Tags: elections 2012, obama, politics, romney, usa
Tags: bay area, bicycles, san francisco, theft
At Priceonomics, we are fascinated by stolen bicycles. Put simply, why the heck do so many bicycles get stolen? It seems like a crime with very limited financial upside for the thief, and yet bicycle theft is rampant in cities like San Francisco (where we are based). What is the economic incentive for bike thieves that underpins the pervasiveness of bike theft? Is this actually an efficient way for criminals to make money?
It seems as if stealing bikes shouldn’t be a lucrative form of criminal activity. Used bikes aren’t particularly liquid or in demand compared to other things one could steal (phones, electronics, drugs). And yet, bikes continue to get stolen so they must be generating sufficient income for thieves. What happens to these stolen bikes and how to they get turned into criminal income?
The Depth of the Problem
In San Francisco, if you ever leave your bike unlocked, it will be stolen. If you use a cable lock to secure your bike, it will be stolen at some point. Unless you lock your bike with medieval-esque u-locks, your bike will be stolen from the streets of most American cities. Even if you take these strong precautions, your bike may still get stolen.
According the National Bike Registry and FBI, $350 million in bicycles are stolen in the United States each year. Beyond the financial cost of the crime, it’s heartbreaking to find out someone stole your bike; bikers love their bikes.
As one mom wrote in an open letter to the thief who pinched her twelve year old son’s bike:
It took CJ three weeks to finally decide on his bike. We looked at a brown bike at Costco, even brought it home to return it the next day, and a blue one at Target. But his heart was set on the green and black Trek he saw at Libertyville Cyclery. CJ knew it was more than we wanted to spend but the boy had never asked for anything before. You see, CJ had to live through his dad being unemployed for 18 months and knew money was tight. Besides, he’s just an all around thoughtful kid.
CJ didn’t ride his bike to school if there was rain in the forecast and he always locked it up. You probably noticed that it doesn’t have a scratch on it. CJ treated his bike really well and always used the kick-stand.
You should know that CJ has cried about the bike and is still very sad. He had to learn a life lesson a little earlier than I had liked – that there are some people in the world who are just plain mean. Now you know a little about my really awesome son and the story behind his green and black Trek 3500, 16-inch mountain bike.
An Economic Theory of Bike Crime
In 1968, Chicago economist Gary Becker introduced the notion that criminal behavior could be modeled using conventional economic theories. Criminals were just rational actors engaged in a careful cost-benefit analysis of whether to commit a crime. Is the potential revenue from the crime greater than the probability adjusted weight of getting caught? Or, as the antagonist in the movie The Girl Next Door puts it, “Is the juice worth the squeeze?”
Criminal activity (especially crime with a clear economic incentive like theft) could therefore be modeled like any financial decision on a risk reward curve. If you are going to take big criminal risk, you need to expect a large financial reward. Crimes that generate more reward than the probability weighted cost of getting caught create expected value for the criminal. Criminals try to find “free lunches” where they can generate revenue with little risk. The government should respond by increasing the penalty for that activity so that the market equilibrates and there is an “optimal” amount of crime.
Using this risk-return framework for crime, it begins to be clear why there is so much bike theft. For all practical purposes, stealing a bike is risk-free crime. It turns out there is a near zero chance you will be caught stealing a bike (see here) and if you are, the consequences are minimal.
There are a few great accounts of journalists getting their bikes stolen and then going on a zealous mission to try to capture bikes thieves (see here and here). In each account, they ultimately learn from local police that the penalty for stealing a bike is generally nothing.
“We make it easy for them. The DA doesn’t do tough prosecutions. All the thieves we’ve busted have got probation. They treat it like a petty crime.”
“You can’t take six people off a murder to investigate a bike theft.”
Bike thievery is essentially a risk-free crime. If you were a criminal, that might just strike your fancy. If Goldman Sachs didn’t have more profitable market inefficencies to exploit, they might be out there arbitraging stolen bikes.
What Happens to the Stolen Bikes?
Just because the risk of a crime is zero, that doesn’t mean that a criminal will engage in that crime. If that were the case, thieves would go about stealing dandelions and day-old newspapers. There has to be customer demand and a liquid market for the product in order for the criminal to turn their contraband into revenue. So, how exactly does a criminal go about converting a stolen bicycle to cash?
