Results From Our CwF+RtB Business Model Experiment

from the cwf+rtb dept

Tue, Nov 3rd 2009 12:54pm — Mike Masnick

Before getting into the "meat" of this post about how our CwF+RtB experiment worked out, I want to announce that we've "replenished" the store with some new t-shirts and hoodies. These are brand new -- not the same t-shirts and hoodies we had before, which are sold out. You have a choice of either a t-shirt or a hoodie with the full Techdirt logo, or my personal favorite DMCA takedown t-shirt which says on the front:
The content of this t-shirt has been removed due to a DMCA takedown notice.

Consider the message on the shirt a good way to engage people in a conversation about the abuses of copyright law and the DMCA. The hoodies come with a copy of my Approaching Infinity book, while you can get the t-shirts without the book or with the book.

Also, we are doing one thing differently this time around. Rather than just waiting until we sell out to stop selling these shirts, we're taking open orders for two weeks only and then will make the shirts and send them out. So if you want this shirt from us, you have two weeks to order. And that's it. On to the post itself...

After seeing many musicians setting up various interesting/amusing "tiers" of scarce value worth buying, while also working to connect with fans, we decided to launch our own CwF+RtB tiers, at the end of July, as an experiment to see what we might learn. We knew that this sort of thing worked for music, but had no idea if it would work elsewhere -- say, for a blog. It wasn't designed to replace our existing business model, but just as an experiment to see what would happen -- and what we could learn that might help others implementing similar business models.

I should apologize, as this post detailing the results is way, way, way overdue. We had most of the results and lessons within about a month, but this is a big post to write up and I kept procrastinating. No good reason why: there was just always something going on in the news that seemed more urgent and every so often I do like to catch up on sleep.

The quick summary: we consider the experiment to have been a huge success.

We brought in approximately $37,000 total due to this experiment, mostly in the course of that first month.
Nearly $12,000 came from direct sales to individuals of the tiers between $5 and $150.
As was revealed in an article at Wired, another $5,000 came from an individual, Didier Mary, who was working on a business plan and bought the Techdirt Reviews Your Business Plan package. The package included an Insight Community conversation, which recently concluded, about his business model idea. Didier has told us that "it was a great experience" and very useful to him in moving forward with his plans.
Another $20,000 came from larger companies, which purchased Insight Community packages after learning about them through this effort.
The effort also resulted in potential future deals, as it led many more companies to contact us to learn more about the Insight Community.
Other companies, with whom we were already talking about the Insight Community, contacted us after we launched this, with one noting that if what his company had been discussing with us was on the list, he probably would have just "clicked buy" right away (though, with that company, we're still discussing a deal and have not yet completed it).
Ignoring the higher end Insight Community deals, the average amount paid by users was over $70. This was significantly higher than expected.
Sales came from 15 different countries around the globe. North America and Europe were obviously the biggest, but we also got sales from Asia, South America and Australia (no Africa). The international sales might have been bigger if we had launched international sales the same day we launched the overall effort. Unfortunately, we didn't have all the details on that sorted out until a week later, and I think we probably lost some international sales that way. The US Postal Service does make international sales much easier these days -- especially with its "one rate" boxes, but shipping is still really expensive, and many countries then add annoying tariffs on top of everything. This was annoying, but (unfortunately) unavoidable.
Our highest selling item was not the cheapest, second cheapest or third cheapest offering (contrary to the claims that people just want the cheapest item). Instead, the biggest seller -- by a pretty wide margin -- was the Approaching Infinity package, that included both a copy of my book and a t-shirt.
For quite a while, the hoodies (which we almost didn't offer) outsold the t-shirts... but in the end the t-shirts barely passed the hoodies.
The Techdirt Book Club outsold the Techdirt Music Club by a factor of three.
No one bought the Day with Techdirt package, though we actually got a lot of inquiries about that, with multiple people who don't live in California saying that if they were closer, they would have bought it. This is still available, though.
And, fear not, no one bought the $100 Million Silence Techdirt offer (still available as well!), though we did get a few people who were worried that someone would actually take us up on this -- and one satirical offer from someone claiming to be from the RIAA, which made me laugh, saying the RIAA would pay up, but wanted to guarantee "exclusive rights" to the RIAA, such that it would be able to "pursue appropriate legal action against any and all 3rd parties that make use of this silence purposely or inadvertently" including, of course "the right to pursue similar action against any individuals who are also not reading Techdirt and therefore infringing on our own licensed agreement to be the sole recipient of a Techdirt-free world." Brilliant.
However, the $100 Million Silence Techdirt offer did get the most traffic of any of the tiers, by a factor of three -- though, it also drove many people to check out the other tiers.

