Writer/director Joss Whedon released a fun little project that he worked up during the actor’s writers’ strike. “Dr. Horrible’s Sing-Along Blog” is a terrific story that I watched several times, shared with the wife and kid, etc. As I watched it for the second time, I got to thinking about the business behind this, since Whedon has stated that this is an explicit experiment in seeing how far a talented, experienced team can go (on an artistic and, presumably, business level) without the advice, support and constraints of an established movie studio or television network.
There’s an enforced scarcity at work with the Dr. Horrible project that I think is smart if you’re really trying to make this into a business. They put the three episodes online to view for free for a few weeks five days but they took them down yesterday; you can only view them on iTunes now — by paying $3.99 for them. So if we’re going to do a profit/expense spreadsheet on this, the first question is “how many people will pay for this now that you can’t get it for free?” We don’t really know the answer because we’ve never seen anything quite like this before — certainly the notion of purchasing videos on iTunes is not new, but they mostly carry movies that have already been in theaters and TV shows that have already aired. But iTunes is the only place you can get Dr. Horrible now; you can’t even get it for free. So for someone who hasn’t seen it yet, you have to pay.
Just from a content perspective, what Dr. Horrible lacks in production value it more than makes up for in terms of plot, humor, and lyrical complexity. For example, musical theater aficionados will note that a few of the Dr. Horrible numbers feature two distinct countermelodies. It’s difficult to parse a melody and a countermelody lyric in real time, much less two distinct countermelodies being sung along with a melody part. To get it all (and rabid Whedon fans will want to), you’d have to listen to it at least three times. So Dr. Horrible seems specifically engineered to be watched again and again. This means that people (like me) who use iTunes and own (multiple) iPods but have never purchased a video on iTunes (because of onerous DRM restrictions, etc.) might now feel compelled to purchase the video. They’d do this even though they’ve already seen it for free — because they want to watch it again, they want to share it with people who missed it the first time, they find Felicia Day’s overbite adorable and find themselves thinking about her in the shower, etc. It’s premature to think of Dr. Horrible to be the birth of a genre or a business model for online content (and ultimately, who knows whether reruns of “Two And a Half Men” are doing well on iTunes), but if the business behind Dr. Horrible works, it could signal the beginning of the end of television as the medium of the least-common-denominator and the beginning of the profitable niche market.
So my original line of inquiry for the notion of “The Business of Dr. Horrible” was: What’s In It for Doogie Howser? It’s definitely the case that actor Neil Patrick Harris’ performance was a significant contributing factor to the series’ success. Assuming that the business of Dr. Horrible works, can independent producers expect to be able to lure “name” talent like Harris as a matter of course in the future?
Let’s assume that Harris worked for AFTRA scale on this project. There are specific AFTRA rates for “interactive media” performers; if he worked for scale, he probably got the weekly rate of $2,634, and we can guess that this project represented maybe 2-3 weeks of his time (maybe more, maybe less, but if he worked for scale it’s safe to say that as a sitcom regular, his up-front paycheck for Dr. Horrible will be little more than a rounding error on his 2008 tax return). If we think in terms of expected rate of return, there’s a bit of a wrinkle here because his expected income from new projects during this time would have been zero (since this project happened during the writer’s strike). Ultimately, though, it seems likely that Harris (as well as most if not all of the actors and crew on the production) were principally paid in points — a (likely small) percentage of any profit that will be made from the production in the future.
Whedon has said that Dr. Horrible cost “in the low six figures” to produce. Let’s assume by that he means a maximum of $250K. If the only revenue stream for this is iTunes, then he will have to sell about 70,000 copies of all three episodes to break even. (This assumes that his net revenue from iTunes is about $3.59 per unit after Steve Jobs takes his 10% cut, and that virtually no one will purchase just one episode.)
So to continue, let’s say that Neil Patrick Harris’ deal with Whedon was for AFTRA scale plus 3 points. If 100,000 copies of the series are sold on iTunes, that generates revenue of $359,100, and a profit of $109,100, of which $3,273 goes to Harris (again, this is assuming he owns 3 points of the series, which is probably not an unreasonable guess). This is definitely the kind of paycheck that a network series regular like Harris would stick in a folder labeled “I Did It For My Art”. But if the series were to sell a million copies, he does considerably better: $100,230 for (presumably) a few weeks’ work. This is about what the cast of Friends were making per after season 2 of that show, but a fraction of what they were pulling down ($1 million per episode each) during that series’ final season.
