[Sorcerer Kickstart] Money over, work starts

[Ron Edwards]

My reading is similar to Karl's, although perhaps that's about as far as this detail needs to be discussed here. Let's get back to the Kickstart as a process. Joseph and Yusra the comic just finished its duration, successfully. I want to consider the issues in play when a crowdfunding project is effectively a pre-order project.

Here's a case where it isn't, or it is only to a minor degree. Joseph and Yusra is a long-running free webcomic; in the Kickstarter, the author simply wanted to do a physical print run to have them on hand, for cons, promotions, or auxiliary sales. Notice that you cannot get the whole run as a big wad through any pledge. She says it's because she wants to re-draw them anyway, but for whatever reason, this is actually very smart and normal. Which is to say, a crowdfunded project should not reward pledgers with the product it's intended to fund!

Look at it this way: money can't be made twice or spent twice. If you need X to make your thing, and you intend to sell it to a general audience, then giving it to a person who pledges effectively steals one of your sales. If you give yourself a decent profit margin on that exchange, then at least you don't lose from it, but the net effect is to run in place. Only if the whole thing, collectively, brings intangible benefits (wider market penetration than otherwise expected, confirmation of existing goodwill - both of which apply to me), is it even marginally justified.

For instance, since I converted the pay-for-art goal to a pre-order goal at $10,000, that means I'm not sitting on $24,000 cash. I can't rub it all over my naked body, because the minute someone pledged, it was eaten by piranhas: print cost for two books, fulfillment cost for them, and some fraction of what I wanted to pay Thomas and Nathan. From a U.S. order, maybe a few bucks are left from each; from the others, effectively nothing. That's with an average order (not counting PDF only for people, only for money) of $39-plus.

You see (#1), the total pledged is in this case almost irrelevant, and if Thomas and Nathan weren't involved, totally irrelevant. It's all about the average pledge of the print-receiving backers, as well as the important factor of at least some people pledging only for PDF.

You see (#2), publishing is always future-oriented. If a book sells, it has to return (i) its own production and fulfillment and storage costs, and (ii) enough above that to play for at least one more book to be made, and ideally, sent. If it doesn't, then you are driving your business into the ground, like I've been mostly doing since about 2007, when interest on business credit skyrocketed (right on top of using it a bit much during Spione production) and when shipping started to go insane as well. In this case, I might have on the average enough to print one new book (not fulfill it) from each pledge.

Now, I'm not bitching at my backers! They totally stepped up to my needs and were in every way excellent. I converted to the pre-order model because that expectation is a fact, and to rail against fact is not really practical. I knew I'd have to do it, so since I did, I went into it whole hog. The only hitch was fumbling that damned $25 pledge edit, which made things stressful in the $10,000-$20,000 range.

(What I planned at $10,000 was to leave the original PDF pledge as PDF only, then have a new pledge that you'd go to if you wanted the books, with shipping included. But I didn't really understand upgrading pledges or that the interface would be so unforgiving when you tried to edit them. So it ended up weird-looking.)

Anyway, the Joseph & Yusra model is a better one. She prints the books with the money she makes, and now she has stock for sale. Signing and sending out a few issues isn't a big deal, and getting them signed is nice - and since no one gets the whole run, getting them prompts the recipient to buy the other issues when they're available. The other rewards are stuff the author likes to do anyway: doodles, yarn dolls, fun stuff like that. The big-ticket item is truly generous and unique, illustrating a comic the backer writes, which is definitely work, but also - frankly - the kind of thing she knows she's good at and might see as a fun opportunity to stretch her artistic muscles a bit.

Or look at what Jeff Dee does at Kickstarter - the man is a veritable engine of redrawing his work from classic early RPG publications, including new drawings of (for example) M.A.R. Barker sketches. Even in his teens, Dee was a notable artist, and now in his late 40s he's sublime. So, the old brilliant psycho-psychedelic imagery of Tekumel, by the same artist done with his current skill? Or the irreplaceable, legendary work from Deities & Demigods, which includes some of the best interpretations of Leiber and Moorcock's fantasy on record - again, now done better? Sign me the fuck up!

But what he's not doing is using the Kickstart to fund a fancy art book with all this stuff in it, then giving the same book away as a reward to the backers! So unlike me, Dee keeps his money and gets to use it for future publishing endeavors or really, anything he wants.

So if I do any more crowdfunding, I'm either going to make it a pre-order from the get-go, but with a very explicit and transparent explanation of why the pledge levels are so high if you want the book; or not a pre-order at all and more on the model of Joseph & Yusra.

Best, Ron

Editing this in: The inimical races of Tekumel, substantially successful, duration ends two hours from the time of this writing.

[Ron Edwards]

OK, two things to clarify because I know you guys and there are two ways you're gonna object.

1. What about all those inventions? They reward backers with the widget, right? But here's the thing: the point of making those widgets is to get them into distribution to a much, much wider paying audience. Same goes for the movies: sure, the backer might get a DVD, but the movie is intended to be marketed to a much, much wider paying audience. In each case, the backers who receive the product are now early adopters and a valuable source of word-of-mouth. That's not the case for most RPGs, especially brand new ones from a first-time publisher.

(It is, however, more the case for me! Which means I'm doing pretty well - please please don't take my post above as bitching and whining; I came out of this with so much awesome renewed attention and goodwill, and Sorcerer itself has such a proven track record of generating customers and audience for my work in general, and new customers via play, that I'm singing "Thus Spake Zarathustra" in the shower.)

