Piracy is tough to quantify. Company A will tell you that it lost X amount of dollars because of Y number of pirates. Comedian B instead made 200,000 sweet, sweet dollars (and counting) by deliberately not doing anything to stop piracy. It turned out well for Louis C.K., but the move is important for more than how it filled his wallet.
Louis C.K. made his latest comedy special available for download for only $5. He didn't upload a torrent of it himself, of course, but he also rejected all of the usual protections, saying, "I made this video extremely easy to use against well-informed advice. I was told that it would be easier to torrent the way I made it, but I chose to do it this way anyway, because I want it to be easy for people to watch and enjoy this video in any way they want without 'corporate' restrictions." In other words, he allowed piracy through his actions, but he was hoping that wasn't what would happen.
People torrent because it's free and easy. Turns out: easy may be more enticing than free.
Piracy is a complex problem, no doubt about it. But the way companies often try to figure out just how much damage is done to them — and the subsequent actions this information leads them to — is by looking at how many torrents there were of a song, show, movie or what-have-you, and then multiplying that by a dollar amount and flipping a desk. Would all those torrenters be paying customers if there was such a thing as no piracy? No. Not at all.
A Pirate-Friendly Approach
$5. That's it. As far as I know, the download (which you can also stream) is the only way to consume the special beside actually having gone to see the performance live at Beacon Theater in New York City. According to Louis C.K. the price for the production was around $170,000:
"First of all, this was a premium video production, shot with six cameras over two performances at the Beacon Theater, which is a high-priced elite Manhattan venue. I directed this video myself and the production of the video cost around $170,000. (This was largely paid for by the tickets bought by the audiences at both shows)."
On top of this, Louis C.K. paid out $32,000 for a "very robust, reliable and carefully constructed website [to] give buyers a simple, optimal and humane experience for buying the video." So, $202,000 all told.
The minimum amount the world would have to pay — that's all 7 billion of us — is $5 once for the file, which could then be torrented to infinity. That's assuming some enterprising hacker didn't just lift it, either, whereby we could all skip that paltry sum to begin with. Louis C.K. knew from the get-go that offering his file up for grabs as an individual was risky. A major distribution company would not only hand out cease-and-desist orders left and right and sue folks into the ground for their torrenting transgressions, but jack up the price as well. $5 is nothing when there's a hundred hands reaching into the pot.
Louis C.K. offered the download with this message, instead:
"I would like to be able to post more material to the fans in this way, which makes it cheaper for the buyer and more pleasant for me. So, please help me keep this being a good idea. I can't stop you from torrenting; all I can do is politely ask you to pay your five little dollars, enjoy the video, and let other people find it in the same way."
Companies — and Louis C.K. — can't beat piracy when it comes to price. Free is free. What can happen, and companies such as Netflix are proof of this, is that you can win by making things easy.
Using Services To Discourage Piracy
What Louis C.K. did was offer the masses a better service than piracy does. Finding torrents, as numerous as they are, can be a hassle. Sometimes you get a bum download, a virus, a file with foreign dubbing — what could be wrong with your file goes on and on. But we don't even need to pick apart torrenting to see why this approach worked.
The $5 buy-in follows the same mentality that made iTunes such a success. Using a credit card or PayPal, you pony up five bucks and then, voilà, the Beacon Theater performance is yours. You can only watch it twice as a stream, sure, but that's made moot by that you're also allowed to just download it. Twice.
When you're fighting piracy, you've got two simple options: you fortify your services, or you evolve them. A good example of fortifying them would be paywalls and DRM, such as those imposed by Ubisoft on almost all of its PC games. Evolving a service doesn't swim against the stream of piracy but rather with it. There's no reason why people couldn't have found Louis C.K.'s performance online and enjoyed it for free. Then again, the urge to see the show and see it fast is served by Louis C.K.'s offering, and for $5 it's a guaranteed thing. It's not as cheap as free, but it's the easiest option on the table.
It worked because it was easy, and because it was the best service offered.
It paid off, too:
The show went on sale at noon on Saturday, December 10th. 12 hours later, we had over 50,000 purchases and had earned $250,000, breaking even on the cost of production and website. As of Today, we've sold over 110,000 copies for a total of over $500,000. 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. 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). You never have to join anything, and you never have to hear from us again.
I watched the performance myself, in a living room with half a dozen others. Louis C.K. only got $5 in total from the lot of us, but I'll have no problem throwing down again when I get the inevitable hankering to rewatch it. Hell, I'd give him $5 just because I liked it so much.