We decided to survey the prior literature on where stolen bikes are sold as well as consult with bike shops and experts in San Francisco to get a better picture of who steals bikes and where the stolen bikes end up.
Amateur Bike Thieves. Amateur bike thieves sell their stolen goods at local fencing spots and are typically drug addicts or down on their luck homeless.
Sgt. Joe McKolsky, bike theft specialist for the SFPD, estimates that the overwhelming majority of bike thefts are driven by drug addicts and end up being sold on the street for 5 to 10 cents on the dollar. Any bike will do, whether it’s a $50 beater or a $2,000 road bike. These thieves are amateurs just opportunistically stealing unsecured bikes to get some quick cash:
“Bikes are one of the four commodities of the street — cash, drugs, sex, and bikes… You can virtually exchange one for another.”
In San Francisco, these amateur stolen bikes end up on the streets at the intersection of 7th Street and Market Street in front of the Carl’s Jr restaurant. We chatted with Brian Smith, co-owner of HuckleBerry Bicycles, which is located across the street from this fencing joint. He confirmed it’s not uncommon for people to come into the shop having just purchased a $50 bike across the street or with obviously stolen bikes.
Professional Thieves. On the other end of the spectrum are professional bike thieves. Instead of opportunistically targeting poorly locked bicycles, these thieves target expensive bicycles. They have the tools that can cut through u-locks and aim to resell stolen bikes at a price near their “fair market value.” These thieves acquire the bicycles from the streets, but then resell them on online markets to maximize the selling price.
We asked Aubrey Hoermann, owner of used bicycle shop Refried Cycles in the Mission, about professional bike thieves and where they sell their merchandise:
“It has to end up somewhere where you can sell it in another city. My feeling is that people steal enough bikes to make it worth to take a trip somewhere like LA and then sell it there on Craigslist. If you have about 10 stolen bikes, it’s probably worth the trip.”
Another bike shop proprietor who asked not to be named added:
“Most of these guys are drug addicts, but a lot of them are professionals. You can cut through a u-lock in a minute and a half with the right tools. Steal three bikes and sell them in LA for $1500 a piece and you’re making money.”
These thieves essentially are maximizing their revenue per van trip to a market in which they can sell the bicycle. In the past they might’ve been able to resell it locally, but according to Aubrey, this opportunity is fading:
You can’t just steal a bike and sell it on Craigslist in San Francisco anymore. It’s too well known that’s where it would be and it’s too much work to change it to make it look different. I used to be a bike messenger and if your bike was stolen you’d go check at 7th and Market. Now that’s too well known to just sell a bike there.
Increasingly when a bicycle is stolen, the victims know where to check locally (Craigslist, 7th and Market, the Oakland Flea Market) so that makes it hard to sell the bikes there. Because bikes aren’t even that popular in the first place, it’s just not worth the effort to customize and disguise them for local sale.
Because of this dynamic, Aubrey concludes that professional bike theft is replacing amateur theft as the predominant form of bike theft. While the police may not penalize bicycle thieves, it’s becoming easier for the person whose bike was stolen to investigate the bike theft themselves. This is making it harder for the amateur thief to casually flip a stolen bike.
Is There at Keyser Söze of the Bike Underworld?
Bike theft is rampant and increasingly the province of professionals. Is there any evidence that a “criminal mastermind” exists behind this network where bikes are stolen in one city, transported to another and then resold? Ultimately, there is no evidence that a bike kingpin exists.
The largest bike theft arrests ever recorded are rather mundane actually. In San Francisco, recently a local teen was arrested with hundreds of stolen bikes found in his storage locker. Did these bicycles end up in some exotic fencing ring? Nope, they were being resold at an Oakland flea market.
In Toronto, a mentally imbalanced bike shop owner was found hoarding 2,700 stolen bikes. Mostly, he was just letting them rust.
Criminal masterminds have to value their time and resources, and bike theft isn’t really that profitable. The transportation costs and low value density ratio of the product likely kill the economics of the stolen bike trade. The bike shop proprietor we interviewed that requested anonymity concluded:
You’d be in the prostitution or drugs business if you were running a criminal ring to make money. There just isn’t that much money in bikes. These people who steal bikes are professionals but small time operators. Or, they’re just assholes.