Lessons Learned

So, what did we learn? Lots of things:

This works! These sorts of models can absolutely work in connecting with fans and in making money.
All of you, in our community, are awesome. Not just for buying, obviously, but because the overall response we got was incredible. This included many really, really nice emails that made us feel great, along with happy emails and Twitter messages from people receiving their packages, and telling us stories about wearing the clothes, reading the books, etc.
It's fun making people happy. Really. It really gave all of us here at Floor64 a great feeling every time we heard back from happy community members.
Logistics and inventory management are more complicated than you expect. We sort of knew this ahead of time, but you realize it first-hand when somehow, somewhere copies of signed books go missing, and you suddenly need to ask for an author to send extras. Also, dealing with sourcing inventory from so many different people for the Book and Music club is doable, but takes a lot of time to manage. Though, I have to say, every one we worked with -- from authors and musicians to publishers, agents and record labels really were fantastic. We didn't have even the slightest trouble from any of our partners in this endeavor. Shipping out the products definitely was an effort, but we tried to make it fun, with a group of us working together to package up and ship stuff (and on this one, the team here, lead by Gretchen, did a fantastic job, going above and beyond to get everything organized and shipped).
Having lots of options was a good thing because we weren't very accurate in predicting what would sell. We came close to not offering the hoodies at all, but those were incredibly popular.
You can't keep everybody happy, but you should try! We had to set up a better process for "customer support" as we launched this (nice job, Dennis!) and then work with and respond to customers who had questions or (in a few cases) problems. A few times the problem was that we did not explain things clearly enough, and sometimes there were problems with shipments (or, in one case, a hoodie that was frayed). But we tried our best to make sure everyone was happy and hopefully succeeded (mostly).
What you're selling should match your audience. The Book Club sold really well. The Music Club, not as much -- despite being awesome (seriously, the combined Music Club items are really, really cool, and the music is great as well). But, in retrospect perhaps that made sense, as the books in the Book Club directly related to everything we talk about here. The Music Club, while supporting artists who did things that we talked about here, was a bit different, and required people to like the music as well, which is a lot more subjective. Bundling together four separate musicians with different styles was, perhaps, not a great idea. On top of that, we perhaps did not do enough to promote the music itself to get more people to enjoy the work of those musicians. Finally, while some of the offerings were "unique," others could be purchased elsewhere, which limited the "scarcity" of the overall package.
Some promotions worked really well. The first promotion we did was offering anyone who bought both the music and book clubs together a choice of either lunch with me or a free hoodie. This helped motivate a bunch of folks to step up and buy -- and resulted in a handful of lunches.
Having lunch with people was really, really cool. I have to admit that I was a bit nervous going into the lunches from the above promotion, but they were all really amazing, often in very different ways. Each individual was really interesting and the conversations were quite engaging and thought provoking and fun. I'm pretty sure every lunch ended up lasting well over the allotted hour. I ended up learning a lot and had a great time at every one. I'm hoping to set up more ways to do things like that, if not the same thing.
Even the tiers that didn't sell, still generated interest in other things we were doing. A bunch of people contacted us about the Day With Techdirt package, and while no one bought it, many of them bought other packages instead.
Not everyone who says they will buy will buy, but that's okay. It was interesting to note that some people who told us they would buy (or even announced it on their Twitter/Facebook feeds) never actually did buy for whatever reason. That's fine, of course. Everyone is free to do what they want, but it was interesting to note. Just because someone says they'll buy, it doesn't mean they will.
Communicating directly with everyone can be difficult. While others here handled customer service requests, I started getting a bunch of emails personally from people who participated, sometimes with long and detailed questions. I tried to reply to most of these, but it was difficult, and I'm sure I missed a few.

Anyway, that's the basic summary. This really has been a lot of fun and quite educational at the same time. We've still got lots of things planned and will be trying a few new things as well, but thanks to everyone who participated and a big thanks to all the authors and musicians who partnered with us, along with the team here at Floor64 for helping to make this all work.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: cwf, results, rtb, techdirt
Companies: floor64, techdirt

64 Comments

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aguywhoneedstenbucks (profile), 3 Nov 2009 @ 12:41pm

I got a T-shirt and a copy of your book. It's been an interesting read, and the reactions to the t-shirt (ranging from actual interest in what it meant to "What does loots of t-shirts mean?") was priceless.
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Chronno S. Trigger (profile), 3 Nov 2009 @ 1:04pm

Looooooots of T-Shirts
I'm still hoping for a polo shirt, but I like my T-Shirt. And I'm going to make my roommate read your book next time we get into an argument about copyright and downloading.
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Mike Masnick (profile), 3 Nov 2009 @ 1:11pm

Re: Looooooots of T-Shirts
I'm still hoping for a polo shirt,

Hmm. Good idea. Will have to consider that for the future...
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Anonymous Coward, 3 Nov 2009 @ 1:12pm

I received a T-Shirt, CDs and book a few weeks ago too. It came neatly packed in an oddly over sized box labeled "Extra Strength Cooling Mint Antacid".