That doesn’t factor in potential DVD sales, though, which Whedon has said will take place later. So we can pretty much assume that Doogie will do okay over time. Joss Whedon, as the principal investor behind this production, naturally stands to do much better. If we assume that Whedon set aside 20% of the profits for cast and crew, as the principal investor in Dr. Horrible, that means Whedon owns 80% of whatever’s left. If the show sells 100,000 units on iTunes, he makes $229,840 $87,280; if it sells a million copies, he winds up making more than four million dollars more than $2.6 million on his original “low six-figure” investment. And that’s before the DVD even comes out. It may not be the kind of bucks he could make from writing and directing a feature film, but very few feature films make millions of bucks in profit (and bear in mind that Whedon’s own feature films haven’t actually done so well, his rabid fan base notwithstanding). The Internet freemium model may be just what Dr. Horrible ordered to enable him to connect with his fans, get the artistic freedom he needs, and sustain himself in a business sense with a niche fan base.
So while this experiment certainly hasn’t played itself out yet, it may light the way for a future in which online content generates revenue without sucking. But the remaining question from a business standpoint is: is this model replicable to other content creators? To what extent is the Whedon factor at work here? Say that a group of four university film students come up with a story that’s even funnier and more heart-warming as Dr. Horrible, and they come to an investor looking for $100,000 (or heck, even $10,000) to pull it off. If they’re even able to locate an investor, what’s that investor’s expected rate of return? If this group just puts their video on YouTube, by the time it gets a million views, it might be too late for them to monetize it as Whedon is attempting to. But it seems to me that the key to this working as a long-term trend is for bright (and niche) content creators to get access to the experienced help and talent they need to bring their visions to life. In the past, filmmakers turned to Hollywood studios for this. Tomorrow, who knows.
A lot of this is back-of-the-cocktail napkin guesstimation, so if my numbers or assumptions are off anywhere I’d be happy to hear from you in comments.
Update: I’m seeing a lot of comments following a link from the Whedonesque blog, so howdy do, Whedon-a-rinos. It’s not possible for newbs to post on Whedonesque, or else I’d post this in that thread. So here are some more thoughts. First, a bunch of people dissed me for not “doing my research”. But I say over and over again that all of these figures are guesstimates, not facts. That said, a bona fide entertainment industry executive (my friend Matthew) did mention in comments here that my profit/loss figures are probably not far off the mark. If you have some specific information (or better guesses) you’d like to share, then by all means, speak up.
A few people seemed to get hung up on the notion of how much acting time went into the production (whether it was six days or 2-3 weeks as I supposed). Joss Whedon did indeed say that there were six days of shooting time for the series, but if you’ve ever done musical theater (and I actually have) you know that music requires a lot of preparation and rehearsal time. Since NPH and company were definitely not learning the songs at the same time they were shooting, I am guessing that the whole thing consumed two weeks of his time, minimum. But whether it took ten minutes or six weeks doesn’t matter in profit/loss terms, particularly in this case since (as I also pointed out) there was a strike on and nobody was making anything during that time.
To the guy who theorized that the actors did this for the love (i.e., for free): not a chance. Whedon actually stated in the Washington Post article that there was a business arrangement; all I did was to try to come up with figures that seemed plausible given what we know. (Union scale plus points is actually a not-very-revolutionary artithmetic when an independent filmmaker wants to attract non-unknown talent to a promising project; the only unknown here is how much did Whedon share with cast and crew. I guessed 20% but it could have been much more or a little less.)
Finally, to the dude who faulted me for calling NPH “Doogie Howser”: these are things that we like to refer to as “jokes”. They are things we say because they are “funny”. The main thing is, I don’t like to use Neil Patrick Harris’ actual name in a blog post because of the element it attracts — who needs an unbearable deluge of Neil Patrick Harris fans posting their onerous, pedantic screeds on my blog? Not me, I assure you.