Ultimately, that’s the point everyone seems to agree on – bike thieves are assholes. For everything else, there is little consensus and hard evidence. However, some things are clear and explain a lot of the bike theft that occurs.
It’s dead simple to steal a bike and the consequences are near zero. You can resell stolen bikes. If you want to get a good price for a stolen bicycle, it requires a decent amount of work. That amount of work is what limits the bike theft trade from really flourishing. Criminal masterminds have an opportunity cost for their time; they can’t be messing around lugging heavy pieces of metal and rubber that are only in limited demand.
So, if your bike ever gets stolen, you can at least take solace in the fact that the illicit bike trade isn’t a very easy way to make a lot of money. That probably won’t make you feel any better though.
Fascinating article on a very common phenomenon observed here in the Bay Area.
Tags: adrian tam, advice, commencement, life, philosophy, speech
I must say thank you to the faculty and staff of the Wee Kim Wee School of Communication and Information for inviting me to give your convocation address. It’s a wonderful honour and a privilege for me to speak here for ten minutes without fear of contradiction, defamation or retaliation. I say this as a Singaporean and more so as a husband.
My wife is a wonderful person and perfect in every way except one. She is the editor of a magazine. She corrects people for a living. She has honed her expert skills over a quarter of a century, mostly by practising at home during conversations between her and me.
On the other hand, I am a litigator. Essentially, I spend my day telling people how wrong they are. I make my living being disagreeable.
Nevertheless, there is perfect harmony in our matrimonial home. That is because when an editor and a litigator have an argument, the one who triumphs is always the wife.
And so I want to start by giving one piece of advice to the men: when you’ve already won her heart, you don’t need to win every argument.
Marriage is considered one milestone of life. Some of you may already be married. Some of you may never be married. Some of you will be married. Some of you will enjoy the experience so much, you will be married many, many times. Good for you.
The next big milestone in your life is today: your graduation. The end of education. You’re done learning.
You’ve probably been told the big lie that “Learning is a lifelong process”and that therefore you will continue studying and taking masters’ degrees and doctorates and professorships and so on. You know the sort of people who tell you that? Teachers. Don’t you think there is some measure of conflict of interest? They are in the business of learning, after all. Where would they be without you? They need you to be repeat customers.
The good news is that they’re wrong.
The bad news is that you don’t need further education because your entire life is over. It is gone. That may come as a shock to some of you. You’re in your teens or early twenties. People may tell you that you will live to be 70, 80, 90 years old. That is your life expectancy.
I love that term: life expectancy. We all understand the term to mean the average life span of a group of people. But I’m here to talk about a bigger idea, which is what you expect from your life.
You may be very happy to know that Singapore is currently ranked as the country with the third highest life expectancy. We are behind Andorra and Japan, and tied with San Marino. It seems quite clear why people in those countries, and ours, live so long. We share one thing in common: our football teams are all hopeless. There’s very little danger of any of our citizens having their pulses raised by watching us play in the World Cup. Spectators are more likely to be lulled into a gentle and restful nap.
Singaporeans have a life expectancy of 81.8 years. Singapore men live to an average of 79.21 years, while Singapore women live more than five years longer, probably to take into account the additional time they need to spend in the bathroom.
So here you are, in your twenties, thinking that you’ll have another 40 years to go. Four decades in which to live long and prosper.
Bad news. Read the papers. There are people dropping dead when they’re 50, 40, 30 years old. Or quite possibly just after finishing their convocation. They would be very disappointed that they didn’t meet their life expectancy.
I’m here to tell you this. Forget about your life expectancy.
After all, it’s calculated based on an average. And you never, ever want to expect being average.
Revisit those expectations. You might be looking forward to working, falling in love, marrying, raising a family. You are told that, as graduates, you should expect to find a job paying so much, where your hours are so much, where your responsibilities are so much.
That is what is expected of you. And if you live up to it, it will be an awful waste.
If you expect that, you will be limiting yourself. You will be living your life according to boundaries set by average people. I have nothing against average people. But no one should aspire to be them. And you don’t need years of education by the best minds in Singapore to prepare you to be average.
