Comedian Louis CK said on Tuesday that he had taken in $500,000 in less than three days from selling his latest standup special directly to the public at $5 a pop. This should make media companies nervous because this is the future -- and increasingly, the present -- of media distribution. Remember all that stuff people were saying 15 years ago about the Internet's capacity for disintermediation? It's all coming true now.
Here's the thing about media companies: they have trouble with edge. That's why local newspapers often churn out inoffensive mush. It's why "local" commercial radio sounds precisely the same in Birmingham, Ala. as it does in Berkeley, Calif. And it's why a brilliant comedian like Louis CK couldn't make it on network television despite two attempts: network executives filed his edges completely away, even though people like him precisely for his edges.
Even auteur-friendly outlets like Time Warner's (TWX) HBO act as filters between artist and audience. In that case, much of the downside comes on the business end. Louis CK told Terry Gross on Fresh Air this week that with traditional comedy specials, he gets his fee, but never a cut of the aftermarket, where the real money is made. After the special airs, he said, "then they put it on video, you know, on iTunes (AAPL), Netflix (NFLX) and DVD, and then they go try to make a profit with it. You're supposed to participate in that profit, but I've never seen a check from a comedy special. They're just -- it's never -- it never ends up being that."
Here, it's all that. On Wednesday morning, the comedian tweeted that sales of the new special had reached 130,000 downloads, for a gross of $650,000. On his Web site, he broke down the finances: the cost of producing the six-camera shoot and renting the Beacon Theater was basically covered by ticket sales (he directed the thing himself and edited the video -- which looks as good as any "professionally" produced special). Expenses associated with distributing the video were minimal -- there is a near-zero marginal cost for each video sold. And unlike traditional media, very little in the way of fixed costs. No big marketing expenses, no focus groups, no paying media-company middlemen to do ... whatever it is they do. (So far, he's netted about $200,000.)