Update 2: Joss-the-man-himself chimed in on the blog to confirm that my numbers are “not far off”. He also made his own Doogie joke. Sweet vindication.
Related posts:
If you are going to crush out on her, you need to spell Felicia’s name correctly.
The scale of the economics you are talking about feel about right.
One of the things we’re doing over in the music business part of the digital world is to try and reduce our “failure” costs by a huge percentage. The key, which is hard in TV, is to reduce your production and distribution costs so low that when you create the assets required for creative work, you can re-use these production assets and re-assemble the creative teams you need to build them. That’s starting to happen now in TV/Movies as it did in music already.
You can think of a digital supply chain as an “L”
Conceive
Create
Build
Stage > eDistribute > Sell
The bottom part of that L is where you can really streamline in terms of technology and the cheaper you can get your costs and time-to-market, the more you have to spend on the top part of the L. The top part is the creative part of the business and I think that Josh’s experiment was all about learning how to streamline the upper bar of the L. The bottom part of iTunes. Good creative teams — like Mutant Enemy — have to learn to “rinse, lather, repeat” on clever projects that work but also to reduce their costs/risks of failure to a much lower mark. Or they’ll have to distribute that risk to investors or tv studios…
“Six day shoot. I was terrified to ask N&N, but they said yes before I said ‘hi.’ I heart them, especially since the six days were grueling.”
From the Washington Post’s website here:
http://www.washingtonpost.com/wp-dyn/content/discussion/2008/07/18/DI2008071801208.html
Interesting look at how this thing might turn out financially.
Thanks — I did run across that article and someone else pointed it out to me today. Note that six day shoot is not the same as six days of actor’s work — I am still guessing that NPH put in *at least* two weeks on this, particularly since there were so many songs and he sang most of them.
Nice analysis. A few comments/clarifications. I think it was shot in 6 days, though there was probably 2-4 weeks of preproduction time (my guesstimate). NPH apparently agreed to work on it before he even knew anything about it (Joss does have a significant rep), Felicia Day was similarly agreeable. Don’t know about Nathan Fillion, but he and Joss are great friends, so I assume he was an easy sell too. Many of the tech people were associated with Mutant Enemy, again partly Joss’s ability to call in favors and the loyalty he inspires in people he works with (former associates Doug Petrie and Drew Goddard were members of the ELE, and Ben Edlund contributed several ideas that were used). Lot of talent involved for the limited budget.
I’ve often thought Joss was ideally situated to make a success of something like this. He has a fan base of at least several hundred thousand (maybe more in the area of a million). One million fans buying episodes at $5 a pop means $5 M/episode. Seems like a viable business model in there somewhere to me. Maybe time has come for him to jettison the Hollywood system and try to connect directly with his fan base. He gets complete artistic control, we get regular episodes of the Whedonverse. It’s apparent the present system, dependent upon almost instantaneous mass popularity with a vapid, capricious viewing populace, serves neither him nor us well.
Mattew,
Josh? ‘Tis Joss.
Nice analysis. An additional, albeit lesser revenue stream you’ve left out is the promised forthcoming soundtrack, likewise iTunes-available. There’s also no firm word yet on future ancillary licensing, since it’s likely no one expected this thing to get huge, quick– but down the road, there could be further returns on merchandising, in addition to the already available t-shirt sales (http://www.jinx.com/drhorrible)
Incidentally, for the sake of accuracy, in your first sentence: Writers’ (plural, as in WGA-West and East), not actors’ strike.
(And yeah, I was the one who linked your article on W’esque. )
Tama Leaver dot Net » Blog Archive » Links for July 23rd 2008 // Jul 23, 2008 at 2:38 am
[...] What?s In It For Doogie Howser? [Jeffrey McManus] – McManus takes an educated stab at the economics of Joss Whedon’s Dr Horrible web experiment. (Joss himself notes that these figures aren’t that far off.) [...]
Thanks for the link and the correction, Simon. Sorta wish Whedonesque would enable new users to register so I could have posted my comments in the thread over there! Seems like a lot of Whedon fans get pretty worked up (and understandably so) and it would have been nice to clarify what I was getting at for them.
That’s a very interesting analysis. I would add one correction though. The episodes were not available “for free for a few weeks” as you say. They came online on the 15th and were taken down on the 20th.