What you should prepare for is mess. Life’s a mess. You are not entitled to expect anything from it. Life is not fair. Everything does not balance out in the end. Life happens, and you have no control over it. Good and bad things happen to you day by day, hour by hour, moment by moment. Your degree is a poor armour against fate.
Don’t expect anything. Erase all life expectancies. Just live. Your life is over as of today. At this point in time, you have grown as tall as you will ever be, you are physically the fittest you will ever be in your entire life and you are probably looking the best that you will ever look. This is as good as it gets. It is all downhill from here. Or up. No one knows.
What does this mean for you? It is good that your life is over.
Since your life is over, you are free. Let me tell you the many wonderful things that you can do when you are free.
The most important is this: do not work.
Work is anything that you are compelled to do. By its very nature, it is undesirable.
Work kills. The Japanese have a term “Karoshi”, which means death from overwork. That’s the most dramatic form of how work can kill. But it can also kill you in more subtle ways. If you work, then day by day, bit by bit, your soul is chipped away, disintegrating until there’s nothing left. A rock has been ground into sand and dust.
There’s a common misconception that work is necessary. You will meet people working at miserable jobs. They tell you they are “making a living”. No, they’re not. They’re dying, frittering away their fast-extinguishing lives doing things which are, at best, meaningless and, at worst, harmful.
People will tell you that work ennobles you, that work lends you a certain dignity. Work makes you free. The slogan “Arbeit macht frei” was placed at the entrances to a number of Nazi concentration camps. Utter nonsense.
Do not waste the vast majority of your life doing something you hate so that you can spend the small remainder sliver of your life in modest comfort. You may never reach that end anyway.
Resist the temptation to get a job. Instead, play. Find something you enjoy doing. Do it. Over and over again. You will become good at it for two reasons: you like it, and you do it often. Soon, that will have value in itself.
I like arguing, and I love language. So, I became a litigator. I enjoy it and I would do it for free. If I didn’t do that, I would’ve been in some other type of work that still involved writing fiction – probably a sports journalist.
So what should you do? You will find your own niche. I don’t imagine you will need to look very hard. By this time in your life, you will have a very good idea of what you will want to do. In fact, I’ll go further and say the ideal situation would be that you will not be able to stop yourself pursuing your passions. By this time you should know what your obsessions are. If you enjoy showing off your knowledge and feeling superior, you might become a teacher.
Find that pursuit that will energise you, consume you, become an obsession. Each day, you must rise with a restless enthusiasm. If you don’t, you are working.
Most of you will end up in activities which involve communication. To those of you I have a second message: be wary of the truth. I’m not asking you to speak it, or write it, for there are times when it is dangerous or impossible to do those things. The truth has a great capacity to offend and injure, and you will find that the closer you are to someone, the more care you must take to disguise or even conceal the truth. Often, there is great virtue in being evasive, or equivocating. There is also great skill. Any child can blurt out the truth, without thought to the consequences. It takes great maturity to appreciate the value of silence.
In order to be wary of the truth, you must first know it. That requires great frankness to yourself. Never fool the person in the mirror.
I have told you that your life is over, that you should not work, and that you should avoid telling the truth. I now say this to you: be hated.
It’s not as easy as it sounds. Do you know anyone who hates you? Yet every great figure who has contributed to the human race has been hated, not just by one person, but often by a great many. That hatred is so strong it has caused those great figures to be shunned, abused, murdered and in one famous instance, nailed to a cross.
One does not have to be evil to be hated. In fact, it’s often the case that one is hated precisely because one is trying to do right by one’s own convictions. It is far too easy to be liked, one merely has to be accommodating and hold no strong convictions. Then one will gravitate towards the centre and settle into the average. That cannot be your role. There are a great many bad people in the world, and if you are not offending them, you must be bad yourself. Popularity is a sure sign that you are doing something wrong.
The other side of the coin is this: fall in love.
I didn’t say “be loved”. That requires too much compromise. If one changes one’s looks, personality and values, one can be loved by anyone.
Rather, I exhort you to love another human being. It may seem odd for me to tell you this. You may expect it to happen naturally, without deliberation. That is false. Modern society is anti-love. We’ve taken a microscope to everyone to bring out their flaws and shortcomings. It far easier to find a reason not to love someone, than otherwise. Rejection requires only one reason. Love requires complete acceptance. It is hard work – the only kind of work that I find palatable.
