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...
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.
He's making like $220k/day. Something like $70+ million total sales.
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.
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.
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.
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.
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.
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...".
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.
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.
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.
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.
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.
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".
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.
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.
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.
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%.
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.
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.
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.
In reality, he is probably in the top 10% of best humans ever.
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.
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.
Am hoping someone here could chime in and give me a quick answer.
I'm hopeful. Just passing along to those who depend on captions.
"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.
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
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.
So MM is a thousand thousand, or one million.
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.
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.
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?
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.
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.
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.
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...
How you came up with "throwing $80 in the bin" is beyond me.
Indeed, one can think of it just more purchase, only he's buying a better world.
 Modulo your opinion of those charities.
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?
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.
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.
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.
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.
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.
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.
So then your employer shouldn't give you a paycheck, if you're just going to turn around and give it to someone else?
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.
Since he's the one doing it, I'm confident his judgement as to what amounts are necessary is sound.
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.
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.