What does Louis CK’s $5 video mean for the future of online media?

In an Internet experiment of sorts, comedian Louis CK sold his latest video of his performance on his website for only $5. There was no distribution, no DRM, no major marketing or sales expenses. Yet in twelve short days, Louis' video has earned earned $1 million.

"The experiment was: If I put a brand new standup special at a drastically low price ($5) and make it as easy as possible to buy, download and enjoy, free of any restrictions, will everyone just go and steal it? Will they pay for it? And how much money can be made by an individual in this manner?" said Louis in a statement, as quoted on Mashable. His statement came shortly after he'd made his first $200,000 on the video, just four days after its release.

In another statement on his website, Louis says he was overwhelmed by the response, and wanted to let all those who had bought the album know what he was going to do with that money. He says it will be split four ways: $250,000 would cover the cost of producing the special and building the website, $250,000 would be given to his staff and those who worked on the special as a bonus, $280,000 would be split amongst five different charities, and $220,000 would go to Louis himself.

While the response in purchasing the video has been immediate and somewhat surprising, this isn't the first time an artist has offered up their work for a fraction of what consumers would normally pay. Radiohead offered fans a similar deal; their 2007 album 'In Rainbows' was first sold as a pay-what-you-want digital download, a radical move for an album that was expected to debut at the top of the charts. It proved that while people weren't paying much money for the album, averaging $2.38 per album download (and only 38% of users actually paying anything), money can still be made as 1.2 million people download an album.

The two examples raise two big questions: 1) does the kind of media matter when designing a pay-what-you-can or low-pay distribution model? And 2) if you set a minimum, or link the small amount to charity, will that encourage more paying customers to join in?

Low-pay distribution models are still a scarcity amongst big-name artists, but it could prove to be a good way to get users to pay for content instead of seeking out ways of getting it through piracy. Low-cost distribution has been used for years in the gaming and software communities as a way for publishers to get their games out, either through shareware or freeware programs, or pay-what-you-can charity models like the Humble Bundle. The most recent Humble Bundle, which gives users a minimum of five games, has already sold over 380,000 and earned a total of nearly $2 million.

Since Louis CK's experiment is a first amongst big-name comedians, it's difficult to say if this is something that would repeat if another artist were to take a similar gamble. What it and the other experiments show, though, is that people are willing to pay for content if that money is going to the right places.

(Getty image)