a strip club?

Isn't it exhausting to be that judgmental?

If you want to donate five dollars to charity, by all means do it yourself. If you want to buy a stand-up film for $5, then do that. He made no promises that he would use the money for charity, or for anything in particular up front.

How does the fact that he's giving some of the money to charity affect your purchase in any way? Do you also feel bad that he's using some of it to pay his employees and care for his children? Would you be happier if he bought a hovercraft or something?

The value of the thing you bought doesn't change no matter what he uses the money for.

As long as he's not like, using it to fund terrorism or something. Then I could see being upset that you supported him.

> The value of the thing you bought doesn't change no matter what he uses the money for.

While this is true, I don't think it is the whole story. Money is also a signal, and understanding how you signal is part of being an aware consumer/investor. You might not like Nike's labor practices (how it uses the money it makes when you buy a pair of sneakers) and therefore not buy Nikes, although you find genuine value in their product.

I (who am not the OP) would feel better if he gave the money to himself, then he used the money for charity.

In the blog post, Louis states that money is "the money" not "his money," and that "the money" is going towards charity.

What he should have said was "I am receiving 500k of "the money" to which I am giving 280k of it to charity"

It's a semantic argument, but for some reason it means something to me.

Louis CK: 'I never viewed money as being "my money" I always saw it as "The money" It's a resource. if it pools up around me then it needs to be flushed back out into the system.'

I don't think his point is that this money exists in some sort of limbo where it's not his, because however he views it, it's still his money. I think he's making a general statement about how he views money: as a resource to be used, not a collectible to be amassed.

I am absolutely floored by the amount of lunacy in this post. Congratulations, swombat, you blew my mind. It feels like I have rewritten this comment a thousand times because I just don't know how to respond.

"Honestly, right now what I'm thinking is that I'll probably get the next version off BitTorrent. I'm not happy paying for a download with 80% of overhead, especially if that overhead is voluntary. Most of the $5 should end up in Louis' pocket, and if it doesn't, I don't feel like throwing it down the drain, I have better uses for my money."

Or you could just not pay for it _and_ not torrent it. That would be the principled thing to do, if you really (inexplicably) object to someone donating their own hard-earned money to charity.

But the money did end up in his pocket. He then spent a big chunk of it on something he wanted to spend money on, which was five specific charities.

That excludes the part he spent on expenses and staff, which went precisely to "support a great effort". It's not like he does this stuff alone.

He gives 25% as a bonus to people who made the whole thing happen. People who, as often as not, don't get any bonuses at all (at least in this magnitude). This will be a huge thing for them. That alone was worth the $5.

>If I wanted to donate to charities, I'd do it myself.

So then your employer shouldn't give you a paycheck, if you're just going to turn around and give it to someone else?

Just in case you thought there was anything that couldn't be trolled, here is the guy who managed to come out against giving earnings to charity. Why couldn't Louis just spend the million on hookers and blow like a normal entertainer?

Donating to charity and giving extra money to his employees will garner a ton of positive publicity which will result in Louis being more of a household name and doing more sales. Just like the initial publicity about the "experiment" did.

It's already happening:


Edit: I would have to guess that the idea of spreading the cheer by the savvy CK has been carefully thought out.

He didn't know how many people would pay $5, I imagine it was just an arbitrary number he felt was reasonable. Only 25% went to charity, so really it was a pretty good guess. Maybe next time he'll charge $3.75.

That's a great idea! I think your employer should do the same for you.

Actually, I felt very similar to you. That 280k he gave to charity should go towards funding his next venture, or funding another comic's venture.

The 250k going to pay for the special is more accurately "replenishing" his company, as Louis CK stated during his interview with Jimmy Fallon. That money will certainly be used for his next project. Plus, the remainder that he's taking for himself will allow him to devote more personal (and probably unpaid) time to whatever the next project is.

Since he's the one doing it, I'm confident his judgement as to what amounts are necessary is sound.

I don't think he's hurting for cash, particularly. That's one of those industries where the unknowns make almost nothing, but once you become a household name you make quite a lot of money.

And beyond that he could always borrow money for a venture that's likely to be profitable, or he could just go with Comedy Central the next time around.

<blatantSarcasm>Yeah let's just forget about all the poor suffering people! Survival of the fittest, right?!</blatantSarcasm>

But in all seriousness, I'm curious as to how/why you and the grandparent think that funding his or another comic's next venture would be more beneficial to the world as whole than donating it to charity. To have an opportunity to improve the lives of thousands, possibly millions, but ignore it and focus on yourself is extremely selfish; and I hope there aren't many people out there who would do such a thing.

You might argue that his investments in future ventures might return more money to donate than he originally would have, but that would be assuming that Louis CK doesn't already have the finances for that; and I assure you, he either does or he can obtain it with minimal effort.

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