I'm still not sure if it was a mistake or something of a subtle message.

Either way, I wanted to say thanks, I guess. :-P
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aguywhoneedstenbucks (profile), 3 Nov 2009 @ 1:17pm

Re:
P.S. If funds permit I'm getting the DMCA Takedown shirt this weekend.
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bulljustin (profile), 3 Nov 2009 @ 1:17pm

Re: Re: Looooooots of T-Shirts
You could put the DMCA takedown notice where the logo should go!
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Suzanne Lainson (profile), 3 Nov 2009 @ 1:22pm

Thanks for the info
It's very useful to learn what you learned.

I hope more people are willing to share what they learn when they do something similar, though I understand when they won't.

But it helps us all to learn more about what works and what doesn't when people do share.
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:Lobo Santo (profile), 3 Nov 2009 @ 1:30pm

Still Waiting
For the "I trolled with Angry Dude" tshirt.
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Dark Helmet (profile), 3 Nov 2009 @ 1:32pm

Re: Still Waiting
"For the "I trolled with Angry Dude" tshirt."

...or the "I eagerly await our new helmeted overlord" shirt.

You know, not that I'm an egotistical jackass or anything...
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Another AC, 3 Nov 2009 @ 1:33pm

Great Post but...
Is that 37,000 in sales or profit?
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:Lobo Santo (profile), 3 Nov 2009 @ 1:43pm

Re: Re: Still Waiting
(LOL)
We could always hit up Zazzle or CafePress and arrange both, I suppose...
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Anonymous Coward, 3 Nov 2009 @ 1:57pm

I have to ask the important question: Would you have sold the "insight community" stuff worth 20k without tying a pork chop to it?

I am thinking that it is part of your normal course of business, not some special item.
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thublihnk (profile), 3 Nov 2009 @ 2:07pm

I find no. 11 really interesting because it really shows that in monetizing online content (newspapers come to mind) you can never rely on people to buy your product, even if they in a poll (or another kind of feedback space) say that they would.

With that in mind I'm seriously considering the DMCA takedown shirt, but I'm pretty strapped for cash right now.
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Thomas (profile), 3 Nov 2009 @ 2:07pm

This would never work for a small website ..
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aguywhoneedstenbucks (profile), 3 Nov 2009 @ 2:09pm

Re:
This would never work for a huge website like Google.
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thublihnk (profile), 3 Nov 2009 @ 2:12pm

Re: Re:
This would never work for Techdirt.
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Anonymous Coward, 3 Nov 2009 @ 2:15pm

Here is just another question: If you have 37k gross, that is maybe what, 10k net? After all, that work cost someone something, the shirts weren't free, etc. Now, how much would it cost to run the ads on techdirt to promote it all?

I am thinking a bottom line statement (rather than a topline) might be more revealing.
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BobinBaltimore (profile), 3 Nov 2009 @ 2:16pm

Thanks
Mike, thanks for sharing the results. A few questions:

1. What was the number of people who actually make a purchase between $5 and $150?
2. What was the distribution of purchases among the packages/items offered?
3. If you have the means to do so, it would be interesting to know the percentage conversion for those actively expressing interest by email, Twitter, FB, or clicking through. Tough to track in total.
4. Were the business plan review and insight community packages discounted for this offer, or are they basically just your standard services offerings? It appear to me that they were an experiment within an experiment, basically using this marketing event as lead generation.
5. What was your net revenue on this (at least on the $12K portion...not asking you to disclose your margin on standard business services)?
6. You note that the $70 average (within the $12K) was higher than expected. Can you share what your overall expected metrics were for this experiment? Curious as to how you developed those, how accurate they were, and how you would adjust your predictive model going forward.
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AG (profile), 3 Nov 2009 @ 2:38pm

Waiting for..
... another book package, I loved mine, glad I got it couple of days before it sold out.

I'd bought the music package except I didn't like most of the music in there. Splitting it up next time is the clear way to go.
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AG (profile), 3 Nov 2009 @ 2:39pm

Re: Waiting for..
I'd **have** bought...
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Alex Hagen, 3 Nov 2009 @ 2:44pm

Interesting, but needs context.
That is very interesting, thanks for posting that info Mike.

