When it comes to monetizing online videos, Louis C.K. is an innovator. In 2011, he decided to distribute his new standup special on his website, downloadable for $5. Instead of making an exclusive deal with Netflix, HBO, or Comedy Central, Louis opted for the open garden of the Internet. One of the main reasons that people pirate content in the first place is that the material is often inaccessible online, even when they are willing to pay. Louis C.K. was able to bring in more than $1 million in sales in less than two weeks during his experiment. While most people would consider this unique scheme a success, the reality is that it could have turned out even better with the help of Bitcoin.
Did Louie C.K.'s Nice Gesture Prevent Piracy?
It is difficult to get raw data on the number of people who torrented or streamed Louis C.K.'s standup special as opposed to purchasing it from his website. What we do know is that torrenting of movies, TV shows, music, and other forms of content has been on the rise in recent years, and the number of people who torrented the Game of Thrones season finale in 2013 was actually higher than the number of people who watched it on HBO. This is a rather staggering statistic considering the fact that the number of "illegal" viewers does not include streaming websites that allow users to watch episodes or movies directly from their browsers. Although certain shows, such as Games of Thrones and Homeland, tend to have a larger number of torrent downloads due to the exclusive nature of their programming availability, the point here is that millions of people are ready to download popular content whenever it is available for free. While Louis C.K.'s plan to make his special easier to download legally was a nice gesture, the reality is that there were still probably plenty of people torrenting the video. Some evidence has shown that Louis's scheme may have led to more purchases and more torrents of his work simply due to the increased publicity around the release of Live at the Beacon Theater.
So how could Bitcoin improve this movement of releasing standup comedy specials on the Internet with no middleman? Before we get into anything else, we should start with PayPal fees. Due to the high volume of transactions, Louis C.K. was likely able to get a rate of around 2% per transaction. On top of that, there is the flat $0.30 fee for each sale. In this scenario, $1 million in sales during the first twelve days of its release would mean PayPal earned roughly $80,000 in processing fees. Their real cut of the action was likely much higher than this due to the fact that sales from outside the United States incur increased costs. For the sake of argument, we will just stick with the $80,000 figure. If these purchases were made with Bitcoin, the total costs would have been $10,000. This assumes none of the sales were made off-blockchain through a company like Coinbase. Also, the Bitcoin transaction fees would have been paid by the customers.
How Else Could Bitcoin Help?
In addition to helping cut down on transaction costs, Bitcoin could also help Louis C.K. create a completely different crowdfunding model. Instead of hoping his fans follow the honor system, Louis could simply record the special and then tell his fans that he will release it after it has been funded by 1 million of his fans. This number is not pulled out of nowhere. Louis C.K. currently has 3.78 million followers on Twitter, which is a drop in the bucket compared to his total number of fans around the world. Expecting 1 million people to pay for his standup special is not an outlandish figure. Louis C.K. could even just ask for $3 from each of the million fans instead of $5 and still come away with millions more than he received for his first trial run in December 2011.
Why is Bitcoin Necessary for This to Work?
Now some will say that Bitcoin is not essential to this crowdfunding model. While Bitcoin certainly is not required, it does make the most sense. Here are the key reasons Bitcoin is the best option:
- No chargebacks - Bitcoin would prevent a large number of people from sending money to Louis C.K. and then pulling off a chargeback once the video file was released for everyone's enjoyment.
- Global availability - While PayPal is available in most developed countries around the world, there are plenty of people who were unable to purchase Louis C.K.'s special due to the fact that they had no means of payment. Bitcoin does not discriminate and is available to everyone in the world, which leads to more money in Louis C.K.'s pocket. Remember, people turn to torrents most often when the content is not available in their country. Louis even discussed this on the Opie and Anthony radio show not long ago.
- Microtransactions - Although Louis would be asking for $3--5 from each of his fans, there would be plenty of people who would be willing to pay much more or much less. Someone may decide that the will throw $1 into the crowdfunding campaign, while others will throw in $20 if they are a huge fan and they want the video released as soon as possible. Traditional payment methods simply do not make sense for small donations. Even at $3, more than 10% of the donation would be going to a payment processor.
- Bitcoin voting - Bitcoin voting is an added incentive that could cause more people to donate. With this model, donors would be able to send their bitcoins to a specific Bitcoin addresses. The final value of an address signifies the amount of votes in favor of a corresponding outcome, such as the content of the standup special. For example, donors could use their bitcoins to vote on where the special will be filmed, who would open for Louis C.K., or even which sections Louis should cut out of the special.
What About Lost Customers Due to Not Accepting Credit Cards or PayPal?
The major downside to accepting only Bitcoin as a payment option for his specials is that barely anyone uses Bitcoin right now. The decentralized payment system is basically in the same situation that PayPal was when they first launched. Having said that, there are plenty of companies working on bringing more users to Bitcoin. The perfect partner for an online sale like this would be Circle. Buyers in the United States, and soon other countries, would be able to purchase bitcoins instantly with their debit cards after signing up for Circle. Better yet, Circle is already giving out $10 worth of bitcoin to all of their new customers. People who were not already Circle members would be able to use half of the $10 given to them by the online Bitcoin wallet provider to pay for the Louis C.K. standup special. Many users may just give Louis the whole $10.
Would Louis C.K. Accept Bitcoin?
Louis C.K. may not be someone who is going to dismiss Bitcoin right away. A Redditor sent his website an email about the subject before the release of his last special, and someone who manages his website said they were "considering crypto currencies." In my view, crowdfunding campaigns powered by unique monetization models made possible through Bitcoin are the future of how artists can get paid for their content. Louis CK has already gone after Ticketmaster and centralized media outlets in the past, so perhaps cutting out the payment processors could be his next move.
And finally, for laughs, Louis C.K.'s explanation of the banking system.
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Featured image via David Shankbone.