Our family spends hundreds of dollars a month with Time Warner Cable. And plenty more with the NBA league pass. And plenty more with tickets to Knicks games. It’s not that we don’t want to pay for our sports entertainment. And it’s not that we are unwilling to pay more.

But last night we were turned into “pirates” as the entertainment industry likes to call us. As 2011 turned into 2012, the executives at Time Warner Cable and MSG Network were unable to make a deal to keep MSG on Time Warner Cable. My son was fuming and so was I.

So I did what many did last night. I opened Twitter on the family room iPad and tweeted out a question.

Within seconds the suggestions came pouring in. NBA.com’s League Pass for broadband was widely suggested but they were blacking out the Knicks Raptors game in the NYC area. Note to NBA.com – take all Time Warner Broadband IP addresses out of your blackout code table. If you do, you’ll sign up a bunch of new subsribers during this TWC/MSG spat.

So we went on to the pirate sites. That worked great. No blackout problems there. Here’s the tweet I sent out when we got the game on the big screen in the family room (via our family room mac mini).

I added the #screwcable hashtag to that one. I hope others start using it. The industry sure deserves it for turning really good paying customers into pirates.

I’ve long believed that piracy is largely a business model problem not a human behavior problem. If you give people a legal way to consume the content they want, they will pay for it. But when you make it impossible to legally consume the content they want, they will pirate it. That’s what happened last night and that is what will happen every night there is a Knicks game on TV for as long as MSG and Time Warner Cable continue to figure out how to screw their customers.

When people ask me, “How do you know which companies and services are going to be the biggest successes?”, I usually tell them to look for the companies and services that are mocked and misunderstood. For some reason, that correlates highly with the biggest breakout successes.

Twitter is a great example of this. For years, every post, column, or article written about Twitter would have comment after comment making fun of a service where people “told the world what they had for lunch.” Of course, people were doing that on Twitter and people still do that on Twitter. But what those mocking Twitter were missing is that in between the tweets about pizza and pita were posts about politics and poetry. There was substance in the midst of nonsense.

And all the while that those mocking Twitter were obsessing about the nonsense, the substance was increasing and the usage was growing. Comscore has Twitter’s monthly users at ~170mm people worldwide, up >60% in the past year. That makes Twitter one of the top twenty websites in the world and it is growing faster than most of those twenty websites. That is what I call “breakout success.”

I woke up thinking about this because before I went to bed last night I watched last night’s episode of Rock Center with Brian Williams. They had a piece on our portfolio company Kickstarter. The piece itself was pretty good. But at the end, Brian Williams discussed it with the Kate Snow (who did the piece), and he said something like “so this is like the guy on the street asking for a handout?”

Yeah, just like that Brian.

Kickstarter couldn’t be farther from the “guy on the street asking for a handout” and yet that was Brian’s takeaway after watching the piece (or maybe he didn’t watch it). Either way he mocked Kickstarter and misunderstands it. And that is fine with me. Because its a signal that Kickstarter is on to something big.

I knew that already, but situations like this are reinforcing it for me. They are the “tell”. So when your company and services gets mocked and is misunderstood by most everyone, particularly the mainstream press and media, just smile and keep doing what you are doing. You are on to something big.

Image from StartupQuote.com

Since the early days of this blog, it has been filled with musings on how creativity will be rewarded in the internet age. It is a theme I’ve come back to again and again. These thoughts have worked their way into our investment thesis and our portfolio. Investments like Etsy, Kickstarter, SoundCloud, and many others have come from this line of thinking.

So when I saw what Louis CK did last week, I was so excited. For those who don’t know, Louis CK is a comedian, a really funny comedian, who made a one hour comedy special and put it on the Internet for anyone to buy/stream for $5. You can “buy the thing” here.

This week, Louis shared the finacial details of his experiment with everyone. Here are some of the salient details:

First of all, this was a premium video production, shot with six cameras over two performances at the Beacon Theater, which is a high-priced elite Manhattan venue. I directed this video myself and the production of the video cost around $170,000. (This was largely paid for by the tickets bought by the audiences at both shows). The material in the video was developed over months on the road and has never been seen on my show (LOUIE) or on any other special. The risks were thus: every new generation of material I create is my income, it’s like a farmer’s annual crop. The time and effort on my part was far more than if I’d done it with a big company. If I’d done it with a big company, I would have a guarantee of a sizable fee, as opposed to this way, where I’m actually investing my own money.