So you made 37 grand in 2 months. Sounds decent, but to put that in perspective, we have to know how does it compare to your normal income levels. Considering that it would take $100 million for you to quit Techdirt for a year, you must be raking in the dough, so it is hard to believe this was more than a small blip.

Also, it would be interesting to see what the normal levels are after the huge "novelty" spike dissipates. You get credit for being one of the first with this kind of idea, and that certainly got you a lot of attention and probably a lot of sales and referrals. The 30th person to do this won't have that advantage. Your sales in a year will more accurately portray the broader possibilities of this kind of marketing.
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Dark Helmet (profile), 3 Nov 2009 @ 2:47pm

I'm just bad when it comes to follow through sometimes...
"Not everyone who says they will buy will buy"

*Raises Hand*

Definitely me. And for no good reason. Being busy doesn't excuse. I'm assuming whatever is offered at the CwF+RtB link are still available, and I'll pick something out because I definitely want to support. Let me know if that isn't the case.

And call me out personally if you don't have my order by the end of November. And do it harshly. And step on my cubes and call me a woman...
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aguywhoneedstenbucks (profile), 3 Nov 2009 @ 2:50pm

Re: I'm just bad when it comes to follow through sometimes...
Woman.
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Dark Helmet (profile), 3 Nov 2009 @ 2:56pm

Re: Re: I'm just bad when it comes to follow through sometimes...
Dammit, I said by the end of the month...
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Mike Masnick (profile), 3 Nov 2009 @ 3:03pm

Re:
I have to ask the important question: Would you have sold the "insight community" stuff worth 20k without tying a pork chop to it? I am thinking that it is part of your normal course of business, not some special item

No, we only included deals that came directly from this offering. We did plenty of other deals over the same time period that we did not include in these results, because those were clearly part of our regular sales efforts. The only ones we included here were ones that came due to this offering.

And not sure what you mean by "tying a pork chop" to it.
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Anonymous Coward, 3 Nov 2009 @ 3:09pm

Re: Interesting, but needs context.
I think it is also a good question as to the cost to do this sort of thing. Advertising on this site I assume isn't free, traffic levels are reasonable. So that big CWF thing at the top of the page is nice, but what would the income be from having some other sort of advertising in that spot (as their use to be)?

Also, in the processing of the goods, how much time and money was spent for shipping, etc? How much were the raw materials?

There are more questions than answers here.
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Mike Masnick (profile), 3 Nov 2009 @ 3:09pm

Re: Interesting, but needs context.

So you made 37 grand in 2 months. Sounds decent, but to put that in perspective, we have to know how does it compare to your normal income levels.

Why? This was never designed to replace our existing business model, but to augment it and see what we learned? I don't see how its relationship to our other models has any bearing.

Also, it would be interesting to see what the normal levels are after the huge "novelty" spike dissipates. You get credit for being one of the first with this kind of idea, and that certainly got you a lot of attention and probably a lot of sales and referrals. The 30th person to do this won't have that advantage. Your sales in a year will more accurately portray the broader possibilities of this kind of marketing.

I don't think it's the novelty aspect so much as it is giving people something they want. We've already seen a burst in sales for the t-shirts we listed today with this post. If you offer people something they want, they'll buy. Not because of the novelty, but because they want it.
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Mike Masnick (profile), 3 Nov 2009 @ 3:11pm

Re:
Here is just another question: If you have 37k gross, that is maybe what, 10k net?

Not revealing the net, other than to say that you are way, way, way off.
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Anonymous Coward, 3 Nov 2009 @ 3:20pm

Re: Re:
Nice. So what you are saying is that you made a level of markup that makes the shiny plastic disc sellers look like they are giving stuff away for nothing?

I put a number up there of 25% net profit. If you are making that or more, WalMart wants to talk to you to help improve their bottom line.

Me thinks you probably missed some expenses. Wait, you only looked at the marginal costs, right? ;)
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cybearDJM (profile), 3 Nov 2009 @ 3:33pm

Great experience, indeed
All the comments on the "unLabel", being positive as well as negative feedbacks, are effectively helping us to keep on working on our project and make it better, simpler and more focused.
I also received direct comments from groups or artists that expressed their interest... amazing!!!
I presented the project @ Womex '09, and got in touch with other "labels" or managers working in the same "disruptive" directions... as well as some institutions that want to know more... encouraging!!!

I then would like to thank Mike, his team and all the commenters for their help.

BTW, if you like World Music and or (World) Jazz, you should check our page for Womex.