Loving someone has great benefits. There is admiration, learning, attraction and something which, for the want of a better word, we call happiness. In loving someone, we become inspired to better ourselves in every way. We learn the truth worthlessness of material things. We celebrate being human. Loving is good for the soul.
Loving someone is therefore very important, and it is also important to choose the right person. Despite popular culture, love doesn’t happen by chance, at first sight, across a crowded dance floor. It grows slowly, sinking roots first before branching and blossoming. It is not a silly weed, but a mighty tree that weathers every storm.
You will find, that when you have someone to love, that the face is less important than the brain, and the body is less important than the heart.
You will also find that it is no great tragedy if your love is not reciprocated. You are not doing it to be loved back. Its value is to inspire you.
Finally, you will find that there is no half-measure when it comes to loving someone. You either don’t, or you do with every cell in your body, completely and utterly, without reservation or apology. It consumes you, and you are reborn, all the better for it.
Don’t work. Avoid telling the truth. Be hated. Love someone.
This witty yet piercing commencement speech is written by Adrian Tan, author of The Teenage Textbook (1988), who was the guest-of-honour at a NTU convocation ceremony. This was his speech to the graduating class of 2008. I’d like to share it with you as I hope that not only new grads, but everyone else can benefit from it, too.
Tags: advertising, copywriter, david ogilvy, letter, mad men, media, ogilvy, ogilvy & mather
British-born David Ogilvy was one of the original, and greatest, “ad men.” In 1948, he started what would eventually be known as Ogilvy & Mather, the Manhattan-based advertising agency that has since been responsible for some of the world’s most iconic ad campaigns, and in 1963 he even wrote Confessions of an Advertising Man, the best-selling book that is still to this day considered essential reading for all who enter the industry. Time magazine called him “the most sought-after wizard in today’s advertising industry” in the early-’60s; his name, and that of his agency, have been mentioned more than once in Mad Men for good reason.
With all that in mind, being able to learn of his routine when producing the very ads that made his name is an invaluable opportunity. The fascinating letter below, written by Ogilvy in 1955 to a Mr. Ray Calt, offers exactly that.
(Source: The Unpublished David Ogilvy: A Selection of His Writings from the Files of His Partners; Image: David Ogilvy, courtesy of Ads of the World.)
April 19, 1955
Dear Mr. Calt:
On March 22nd you wrote to me asking for some notes on my work habits as a copywriter. They are appalling, as you are about to see:
1. I have never written an advertisement in the office. Too many interruptions. I do all my writing at home.
2. I spend a long time studying the precedents. I look at every advertisement which has appeared for competing products during the past 20 years.
3. I am helpless without research material—and the more “motivational” the better.
4. I write out a definition of the problem and a statement of the purpose which I wish the campaign to achieve. Then I go no further until the statement and its principles have been accepted by the client.
5. Before actually writing the copy, I write down ever concievable fact and selling idea. Then I get them organized and relate them to research and the copy platform.
6. Then I write the headline. As a matter of fact I try to write 20 alternative headlines for every advertisement. And I never select the final headline without asking the opinion of other people in the agency. In some cases I seek the help of the research department and get them to do a split-run on a battery of headlines.
7. At this point I can no longer postpone the actual copy. So I go home and sit down at my desk. I find myself entirely without ideas. I get bad-tempered. If my wife comes into the room I growl at her. (This has gotten worse since I gave up smoking.)
8. I am terrified of producing a lousy advertisement. This causes me to throw away the first 20 attempts.
9. If all else fails, I drink half a bottle of rum and play a Handel oratorio on the gramophone. This generally produces an uncontrollable gush of copy.
10. The next morning I get up early and edit the gush.
11. Then I take the train to New York and my secretary types a draft. (I cannot type, which is very inconvenient.)
12. I am a lousy copywriter, but I am a good editor. So I go to work editing my own draft. After four or five editings, it looks good enough to show to the client. If the client changes the copy, I get angry—because I took a lot of trouble writing it, and what I wrote I wrote on purpose.
Altogether it is a slow and laborious business. I understand that some copywriters have much greater facility.