Thanks for the correction. The amount of time the streaming episodes were up doesn’t directly affect the profit/loss arithmetic, though. If the Dr. Horrible model catches on, it will be interesting to see whether five days (versus one day, two weeks, etc.) becomes the industry standard for making episodes available for free up front.
The summer factor is an interesting one to consider, too. I wonder how many people missed out on free Dr. Horrible because they were on vacation? (If the answer is “a lot” then it works in favor of the business, since these people will all have to pay.)
I believe that in your tally of iTunes prices, you are pricing each of the three acts at $3.99, but each act bought seperately is $1.99 with the series as a whole for $3.99.
If 1 million people were to buy the series as a whole, the gross would be a hair less than 4 million. Joss’s return wouldn’t be nearly that high.
Nice work Jeffrey – I wondered about the business model quite a bit and appreciated your look at it. I think the commenters who worried about the exact amount of time involved or the pay the actors got up front are missing the point. It is the points paid and the estimates of the number of sales that matter here (that minus the production costs, of course.)
Let’s assume you are right – that 1M sales at $4 = $3.6M profit on a $250k investment with a portion of that profit split between participants (however you want – doesn’t really matter how it splits between the relatively few people who worked on the thing). Even if you are off by a factor of 2, and only 500k sales are made, that’s still a darn good return.
But how often can you repeat that? I argue that no matter how good the content is, there is a limit on how many times this can be done. The rabid fanbase not-withstanding, they have a limit on how much of their disposable income they can spend on $4 for 45 minutes of entertainment. Can this be done once per week? Or once per month?
Well, the Amanda Tapping webisodes of Sanctuary did so well that it’s coming to regular t.v.
[http://www.sanctuaryforall.com/social/]
[http://newteevee.com/2008/01/31/sci-fi-channel-finds-sanctuary-for-all/]
With Joss at the helm (so to speak!) of Dr Horrible I would fervently hope for more web based musicals and dramas from him in the future.
Philippa
Dr. Horrible by the numbers | TV Show News // Jul 23, 2008 at 12:40 pm
[...] McManus has made some educated guesses at just how the numbers shake out for those involved. The short version of McManus’ [...]
QingTing: You are actually right on the final calculation. Under my assumptions, if Dr. H becomes a million-seller, Joss would see about $2.7 million, not $4 million as I originally wrote. Still, it’s a decent chunk of change, and hopefully enough to prove that this kind of thing is viable, at least for Joss. (As Joss pointed out over on Whedonesque last night, the bucks are definitely not the main reason why anyone worked on this — and calling that aspect out wasn’t my motive in this, either. My motivation is this: Network TV has been a walking corpse for decades, it can’t die off soon enough, so hopefully this kind of work would shed at least some light on how that might happen. Call my spreadsheet jockeying a labor of love.)
Anyway, here’s the math that went into the iTunes part of the calculation.
Assume that nearly everybody buys all three episodes at $3.99 for the three-part series. Apple keeps about 10% on digital downloads (this is not a guess, it’s been reported in many places) so the net to Joss is $3.59 per series sold.
If 1 million people buy the series, that generates revenue (after Apple takes their cut) of $3,591,000. Subtract production costs of $250,000 and that provides a net (profit) of $3,441,000. An individual with an ownership stake of 3 points (which I surmise to be about what Neil Patrick Harris got) would see $100,230 out of that. If Joss gave out 20% equity in the production that means he keeps 80% for himself, which means that out of the $3.4 million he keeps $2.672 million.
Of course, there can and will be other revenue streams such as DVD and soundtracks, but it’s unclear to me how those will do. I’m actually partial to the DVD format over iTunes (because of DRM) I will probably wait for that before buying, but I may wind up buying iTunes now and the DVD later.
Jeffrey McManus » Soon I Will Be Invincible // Jul 23, 2008 at 2:10 pm
[...] been meaning to recommend this book since before the time I became the holistic accidental accountant to the stars, but now’s as good a time as any, I guess. Austin Grossman’s Soon I Will Be Invincible [...]