Sincerely
Didier J. MARY
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catullusrl, 3 Nov 2009 @ 3:34pm

Re: Re:
This is ridiculous. How are we meant to judge whether the experiment was a success or not when Masnick won't tell us his costs? This is just so typical of the freetards.
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Pjerky (profile), 3 Nov 2009 @ 4:26pm

Christmas Planning
I really hope you plan on keeping the store open through Christmas. Because I want to put some of the items on my list.

Anyways, awesome experiment!

-Pjerky
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Suzanne Lainson (profile), 3 Nov 2009 @ 4:27pm

Re: Re: Re:
It would be really nice to get a total breakdown.

I know people don't always do that, but if this is a public experiment, why not give us all the details?

I'm particularly interested in the apparel sales since that is most comparable to what musicians do.
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mobiGeek, 3 Nov 2009 @ 4:35pm

Re: Re: Looooooots of T-Shirts
For the polo shirt, I recommend you keep it simple, clean and embroidered instead of painted. Just the logo, no other wording. Though you might consider keeping it a different look from any "corporate ware" you decide to put out in the future.

It will be weird to show up to #TechdirtCon (or whatever) and have everyone looking all corporate :)
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ChurchHatesTucker (profile), 3 Nov 2009 @ 4:51pm

Re: Looooooots of T-Shirts
"I'm still hoping for a polo shirt"

Ditto that.
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mobiGeek, 3 Nov 2009 @ 4:56pm

Re: Re: Re:
- Nearly $12,000 came from direct sales to individuals of the tiers between $5 and $150.
- [...] another $5,000 came from [...] the Techdirt Reviews Your Business Plan package[...]
- Another $20,000 came from [...] Insight Community packages.
So only $12k came from the sale of packages whose key component included "merchandise".
We know the base t-shirt packages cost $25 and you can get t-shirts custom printed in bulk for approximately $5-$8 each.
The book package costs another $10 in addition, and I'm sure that custom printing will be less than $5/book.
We're all quite aware of the cost of printing CDs from the music packages.
Now, do you consider the expenses of running the Insight Community packages when considering the "profit" for CwF+RtB ?
Oh, and the $5 and $15 packages are ZERO marginal cost items. So that's infinite markup.
What exactly is it you are after in knowing the "profit"? The number is only somewhat meaningful because a bunch of sunk costs went into this initial offering. Now that infrastructure has been put in place, another round or similar campaign can be run with less overhead and reduced risk.
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mobiGeek, 3 Nov 2009 @ 5:13pm

Re: Re: Re: Re:
I'm particularly interested in the apparel sales since that is most comparable to what musicians do

I'm totally unsure of what you mean by this. If you mean "musicians sell t-shirts at concerts" and compare this to the CwF's approach, then you are missing some key factors to CwF.
Most musicians see t-shirts as a "must do it" or as part of the template of holding a concert. Frequently, they outsource the entire t-shirt operation to a group that has little knowledge of the artist's fanbase.
Instead CwF is about connecting. Knocking out a templated item is not connecting.
I have not bought a concert shirt, at least not a large-venue shirt, in over a decade. They are often cheaply made, ridiculously overpriced, nothing more than the album cover, and I have no feel that they are actually representing something that the artist themself had any expression in.
I'd happily pay $25 or $30 for a decent $8 t-shirt, but I'm not willing to pay $45-$50 for a lousy $4 t-shirt with a quick-n-dirty album art scan job (scam job?).
I am quite happy with the quality of the Techdirt shirt. I look forward to the opportunity to buy more swag, though the next purchase I make will be less comical (see above polo shirt thread).
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Suzanne Lainson (profile), 3 Nov 2009 @ 5:39pm

Re: Re: Re: Re: Re:
I'm totally unsure of what you mean by this. If you mean "musicians sell t-shirts at concerts" and compare this to the CwF's approach, then you are missing some key factors to CwF.

What I am asking is how many people bought apparel from Techdirt and what were the wholesale prices that Techdirt was able to get them for the items. I should be able to figure out the retail price based the original offerings.

It's very straight forward question. I check prices for apparel all the time looking for the best quality for the least price because it is a standard offering for musicians.

Even if you are saying that Techdirt can charge more because it's from Techdirt, that's fine. So much the better if the markup is high. That's relevant to the discussion.

Musicians compare notes all the time about this stuff: who has the best wholesale prices, who does the best printing, who offers the best customer service. If we are talking about how to do business in these times, that stuff is really helpful to know.
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Lisa (profile), 3 Nov 2009 @ 5:55pm

Re: Re: Re:
"This is just so typical of the freetards."