Tags: acronyms, bullshit, business, buzzwords, fluff, harvard business review, hbr, internet
I’d say that in about half of my business conversations, I have almost no idea what other people are saying to me. The language of internet business models has made the problem even worse. When I was younger, if I didn’t understand what people were saying, I thought I was stupid. Now I realize that if it’s to people’s benefit that I understand them but I don’t, then they’re the ones who are stupid.
There are at least five strains of this epidemic.
We have forgotten how to use the real names of real things. Like doorknobs. Instead, people talk about the idea of doorknobs, without actually using the word “doorknob.” So a new idea for a doorknob becomes “an innovation in residential access.” Expose yourself repeatedly to the extrapolation of this practice to things more complicated than a doorknob and you really just need to carry Excedrin around with you all day.
This is a disease of epic proportions in the world of charity. I was at a meeting just two days ago at which several well-meaning staff members of a charity were presenting to their board, and the meat of their discussion revolved around the acronyms SCEA and some other one that began with “R” that I can’t recall. In the span of three minutes these acronyms must have been used eight times each. They were central to any understanding of the topic at hand, but they were never defined. So I had not the vaguest idea what the presenters were talking about. None. Could have been talking about how to make a beurre-blanc sauce for all I know.
Valley Girl 2.0
My partner and I were at a restaurant in the San Fernando Valley five years ago, and a real-live Valley girl was sitting in the booth behind us talking on her cell phone. We couldn’t stop listening to her. She had a world-class ability to string together half-sentences devoid of any substance whatsoever. And yet you felt as if something important were being discussed! “And she was like, ummm, and I was just like, you know, umm, no way, really, like, yeah, and when she was like that, I was just like..umm….” She could go on in this way for extended periods of time without mentioning any actual people, actions, or thoughts. There’s a business version of this illness. It involves the use of words such as “space,” “around,” “synergy,” and “value-add” with a healthy dose of equivocators like “sort of” and “kind of” to ensure that there is no commitment to anything being said: “I’m in the sort of sustainability space around kind of bringing synergistic value-add to other people’s work around this kind of space.” Oh, OK, that explains it.
I wrote about the phrase “thinking outside the box” recently and how overused and utterly misunderstood the expression is. There are many more. Another term that has lost its meaning is “Let’s exceed the customer’s expectations.” Employees who hear it just leave the pep rally, inhabit some kind of temporary dazed intensity, and then go back to doing things exactly the way they did before the speech. Customers almost universally never experience their expectations being met, much less exceeded. How can you exceed the customer’s expectations if you have no idea what those expectations are? I was at a Hilton a few weeks ago. They had taken this absurdity to its logical end. There was a huge sign in the lobby that said, “Our goal is to exceed the customer’s expectation.” The best way to start would be to take down that bullshit sign that just reminds me, as a customer, how cosmic the gap is between what businesses say and what they do. My expectation is not to have signs around that tell me you want to exceed my expectations.
Abstract Valley Girl 2.0 Acronymitis Using Meaningless Expressions
This is when you combine the four diseases above. So you get phrases like, “You should meet this guy with the SIO. He’s sort of this kind of social entrepreneur thinking outside of the box in the sustainability space and working on these ideas around sort of web-based social media, and he’s in a round two capital raise in the VP space with the people at SVNP.” How many times have you heard what you now recall to be precisely this sentence?
This would all be funny if it weren’t true. People just don’t make sense anymore. You’ll save yourself a lot of trouble if you internalize this. Observe it, deconstruct it, and appreciate just how ridiculous most business conversation has become.
You will gain tremendous credibility, become much more productive, make those around you much more productive, and experience a great deal more joy in your working life if you look someone in the eye after hearing one of these verbal brain jammers and tell the person, “I don’t have any idea what you just said to me.”
Couldn’t agree more with this article by Dan Pallotta on HBR. The levels of buzz-words and fluff used in business nowadays (especially in the internet industry) have reached ridiculous levels and there is a drastic need to deconstruct and simplify our everyday lexicon.