Note on the idea that Whedon’s feature films haven’t faired well:
There’s a distinction to be made between Whedon’s work-for-hire and his original creations — an important distinction if one wants to understand the importance of Dr. Horrible as a business model.
Joss’s current (and rabid) “cult” following has little or nothing to do with the vast majority of his feature film work. It’s flat-out inaccurate to assume anything about his theatrical appeal based on Alien: Resurrection, Titan AE, or even the original Buffy The Vampire Slayer. These are not the projects that fuel Whedon fandom, and are not indicators of any kind of poor track record — any more than his involvement in Toy Story or Speed might suggest that he is a sure thing. All of the above are not part of the (to go a little geeky on you here) Whedonverse that has garnered such a sizable following.
The only theatrical iteration of the ‘verse was Serenity, the feature version of the late, lamented Firefly TV show. That film (with something like a $40 million budget and a $25 million return at the theaters) was a disappointment when viewed in the old-fashioned, weekend box-office context. But the subsequent DVD returns have been, I believe, quite substantial. While I don’t have the numbers in front of me, suffice to say that the DVD release was successful enough to merit a second, “special edition” disc, and is widely seen as a new-Hollywood-economy success.
Just saying.
Fair, but you can’t say that a theatrical failure was a success because they make it up on DVD sales. That’s like saying that it’s OK that you flunked out of high school because you got this great job at a gas station. A more economical course of action might be to release the next original Whedon work direct to DVD, but there’s a stigma associated with that at the moment that releasing something direct to iTunes doesn’t carry. We’ll see if that continues to be the case in the future.
(Also, when people start talking about a “new economy” I want to immediately go move my wallet to the fireproof safe in the garage. There’s only one economy, the one in which people pay more for goods and services than it cost to produce them.)
@jeffrey: “A more economical course of action might be to release the next original Whedon work direct to DVD…”
I’m not sure I understand… Apple’s 10% take off of an iTunes sale is peanuts next to the manufacturing and retail costs of creating, delivering, distributing and stocking the DVD format on shelves, no?
According to Whedonesque’s membership page, if your article is being commented on, you can get an emergency membership if you fill out a form:
http://whedonesque.com/?signup=form
Dr. Horrible - the horrifying math at For Your Reading Pleasure // Jul 23, 2008 at 5:45 pm
[...] blog experiment, and while he admits it’s just an estimate, the video’s success “could signal the beginning of the end of television as the medium of the least-common-denomin… Filed under digital vs analogue media [...]
That’s sort of an anti-form, I think. I have to say I’m sort of put off by a community site that doesn’t have open membership, and besides, it seems like the conversation here is a bit more thoughtful on this particular topic.
@lianne, you’re right, but I’d meant to compare the notion of releasing feature films to theaters versus just sending them straight to DVD (apologies for not being clearer). It’s not cheap to release a feature film to theaters — in a world in which a feature’s marketing budget alone can be $75M to $150M it *might* make sense to release a big feature straight to DVD and end-run the theaters, but there’s a stigma associated with straight to DVD, to say nothing that there is a lot of crap product out there and the overall DVD market is shrinking.
In 2006 the director Steven Soderburgh tried to break that stigma with the simultaneous release of Bubble but it did very poorly — one data point isn’t really sufficient to define a trend, but it seems unlikely that anyone’s going to gamble in this way again anytime soon.
Tubefilter // Jul 23, 2008 at 6:59 pm
‘Dr. Horrible’ Could Bank $2.6 Million Even Before DVDs…
Proof of concept? Joss Whedon spent about in the “low six figures” out of his own pocket to shoot Dr. Horrible’s Sing-Along Blog, and after a whirlwind launch the summer sitebuster could bank over $2.6 million, according to some numbe…
Jeffrey McManus Analyzes Dr. Horrible’s Income « memoirs on a rainy day // Jul 23, 2008 at 8:49 pm
[...] Jeffrey McManus Analyzes Dr. Horrible’s Income Published July 24, 2008 asides , blogs , entertainment , finance Tags: asides, blogs, dr horrible, finance, Jeffrey McManus, Joss Whedon, Sing-Along Blog, vlog Jeffrey McManus analyzes the revenue streams of Joss Whedon’s Dr. Horrible. [...]