You'd think people would have learned by now that insulting others is not the best way to argue. Have fun being ignored.
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Mike Masnick (profile), 3 Nov 2009 @ 6:23pm

Re: Re: Re: Re: Re: Re:
What I am asking is how many people bought apparel from Techdirt and what were the wholesale prices that Techdirt was able to get them for the items. I should be able to figure out the retail price based the original offerings.

A lot. Our three biggest sellers involved apparel. Though, the biggest was actually the book, which came with the t-shirt (and the hoodie came with the t-shirt as well). As for the wholesale prices, I don't even know what they were exactly, but we work with some local printers and we ordered in bulk, but made sure that we got high quality American Apparel shirts and hoodies, rather than the cheap crap that some others offer.
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pjhenry1216 (profile), 3 Nov 2009 @ 6:44pm

music club = awesome
I wouldn't sell the music thing short. If you split it up, you probably would have sold more. To be honest, the artists don't really go well together except for those with quite eclectic tastes. I purchased it based off of not just Amanda Palmer's signature, but Neil Gaiman's as well. I'm happy to say that I enjoyed the other artists too. I hadn't even heard any of their things until after I received the package. The music box was a nice touch, obviously not something to be repeated exactly as such, but it was creative. The handwritten lyrics was also nice too. It creates a kind of connection with the artist to have something you know they did personally, even if they did it quite a lot.

I hope you keep the music club or some form of it around for awhile. Try to pick up new artists, etc. Maybe even have a cheaper music tier for those that don't want to dish out so much for an artist they haven't heard of, but possibly just help various artists get their name out there. It'd be really neat if you could get Trent Reznor.

I enjoyed the music club greatly. Definitely one of the best and well-remembered purchases of the past year.
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Nick Coghlan (profile), 3 Nov 2009 @ 7:01pm

Re: Thanks
The article at least answers your first question: $70 average value for purchases excluding the 'higher tier Insight Community packages' and $12000 total for purchases of the $5 to $150 tiers. Since nobody bought the $1000 Day With Techdirt and the $5000+ tiers are the Insight packages, the $12000 total and the $70 per user average can be combined to determine that there was most likely just over 170 distinct customers for the merchandise tiers.
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Anonymous Coward, 3 Nov 2009 @ 7:02pm

Re: Re:
Basically, did someone take the 20k worth of insight community just because it was on the CwF deal, or would have likely have taken it anyway? Is it actually just a sale displaced?

Example, if UPS takes 4 community things a year, and then says, oh, yeah, we'll take one more to support your CwF thing, is that really showing anything?

The term "tying a pork chop to it" is the old ugly kid joke, you know, a kid so ugly you have to tie a pork chop around his neck to get the dog to play with him. :)
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Suzanne Lainson (profile), 3 Nov 2009 @ 7:29pm

Re: Re: Thanks
Yes, I would have run those numbers. I haven't had a chance to do it yet, so you saved me the time.

I haven't yet gone back to see what people were getting for an average of $70 (I don't remember what was offered in each tier), but I will sooner or later. Or someone else will, and post it here.

I know what musicians usually pay for and charge for t-shirts, hoodies, etc. so it's always helpful what others are doing.
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Suzanne Lainson (profile), 3 Nov 2009 @ 7:38pm

Re: Re: Interesting, but needs context.
If you offer people something they want, they'll buy.

Discussing pricing is pretty interesting though. A lot of business revolves around that.

Most of music and music merchandise have been priced based on what everyone else is doing. Or, in the case of live music, you can see what the secondary market will bring for tickets.

I guess you can experiment with pricing an item or a package and seeing what happens. If no one buys it, perhaps there is no demand, or at least not at that price. If it sells out quickly, maybe you priced it too low.

All pretty basic stuff, but new territory for some.
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mobiGeek, 3 Nov 2009 @ 7:40pm

Re: Re: Re: Re: Re: Re:
I'm not saying that Techdirt commands a higher price because they are Techdirt.
They commanded a higher price (at least from me) because they reached beyond simply printing a brand on the shirt and slapping a price tag on it. They offered other things with it and made the brand far more meaningful with as simple a thing as a moniker to go with my forum postings (something that cost them nothing). They interact with their community (heck, directly with me from time to time).
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mobiGeek (profile), 3 Nov 2009 @ 7:43pm

Re: Re: Re: Re: Re: Re: Re:
Tee-hee-hee...of course, I have to be logged in to actually show the moniker.
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BearGriz72 (profile), 3 Nov 2009 @ 9:04pm

Re: Re:
P.S. If funds permit I'm getting the DMCA Takedown shirt this weekend.