The development of the website, which needed to be a very robust, reliable and carefully constructed website, was around $32,000. We worked for a number of weeks poring over the site to make sure every detail would give buyers a simple, optimal and humane experience for buying the video. I edited the video around the clock for the weeks between the show and the launch.

The show went on sale at noon on Saturday, December 10th. 12 hours later, we had over 50,000 purchases and had earned $250,000, breaking even on the cost of production and website. As of Today, we’ve sold over 110,000 copies for a total of over $500,000. Minus some money for PayPal charges etc, I have a profit around $200,000 (after taxes $75.58). This is less than I would have been paid by a large company to simply perform the show and let them sell it to you, but they would have charged you about $20 for the video. They would have given you an encrypted and regionally restricted video of limited value, and they would have owned your private information for their own use. They would have withheld international availability indefinitely. This way, you only paid $5, you can use the video any way you want, and you can watch it in Dublin, whatever the city is in Belgium, or Dubai. I got paid nice, and I still own the video (as do you). You never have to join anything, and you never have to hear from us again.

So Louis’ experiment was a financial success. But more than that, it is a business model success. He has recouped his investment, is well into the black, and he owns the rights to his creativity without any limits on what he can do with it. He is able to sell it everywhere in the world at the same time without any DRM on it. And he will continue to make money from this content for many months (years?) to come.

Some will say that Louis can do this because he is a star. That is true. And I sure hope other stars will follow his lead and go direct to their fans. They can also go direct to their fans and raise the upfront production costs on Kickstarter. They can use any number of internet services to process the payments (paypal), host the video (vimeo), and get distribution (twitter). This is not that hard.

But this can also work for emerging artists. They won’t make as much money as Louis CK, but they also don’t need to make as large of an investment either. And over time, if their work is good, their audience will grow and the investments they can make and the profits they can make will increase.

The business model of going direct to the fans is powerful, it has none of the negative issues of the existing business model (like fucking with the architecture of the net in a naive attempt to quell piracy) and is going to work bigtime. Thanks Louis CK for shining on a huge bright light on that fact for the past couple weeks. And thanks for the laughs you gave me and the Gotham Gal on thursday night.

About a month ago, William Mougayar, an AVC regular if there was ever one, emailed me about an idea he had to create a web service to make social conversations easier. We went back and forth on the idea. I pushed him to come up with a simple name and a simple UI. I told him “make it like gmail for social conversations.”

Over the past month, he and his crack team of something like two or three developers did just that. And today, I’m pleased to tell all of you that William and his team have built something pretty special.

He calls it engag.io. It’s a good name. An io channel for social engagement. Here’s what my engagio inbox looks like this morning:

My inbox is dominated by AVC discussions. For most people, their inbox will have a multitude of conversations from many services; Twitter, Foursquare,  Hacker News, Facebook, and hopefully AVC too.

There are a few other nifty features shown on the left sidebar. Engagement shows who you are engaging with. Shared links stores all the links being passed back and forth in your conversations. And Sites shows what sites your friends are having discussions on. So engagio is not just your inbox for social conversations. It is your dashboard for social conversations.

William’s got a blog post up on the engagio blog explaining his vision for the product. It’s a good read.

Engagio is offering 100 invites this morning to AVC readers. The first 100 users will get in. The invite code is avcengage (lower caps). Give it a try and let us know what you think.

Just In Case You Were Wondering: Neither me nor USV has any financial interest in engag.io or eqentia, it’s sister service.

I love emergent behavior inside web services. When the users take over and start doing stuff you never imagined, you know you’ve got something.

Next week, on Dec 7th, the core users of Turntable‘s three mashup rooms are hosting an online event with some of the top mashup DJs in the world.

Here are the details:

Dec 7th 8-11 PM EST All Mashup rooms – Mashupfm1, Mashupfm2, and the Mashupfm VIP room – are hosting what could be Turntable’s, and possibly the internet’s, first online Music “festival”

20+ DJs including:
3LAU, Yoni, Basic Physics, DJ Trademark, Kap Slap, DJ DiBella, Wick-It, Desler, Bruneaux, DJ abSRD, Dotcom, DJ Graycat, DJ Strongarm, DJ Rudy, The Airport District, DJ Bahler, Nammo, Mitch-Mash and More

These mashup rooms are some of the most fun rooms in the turntable service. You get crazy stuff in them all the time. Here’s my favorite of them if you want to check it out in advance.