What’s next for Neil Patrick Harris » The Sly Oyster | culture & entertainment on the sly » Blog Archive // Jul 23, 2008 at 9:57 pm
[...] people could afford to have more Doogie in their lives. So now that Dr. Horrible has ended and the numbers are being crunched as to the business side of things, which Joss himself seems to concur, what’s doing with The [...]
For me, the Whedon/NPH factor had a lot to do with my decision to buy the “season” pass immediately after seeing Act 1. I’d like to think that I’d do the same even if the actors/director were unknowns as long as I felt the writing/acting was quality stuff but it’s hard to know. I hope the experiment is a success because I’d love to see more of Dr. Horrible.
Dr. Horrible by the numbers | cinematvnews.com // Jul 24, 2008 at 2:25 am
[...] McManus has made some educated guesses at just how the numbers shake out for those involved. The short version of McManus’ analysis: [...]
Quick question: are you sure that Joss bankrolled this out of his own pocket with no other investors/co-producers? I only ask because:
(a) that’s uncommon, even for such an uncommon piece as Dr Horrible.
(b) there were at least three producers with cameos in the thing (David Fury, Marti Noxon, Drew Goddard) which at the time made me think they had money in it.
(c) he worked on it with his brother(s) and I figured they had some investment.
(d) I can’t remember the credits saying anything about producers but they went by so darn fast.
(e) Joss himself said: “Aided only by everyone I had worked with, was related to or had ever met, I single-handedly created this unique little epic.”
Just wondering. I’d look into it, but I’m pretty lazy and the crew on Whedoneque scares me a little so no way I’m going there…
No need to think ‘new economy’ when people ask about new ways of doing business, alternative revenue streams still means people are getting paid after all, just not in the same way as they used to.
I still can’t wrap my head around your ‘enforced scarcity is good’ comment, would you care to explain your thinking ?
You asked the question “how many people will pay for this now that you can’t get it for free?”, have you considered the question, How many people will pay for it even if it is available for free ?
Twenty Sided » Blog Archive » Dr. Horrible Teaser // Jul 24, 2008 at 6:01 am
[...] was “not far off”. We have no way of knowing how many iTunes downloads there have been, but the numbers do give us a picture of how many copies they would need to sell to begin to turn a profit, and they [...]
@zestypete: Joss has stated that he bankrolled the production himself. The role of “producer” is different than “investor”. You’re right that a writer/director financing their own production is very unusual which I think is one reason why this story is getting a lot of attention.
@jpr: “Enforced scarcity” refers to the way that businesses intentionally reduce distribution of a commodity as a way to support the price. It’s one reason why a cabinetmaker might insist on handcrafting all their wares instead of resorting to automated assembly (for example). In this case, it refers to the strategy of withdrawing the free viewing of the series in favor of iTunes purchases. (If Joss had released Dr. Horrible on YouTube, in contrast, the expected revenue would have been $0.)
links for 2008-07-24 « Brent Sordyl’s Blog // Jul 24, 2008 at 7:31 am
[...] Dr. Horrible » How’s it doing? If the show sells 100,000 units on iTunes, he makes $87,280; if it sells a million copies, he winds up making more than $2.6 million on his original “low six-figure” investment (tags: josswhedon business iptv) [...]
So you’re saying that this ‘enforced scarcity’ still makes sense to you for in the age of the internet, despite the drawbacks of lost exposure and ‘leakage’ of revenue due to pirating effects ?
Do you have any thoughts on what kind of advertising revenue the Whedon clan left on the table by having an advertising-free site from which to stream their show ?
You said, “If Joss had released Dr. Horrible on YouTube, in contrast, the expected revenue would have been $0″.
From YouTube yes but isn’t it possible that a longer period of free availability on multiple platforms including YouTube could result in significantly more DVDs, iTunes episodes, tshirts and action figures sold, all due to the larger number of people able to get a free taste.
There is clearly a tradeoff between expected revenue for the show itelf and other revenue streams but for lifetime revenue it makes sense to me to embrace the concept of ‘The show is it’s own commercial’ and allow for free distribution.
The effects of “piracy” are actually negligible, regardless of what the industry would have you believe. People who go to the trouble of pirating media are generally not the people who would have paid money for the media in the first place.
