Earlier this year comedian Louis CK raised some eyebrows when he sold downloads of a live show through his website and pulled in more than $1 million in about a week, despite the fact that fans could easily download the content for free. Now, he has done it again: instead of a traditional tour, he decided to sell tickets through his website, and sold $4.5-million worth in under 48 hours. Content creators of all kinds — authors, musicians and others — would do well to learn from his example, and that of others like Amanda Palmer, who recently financed a new album and tour through Kickstarter. The main lesson? Building a community is more important than ever.

Louis CK (whose real name is Louis Szekely) was far from being an unknown when he launched his download experiment in December: he had a show on the FX network that was fairly successful, and had appeared on late-night talk shows — but he was far from being a top-tier name. But one thing CK did have was a community of fans, and he tapped into that when he offered a self-financed show to them as both a live-stream and a download. And he deliberately didn’t encrypt the show with digital-rights management locks or barriers, because he said he wanted to make it as frictionless as possible for fans.

As I pointed out at the time, media companies of all kinds could learn a lot from that approach — including the lack of DRM controls and the power of the community that CK was able to draw on. Tens of thousands of fans paid $5 for that show even though they could have easily downloaded it for nothing. His latest move, in which he offered single-price tickets for a 39-city tour through his website, built on that community and created a sold-out $4.5-million tour in less than 48 hours. That’s an incredibly powerful example of going direct to your fans.

Can giving content away result in more money?

This kind of model isn’t necessarily restricted to individuals either, as Union Square Ventures partner Andrew Weissman points out in a blog post about the TED conference entitled “What If We Give It Away.” As he notes, the conference has spent the past couple of years giving its content away for nothing — via videos on its website and elsewhere, and also through the branding of free TED spinoffs called TEDx conferences in cities around the world. As Weissman notes:

[B]y giving away what one would generally think of as a company’s (a media entity) greatest assets – its content, brand and business processes – the business has grown enormously in just a few short years.

On the individual front, musician Amanda Palmer is another great example of this approach: she quit her record label in 2010 and decided recently to fund a new album and tour directly by allowing her fans to donate through Kickstarter. Her original goal was $100,000 — but she blew through that figure in a matter of hours after the launch, and by the end of the campaign had raised ten times that amount or almost $1.2 million. In return for the funds, fans get a variety of rewards, including a signed art book, an invitation to special dinners and parties for fans in a number of cities, and so on.

One thing that’s important to note about both of these examples is that CK and Palmer didn’t just pull in a huge amount of money and walk off to do whatever they wanted with it: both of them have spent a lot of time detailing what exactly will happen to the funds, with Palmer in particular posting an itemized breakdown of her expenses for the album and the tour so that her fan community realizes what is involved. Louis CK, meanwhile, gave a substantial portion of the money he made from his downloadable show to charity, and wrote about that.

Building on those “1,000 true fans”

Authors can also benefit from this kind of community, and there are any number of examples: self-published young-adult fiction writer Amanda Hocking made more than $2 million without an agent or a traditional publisher by distributing her e-books through Amazon’s Kindle platform, and author John Green managed to get his new e-book to the number one spot on the best-seller list before the book was even completed — because his community of fans was already connected to him on multiple levels, including Twitter, Facebook and YouTube.

This kind of community engagement has always been important: the band The Grateful Dead was legendary for allowing fans to tape its live shows and share that content, and other artists such as Jonathan Coulton have also made a living while still giving away much of their content for free (Coulton is also a thoughtful commenter on the issues around copyright infringement). Radiohead and Girl Talk have both used the “pay what you want” model for album downloads, which show — just as Louis CK has — that fans will pay even when they can get the content for nothing.

What has happened is that the web and social media — along with crowdfunding platforms such as Kickstarter and Indiegogo — have added more horsepower to the concept that Wired magazine founding editor Kevin Kelly described as “1,000 True Fans.” In that model, trying to become the next global superstar through traditional media is replaced by connecting with a loyal fan base and then engaging with them, whether it’s to fund a tour or an album or a book (marketer and author Seth Godin is funding his new book through Kickstarter).

Can anyone make use of this new model? Obviously it helps to have already established a brand, as Louis CK and Amanda Palmer have (or Seth Godin and TED). And there may be no easy parallel to the concert tour when it comes to some kinds of content — but the power of connecting directly to your fans, however small that group might be, can’t be underestimated. And whether its record labels or publishing houses or media companies, former intermediaries and gatekeepers of all kinds are going to have to try a lot harder to prove that they are adding some value to that process in order to survive.

Via Gigaom