I’ve got this in my calendar. Hope to see you there.

Note: An earlier version of this post had the event from 3pm to 8pm eastern. That was incorrect. I apologize for the error.

It’s Black Friday, the biggest shopping day of the year. But you don’t have to get crushed by the crowds stampeding the doors in order to participate in this shopping crazed day.

You can take out your mobile phone and do your holiday shopping while you are sitting in the park, on the beach, or by the pool.

Consider the new Etsy iPhone app, for example. Download it to your iPhone and shop away.

The treasury lists make a great way to shop on mobile. Here’s a treasury called “Merry X-mas for him”

The

And if you find something you like, you can purchase it right on your phone:

So if you want to participate in Black Friday mania from the comfort of your couch watching football games, try shopping on your mobile phone. It works nicely and you aren’t likely to get trampled.

When Amazon opened up pre-orders for the kindle fire, I bought one immediately. I received mine on Tuesday and I’ve been playing with it for a few days. So I thought I’d post a few thoughts.

A lot of what you think of kindle fire will depend on what your use case is. If you are looking for a less expensive iPad, then this is not for you. But if you, like me, are looking for a kindle with a browser on it, this could well be the device for you.

My biggest frustration with the kindle is that I can’t jump out of the book and do a quick map lookup, wikiepedia lookup, google images lookup, etc. I blogged about that a few months ago. I’ve solved that problem by moving all my reading from the kindle to the kindle app on the iPad. But the 11″ form factor of the iPad isn’t ideal for me. I like something a bit smaller for reading on the couch, plane, or in bed. So that is why I hit the pre-order button immediately when Amazon announced kindle fire.

A number of critics have said that kindle fire is slow. I have not experienced that very much. It seems plenty snappy for me. Again, I’m mostly using it for reading and light browsing. I am not doing email on it. I am not doing spreadsheets on it. Graphics rich applications like Google Maps do seem to be slower on the kindle fire though.

So with all that said, here’s a quick tour. The main screen is what you’d expect. Navigation and apps.

Just a word to the wise. Those Twitter and Facebook apps are web apps, not android apps or kindle fire apps. One of the things I don’t understand is why the kindle fire doesn’t run android apps natively. I think that’s a huge mistake on Amazon’s part. The Netflix app is a native kindle fire app.

The best part of this device is the kindle functionality. This is a kindle with an OS and a modern browser. Here’s the book library and the book reader.

As a book reading device, kindle fire works great. It is heavier than a kindle, about the same weight (I think) as an iPad. But because it is a smaller device and the same weight, it feels heavier in the hand. That said, I do not have any issue reading on the kindle fire for long lengths of time (same with iPad).

The browser great for reading. Here’s the Gotham Gal’s blog on the kindle fire.

I do have a few issues with the way Google Maps works on the Kindle Fire browser. It seems less functional and a bit slower.

In addition to books and web, the kindle fire has tabs for newstand, music, video, docs, and apps. The only tabs that interest me on that list are apps and videos. I use the web to access everything else on that list (and much of the video I watch is also on the web). I used kindle fire to watch a youtube video in full screen mode on the treadmill this morning and it worked great (with headphones on).

The app store looks like this. It is pretty sparse right now from what I saw.

Amazon Prime Instant Video is a pretty awesome service. We use it a lot in our home on our mac mini (sure wish it was available on Boxee). Here’s what that service looks like on the kindle fire.

So that’s a quick tour of the kindle fire. I think it will replace the iPad next to my bed as my primary reading device. It’s smaller and fits better in the hand. And while it is not much lighter, it still feels like a better reading device. The browser works fine. I can jump back and forth between reading and browsing easily.

It will be interesting to see how the rest of the family reacts to it. I will put it on our family room coffee table for a few days next to the iPad and see what the rest of the family thinks. If I learn anything interesting, I will report back.

Bottom line – if you are in the market for a kindle or a new kindle, consider this. If you are looking for a less expensive tablet, this is not a good choice, at least yet. I think the android tablets are a better choice for that.

Additional reviews:

Mossberg on Kindle Fire

Pogue on Kindle Fire