Maybe, but I doubt it. The free period definitely served its purpose, which was to draw attention to the project; I can’t imagine that another, say, week of free viewing would have made that much of a difference. I mentioned in a previous comment that I don’t think that the five day preview period is by any means set in stone, and I would imagine that if others try something like this in the future they’d experiment with different free periods. I don’t think that YouTube is the right venue for something like this, though, because content creators can’t enforce scarcity there, and if there’s no scarcity of a commodity its value shrinks to zero.
Interesting, I’d tend to agree that “The effects of “piracy” are actually negligible”, but I believe it’s mostly because the early adopters and heavy consumers of media that pirate already spend significant amounts on entertainment/media any additional spending is a drop in a very large bucket.
I agree that another week of free viewing will not change the basic math, but I am arguing that for every week of availability there will be additional ’samplers’ people who would not pay for something they don’t know but will try it out if it’s for free, those additional converts provide the after-market for the DVDs, tshirts etc. etc.
The other factor to take into account is that an entertainment show as a commodity is infinitely resellable, a show can be shown for free one week, sold as a basic DVD the next, have added commentary tracks and sold again, converted to Blu-Ray format and sold again, which leads back to my earlier question, “How many people will pay for it even if it is available for free ?” and add to that, and they already own a copy ?
I still don’t understand where scarcity comes into that, to me scarcity of customer exposure and of product only stops you from making money.
On that theme one of the revenue streams left on the table in this project is the whole non-US consumer population who still cannot pay for Dr Horrible, whether they want to or not, the internet seems to have translated this long standing blind spot in the entertainment industry into an direct loss of revenue.
Agree that YouTube is not the right venue, but I base that on thinking on the nice advertising revenue they could have made for themselves on their website.
2.2 million downloads for Dr Horrible ! @ TVoholic.com: Full episode reviews of your favorite TV shows & news about television // Jul 24, 2008 at 2:37 pm
[...] this work as a new ways to create and provide content online ? Well, recently Jeffrey McManus made some educated guesses, which Whedon felt were not far off. Basically, he said that with one million iTunes downloads [...]
@jpr Scarcity is meaningful because people have limited disposable income and limited attention. (Bringing attention into this is important because it is something that applies to people of every economic class — whether you’re rich or poor, there are only so many hours in the day.) This scarcity means that every entertainment product competes with every other entertainment product. It may seem infinitely resellable as you assert (and that’s one of the reason why media and software can be appealing businesses), but “infinity” is actually a pretty big number. In reality we have to take into consideration the size of the population, the number of people who are interested in the product, how many of those have the disposable income to devote to it, how much free time they have, etc., and those are all limits to how far you can take this. My wife, for example, is a much bigger Whedon fan than I am and she hasn’t even seen Dr. Horrible yet, not because she’s not interested but because she hasn’t had 45 minutes free in her schedule since it came out (and, secondarily, because iTunes keeps dicking with her login and DRM settings).
Advertising revenue for online video content has not proven to be a significant factor yet (here or anywhere), so I didn’t even factor it into my math. I have no idea what Joss’ deal with Hulu was, but I’m guessing that it wasn’t material in the profit/loss arithmetic.
We’ll have to agree to disagree on the scarcity issue since I’m arguing that holding back the product to create scarcity and thereby increasing product value makes little sense for media products on the internet, the needs for quick worldwide distribution and the ability to create and take advantage of internet buzz should trump other considerations, while you now seems to be talking about the scarcity of attention and time on the receiver side an entirely different issue in my book.
The four film students you mention in the article should definitely consider the option of releasing an early trailer of YouTube, leaking a watermarked version to the major filesharing sites and having the DVD and paid downloads ready to roll, availability not scarcity. After all they need the free publicity in a way Joss really doesn’t, the critics aren’t quite as likely to queue up for interviews for them as they are for the more well known names.
While internet advertising revenue might not (yet) be significant compared to network advertising those four film students could find it to be the difference between making money or losing money on their project.
Someone on Whedonesque pointed out that Joss deal with Hulu might actually have cost the Whedon clan some money since the kind of bandwith required for the worldwide streaming of the show would not be cheap.