Ditto! I am SO there.
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The Groove Tiger (profile), 3 Nov 2009 @ 11:48pm

I Can Haz T-Shirt?
Sweet deal... I just ordered the book with the DMCA shirt.

Now I'm gonna be l33t!
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Suzanne Lainson (profile), 4 Nov 2009 @ 12:05am

Re: Re: Re: Re: Re: Re: Re:
They commanded a higher price (at least from me) because they reached beyond simply printing a brand on the shirt and slapping a price tag on it. They offered other things with it and made the brand far more meaningful with as simple a thing as a moniker to go with my forum postings (something that cost them nothing). They interact with their community (heck, directly with me from time to time).

Sure, I get that. I'm not sure why you assumed musicians wouldn't be coming from the same perspective. The smart ones are.
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R. Miles (profile), 4 Nov 2009 @ 3:54am

Re: Re: Re:
This is ridiculous. How are we meant to judge whether the experiment was a success or not when Masnick won't tell us his costs? This is just so typical of the freetards.
WTF? $37k in two months isn't enough to give you a determination of success?

You probably don't even make this in a year (gross), especially after all the deductions (net) of 401k, etc.

Yet you use the term "freetard". Einstein would be proud as you support his "infinite stupidity" theory.
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Anonymous Coward, 4 Nov 2009 @ 5:52am

Re: Re: Looooooots of T-Shirts
I'd love to buy a T-Shirt but I'm holding out for the Polo.

1 confirmed future buyer right here!
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Craylach, 4 Nov 2009 @ 6:52am

Re: Re: Re: Re:
WTF? $37k in two months isn't enough to give you a determination of success?

Not if the $37K was brought in at a loss. Which I'm sure is not the case here, but how can anyone be expected to truly evaluate this experiment if only one part of the return is disclosed with very little about the investment?
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Anonymous Coward, 4 Nov 2009 @ 7:39am

Re: Re: Thanks
Nick, I did the basic math, too. But I am curious about the actual number because it goes to the incremental cost of the sale (at least in the case where you had to pay for marketing) and informs which packages are ones worth pursuing in future (along with my question #2). If, say, there were actually 350 purchasers, this tells me that the lower end packages in the $5 - $150 range are more popular (or a better market fit). I would then look at my margin on those very carefully and see how to expand those types of offerings or offerings in that cost range. If theya re more popular, but I'm making a margin near 0, then I've got a problem.

Doing the easy average math doesn't really provide much helpful info.
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BobinBaltimore (profile), 4 Nov 2009 @ 7:40am

Re: Re: Re: Thanks
Sorry. The above AC comment was from me. Forgot to sign-in.
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BobinBaltimore (profile), 4 Nov 2009 @ 7:53am

Re: Re: Re:
Hmmm....I'm often a critic of Mike's "free, free for you and me" but anyone wanting to be successful in their chosen arena has to have an open mind. Freetard is a bit strong, even fore me.

On the surface, and even a few feet below it, this looks like a successful experiment relative to what he was intending to try. I do question whether the $20K sold in business plan review and Insight Community stuff represents income truly directly attributable to the experiment, or whether they were just displaced sales that would have happened anyway. Even disregarding those (which may be unfair), $12K gross isn't bad given the economy, the limits of this community and no outside advertising.

All that said, I do find it very strange that Mike is not disclosing more information about exactly what worked, what didn't, what his predicted results were (and how he calculated them) and how the actuals compare. These are EXACTLY the questions Mike would himself ask of other models. I understand he may not want to disclose the net (especially on the business services that he sells in his "day job") but how about the package sales numbers, distribution, what worked and didn't, and how he will improve the next time.

My hope is that he's working on a follow-up to provide more info.
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Suzanne Lainson (profile), 4 Nov 2009 @ 8:51am

Re: Re: Re: Re:
All that said, I do find it very strange that Mike is not disclosing more information about exactly what worked, what didn't, what his predicted results were (and how he calculated them) and how the actuals compare.

Yes, if you view the purpose of this as a true experiment for the benefit of all, you'd put up how many people bought what packages. Academic studies do provide those charts somewhere.

I guess the grey area could be this:

If this is a public experiment, give us as much info as you gathered.

If this is a money-making or promotional business for Techdirt, then yes, I can see why more info isn't being disclosed because you don't really want to share the margins. Your goal for your public isn't info, but for them to be consumers in this.

But again, having some info is better than no info. The reason I ask is that if this is successful, then having as much info as possible allows other people to copy it. Which is kind of the issue. If you want others to copy it, you tell them how to do it. If you don't want others to copy it, you don't give them a complete how-to.