Highly recommend visiting the site and reading the comments. The one below, in particular, is pure gold:
While in the run-up to transitioning in this phase of right-sizing and redeployment, we still need to—at the end of the day—drill down and make sure that our mission-critical, goal-oriented core competencies are in alignment and on the same page as the most current best-practices paradigm. While we as a customer-centric long-tail company are still on the runway, we need to each firewall enough time to allow out-of-the-box thinking and strategize the low-hanging fruit in the marketplace. Envisioning the metrics here will require accountability management on each team member to come up with a value-added solution that doesn’t require putting out fires or a lot of bandwidth. Bottom line? The truth is we have to step up, work smarter, not harder, and create a Web 2.0 solution. This is an exciting model for limitless potential and mutually agreed synergies!
I’ve got an open door policy, so touch base and keep me in the loop. If we can move forward and proactively get on the same page about this, it’ll be a win-win-win. Remember: our people make the difference.
Tags: beacon, comedian, digital, digital media, ecommerce, louis ck, million, paypal
Back to LouisCK.net –>
A Statement from Louis C.K. (December 13, 2011)
People of Earth (minus the ones who don’t give a shit about this): it’s been amazing to conduct this experiment with you. The experiment was: if I put out 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?
It’s been 4 days. A lot of people are asking me how it’s going. I’ve been hesitant to share the actual figures, because there’s power in exclusive ownership of information. What I didn’t expect when I started this was that people would not only take part in this experiment, they would be invested in it and it would be important to them. It’s been amazing to see people in large numbers advocating this idea. So I think it’s only fair that you get to know the results. Also, it’s just really cool and fun and I’m dying to tell everybody. I told my Mom, I told three friends, and that wasn’t nearly enough. So here it is.
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). The material in the video was developed over months on the road and has never been seen on my show (LOUIE) or on any other special. The risks were thus: every new generation of material I create is my income, it’s like a farmer’s annual crop. The time and effort on my part was far more than if I’d done it with a big company. If I’d done it with a big company, I would have a guarantee of a sizable fee, as opposed to this way, where I’m actually investing my own money.
The development of the website, which needed to be a very robust, reliable and carefully constructed website, was around $32,000. We worked for a number of weeks poring over the site to make sure every detail would give buyers a simple, optimal and humane experience for buying the video. I edited the video around the clock for the weeks between the show and the launch.
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 really hope people keep buying it a lot, so I can have shitloads of money, but at this point I think we can safely say that the experiment really worked. If anybody stole it, it wasn’t many of you. Pretty much everybody bought it. And so now we all get to know that about people and stuff. I’m really glad I put this out here this way and I’ll certainly do it again. If the trend continues with sales on this video, my goal is that i can reach the point where when I sell anything, be it videos, CDs or tickets to my tours, I’ll do it here and I’ll continue to follow the model of keeping my price as far down as possible, not overmarketing to you, keeping as few people between you and me as possible in the transaction.
(Of course i reserve the right to go back on all of this and sign a massive deal with a company that pays me fat coin and charges you straight up the ass.). (This is you: yes Louie. And we’ll all enjoy torrenting that content. You fat sweaty dolt).
I probably sound kind of crazy right now. It’s been a really fun and intense few days. This video was paid for by people who bought tickets, and then bought by people who wanted to see that same show. I got to do exactly the show I wanted, and exactly the show you wanted.
I also got an education. And everything i learned are things i was happy to learn.
I learned that people are interested in what happens and shit (i didn’t go to college)
I learned that money can be a lot of things. It can be something that is hoarded, fought over, protected, stolen and withheld.
Or it can be like an energy, fueled by the desire, will, creative interest, need to laugh, of large groups of people. And it can be shuffled and pushed around and pooled together to fuel a common interest, jokes about garbage, penises and parenthood.
I want to thank Blair Breard who produced this video and produces my series LOUIE, and I want to thank Caspar and Giles at Version Industries, who created the website.
I hope with all of my heart that I stay funny. Otherwise this all goes to hell. Please have a safe and happy holiday, and thank you again for all this crazy shit.
I absolutely love how Louis C.K was brave enough to forsake a guaranteed payout from a studio and offer his material online (without any copyright protection) for a measly sum of $5. And it has paid off brilliantly! Sales have already crossed half a million in 4 days and I won’t be surprised if it passes a million very soon. Louis has been kind enough to share the details in an online statement pasted above which acts as another proof point to the disruptive power of digital.