Last time I checked Dr Horrible was available on the internet both in streamed format and as download, if your wife looks in the right places she can find it :)
You’re setting up an either/or dichotomy where none exists — in a world in which anyone can put a video online, there’s no need to trade off scarcity for international distribution. Everybody has access to international distribution; the question is whether you can get people to pay for your stuff. Dr. Horrible is the #1 video on iTunes, which suggests to me that the five-day free period was exactly the right thing to do. I would be really surprised if others didn’t attempt to follow this playbook to the letter in the future.
You’re right about the film students and YouTube; they have slightly different objectives than Joss does. In fact one group that’s doing well with this model right now is Improv Everywhere. It’s important to note, though, that their expectation is not to make money on sales of DVDs or advertising (at least not directly), but to break into the business (they got a deal with NBC and I believe their series will premiere later this year).
Agree to disagree, still believe this playbook is missing some pages, I’m thinking other options will be tried as well and whomever shows the best results will show the way. We will never know how much Dr. Horrible would have sold on iTunes if it would have been available (on the official site) as a streaming video in parallell, possibly less, how much less ? Sold more DVDs in the long run ? Someone else will have to test that.
Looking forward to seeing the results, hopefully the end result is more ways to create and finance quality programming.
Jeff McManus Crunches The Numbers For Dr. Horrible | Phil Nelson // Jul 24, 2008 at 7:31 pm
[...] Joss Whedon has said the numbers aren’t far off. [...]
Machinima for Dummies : Does Doctor Horrible offer a way for Machinima creators to make money? // Jul 25, 2008 at 6:54 am
[...] numbers (there’s a great post on this subject) say that Mr Whedon is likely to at least break even on his investment, if not make a couple of [...]
Running With My Eyes Closed › Will Dr Horrible Make Joss Rich(er)? // Jul 25, 2008 at 2:59 pm
[...] McManus has an interesting post on the economics of Dr Horrible: If the show sells 100,000 units on iTunes, he makes $229,840 [...]
Unsquare Dance / Bookmarks for July 21st through July 25th // Jul 25, 2008 at 6:01 pm
[...] Jeffrey McManus » What’s In It For Doogie Howser? There’s an enforced scarcity at work with the Dr. Horrible project that I think is smart if you’re really trying to make this into a business. [...]
Joss’s fans once came to my blog en masse too. It was when I wrote about the (first) pilot script for Dollhouse. I had loved the script, but on the basis of the rapidness of Joss’s fans, I started watching Buffy. Pretty soon I was a fan too and thank god, because it meant I was right there and ready to love Dr Horrible when it came out. It was excellent and I’m happy to know that he’s going to make some dough from being web pioneer.
Joss is clearly a guy with an enormous vision and a great deal to say. I can’t wait to see what else he does in this new medium because I think that it will be here on the web where we hear his own voice most clearly.
Thanks for doing the math and showing the rest of us where the money is.
Damien Mulley » Blog Archive » Fluffy Links - Monday July 28th 2008 // Jul 27, 2008 at 9:33 pm
[...] what did that Joss Wheedon “Dr. Horrible’s Sing-Along Blog” project make, numbers wise? Wheedon nodded in the comments that they were about right. Love this idea though: For example, [...]
Designing for Experience | Why Dr. Horrible is horribly important // Aug 1, 2008 at 8:29 am
[...] and that there is a dearth of hard numbers (though you can see some guesses on revenues here and here) on viewership and purchases so at least some of this is speculative and educated guesses. That [...]
It’s back!
Yep, turns out that Dr Horrible has come back online, for free.
So, what does that mean? Any ideas? I’d love to hear your thoughts on this development…
No idea what this means for the business, honestly — it would depend on what Hulu’s ad rates are and how many people are viewing this way. You’d think that making the episodes available for free would reduce the number of people who would buy on iTunes, but then again maybe not, since viewing TV on a computer pretty much sucks and you can’t put Hulu on your iPhone, etc.
It’s conceivable that there’s a motivation beyond the advertising bucks (which I suspect aren’t going to be too significant). Maybe there’s a deal afoot with NBC, or maybe the free streaming is being done to keep the momentum going as they get ready to release the DVD in a few months? Dunno.