And I suppose with the academic studies, you in fact want people to copy the experiment to see if the statistics are consistent across multiple audiences to validate the concept.

Interesting stuff to think about.
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Anonymous Coward, 4 Nov 2009 @ 9:04am

Also, it would be interesting to see what the normal levels are after the huge "novelty" spike dissipates. You get credit for being one of the first with this kind of idea, and that certainly got you a lot of attention and probably a lot of sales and referrals. The 30th person to do this won't have that advantage.

DING DING DING!

If you offer people something they want, they'll buy.

...unless they can pirate it.
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Anonymous Coward, 4 Nov 2009 @ 9:33am

Re:
If you offer people something they want, they'll buy.

...unless they can pirate it.

What Mike should have written is: If you offer people something they want and give them a reason to buy, they'll buy it.

However, if the only reason one has to buy something is because he/she can't pirate it...I'm not all that sure that something is going to sell.
Wanting != willing to buy.
I can't pirate a Ferrari...I'd love to have one...am I willing to buy one? err...No
I can't pirate a data plan for my cellphone...I'd love to have one...am I willing to buy one? err...No
I can't pirate a ticket to Game 6 of the World Series...I'd love to go...am I willing to buy one? err...No

The question, of course, is what am I willing to buy? Well, you'll have to grease the skids a bit to get that outta me...just like anyone else who is trying to sell me something. Do a little work, find out what I'm willing to buy, give me a reason to buy it, and I just might.
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Suzanne Lainson (profile), 4 Nov 2009 @ 11:56am

Re: Re:
The question, of course, is what am I willing to buy? Well, you'll have to grease the skids a bit to get that outta me...just like anyone else who is trying to sell me something. Do a little work, find out what I'm willing to buy, give me a reason to buy it, and I just might.

Yes, I think along the same lines. There are a ton of things I want, but I don't have unlimited cash, so I'm pretty frugal.

The challenge for music is that it isn't a necessity for most people, so if you don't have the money, you don't buy.

Music-related merchandise may be fun to have, but again, not a necessity for most people.

Being part of a music community and paying a subscription or going to a show might be important enough for some to spend for it. For others it might be not be as important, so when funds are tight, it's not on their must-do list.

Business-related offerings can be an easier sell in troubled economic times if they appear to offer the promise of more income. Techdirt might have the edge over some music sites in that a lot of readers probably are participating for direct or indirect business reasons.

I've thought a lot about pricing. I've been a sports marketing and a music marketing consultant. I know my advice is helpful. But deciding what to charge in both industries is a challenge because I can't always guarantee a direct payoff to someone who takes it.

For example, if I can guarantee that an athlete I work with will get a pro career based on my advice, I can easily charge $10,000+ because that athlete's sports earnings will more than cover it.

Why is a Harvard degree worth more than a degree from another school? It isn't really about the quality of the education, but the status and networking opportunities that come with it.

So when we talk about "reason to buy," I like to explore what those reasons might be. The psychology of selling in the art or entertainment market can be different than selling in the business market.
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The Groove Tiger (profile), 4 Nov 2009 @ 2:47pm

Re:
"...unless they can pirate it."

Good luck trying to pirate a hoodie and a real autograph.
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Steve S, 6 Nov 2009 @ 6:35am

Re: Looooooots of T-Shirts
/agree with the Polo Shirt idea. Would be nice to have office-wear thats also a conversation starter
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Art, 7 Nov 2009 @ 6:24am

Regarding point 11. I rarely make impulse purchases over the Internet, even when I'm willing to pay and feel the purchase would be worth it. Registering and getting my credit card to type in the damn number takes just a bit more time than I'd want to. By contrast, when I'm in a book or music store, I can't seem to avoid buying something, because I'm already there and the tangible goods are present. A physical presence can be an RtB.

Also, I didn't know about the experiment until two days in, when I saw "shut Techdirt up" emblazoned on the front page, I clicked through. The book club was the only one that appealed to me, but it was sold out. If it hadn't been, I probably wouldn't have bought it. But if you had added a limited number of extra book clubs to meet demand, having been previous unable to buy it, I probably would have swooped in. However if you do the book club again, I probably wouldn't buy it, because it would seem less scarce.

All in all brilliant experiment though.
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Anonymous Coward, 19 Nov 2009 @ 9:17pm

Re:
If they can pirate it, then you shouldn't be selling it.

Well, okay, you CAN sell it if you want. Just don't go whining to the government when you realize that everyone in the world knows how to copy/paste.
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