From the FT's Lex blog
After the vigorously profane American comic Louis C.K. decided to produce and distribute his latest concert himself, he said he hoped the experiment would work “so I can have s***loads of money”. It worked. At $5 a download straight from Mr. C.K.’s website, the show, which cost $250,000 to make, grossed over $1-million over 12 days.
A few other entertainers, notably the rock band Radiohead, have tried going direct to fans, but none has been as transparent as C.K. The implications of his financial success for companies in the traditional distribution chain are significant but they depend on where they sit.
Movie studios and TV networks can afford to shrug. Only artists with a cult-like following in a limited number of genres (comedy and music first among them) could pull this off. In most cases, financing, production wherewithal, advertising skill and distribution muscle are essential to large-scale, profitable productions.
Cable, satellite and telecoms companies that pipe media into homes should be fine too. The physical infrastructure they pay billions to install and maintain is indispensable. As more entertainment is consumed from the internet rather than through cable channels, they will have to adjust their pricing models, but that seems feasible.
The likes of Netflix, Amazon and Apple’s iTunes, which play an intermediate role as content agglomerators, have more reason to sweat. The website C.K. used to push his product cost him only $32,000 and was immediately capable of handling huge volume. There will always be second-tier products that require the benefit of a busy virtual store to sell but any entertainers or organizations with a loyal following already in place can now distribute their content seamlessly, without giving a cut to anyone, for next to nothing. For internet shopkeepers, the joke is on them.