2. What about Tunnels & Trolls and FATE? Awesome! Rich! Rubbing nakedness in piles of cash there, right? Umpty-ump percent of goals, right? I submit that if you look at their average take, including PDF-only money but not PDF-only person-count, then you will find average pledges that are only barely going to cover production, fulfillment, professional costs (like art et cetera), and the inevitable unexpected crisis lying in wait for nearly any RPG project. Again, going ga-ga over the total amount gained is not the relevant variable.

Best, Ron

[Eero Tuovinen]

Is somebody constantly talking to you about how big a money-maker Kickstarter is, or why do you return to the topic of per-unit costs again and again? This sort of sounds like the other half of some discussion where the other party keeps insisting that you're rich now.

Aside from that, perhaps I don't understand what the problem is. To me it seems obvious that you price things you sell according to your expenses, risk, profit expectation and what the market will bear. Crowdfunding sites and such talk a lot of indie bullshit, but all those projects, they're selling stuff - why would you even assume that the prices were not set profitably? Is it some unspoken rule that I've missed, that Kickstarter projects should be underpriced?

For my part I'm not particularly enthusiastic about a begging project like Joseph & Yusra here: not only is the entire effort predicated on guilting some small money out of people in exchange for trinkets (all glory to trinkets, but ultimately they're just a distraction from the substance of your art, or lack thereof), but it also makes it necessary for interested customers to first fund a Kickstarter and then order the comic book they wanted separately. Completely unnecessary complication, it seems to me, when they could just do some pre-order sales to raise the money.

[Ron Edwards]

By saying "problem," you're implying I'm complaining. I'm not complaining; I'm distinguishing between two almost incompatible models for crowdfunding. I seem to have managed pulling them off together, but they aren't the same things. I have not yet read a single discussion of the difference in post-crowdfunding analyses and threads; I figure if it makes sense and no one's said it yet, I might as well.

As observations:

1. Yes, the perception that I or any person with a successful crowdfunding project, am (is) sitting on a huge pile of free-spending money is real. It's not an insult, a disgrace, or anything, it's merely incorrect. If you don't suffer from this misperception, that's great, but don't object to me pointing it out. Same goes for the whole "gee why don't you predict your margins better" line, which you've already shared with me in the other thread. Fine, Eero: you win the level-headed businessman gold star. I'm writing for (and as one of) the rest of us, who suffer from confirmation bias and cognitive dissonance most of the time.

2. It's also clear from the helpful people who've posted at the Forge and RPG.net and elsewhere about success/failure in RPG crowdfunding, that first-time publishers run into trouble. As far as I can tell, they're bummed when they don't meet their goals and they're hosed by logistics when they do. Much of what I'm saying is "obvious," sure - if you know it already. I'm the guy who likes to help people with a game idea in their backpack, remember? For whom even the most basic information about publishing is value added.

3. The various analyses also show that first-timers aren't the only ones, either. In general, RPG crowdfunding tends to fall short on actually fulfilling what it promises, or at the least, is characterized by lengthy delays. Although I am not personally familiar with whatever snags Two Scooters Press ran into with They Became Flesh, if you don't think there were inherent perception/expectation problems built into that scenario with both publisher and customer base, then you aren't paying attention.

Given those observations, I think these topics need airing. In particular, will it be possible in the future to run RPG crowdfunding which isn't pre-ordering? And more generally, will those who do run pre-order projects do their accounting according to a working model ... which will almost certainly increase the minimum pledge values which give the backer books, i.e., more than its eventual retail cost.

Best, Ron

Editing this in: Eero, I completely disagree with you about Joseph & Yusra. The point is to have the issues on hand for sale. For a grass-roots, limited-audience product like this (and which the books you sell via Arkenstone are too), if you eat into your fan base - the ones who will make the bulk of future sales - for production, then you will have less sales later. Doing this to the extent that apparently many RPG projects do is like digging holes just so you can fill them in.

[Eero Tuovinen]

It is definitely good to look at crowdfunding critically, in the light of the apparently well-intentioned fuck-ups that seem to occur regularly. So carry on, I say. I haven't crowdfunded anything myself, so I'm not in a position to say that it's all so very simple if only people learned to think before they do.

Following the crowdfunding scene from a distance over the last few years, the impression I get is that we're seeing a recalibration of skills and expectations, not dissimilar to what you spearheaded a decade back. A bunch of small press independent culture producers came into the rpg scene then, thanks to cheapening workflows (digital sales and POD printing, essentially), and that brought with it a share of problems - especially issues of creative quality (are you mistaken in thinking your game is groundbreaking?) and fiscal realism (should you really print a thousand copies?). Now we're going through a very similar process with crowdfunding, as it's essentially a new technology that again enables people to up their game with less of a threshold than there used to be before: you need even less in terms of money, seriousness, skill or experience to become a publisher. The growing pains we're seeing are natural in this context, Kickstarter is simply encouraging many people to become publishers who were not and did not consider themselves qualified without it.

If this explains the difficulties people are having with crowdfunding, then I suppose that the solution is similar as well: prospective small press publishers need to be educated about best practices, such as correct budgeting, managing project schedules and so on. We've reduced the amount of tragic over-optimism in small press rpg sales over the last decade, it seems to me, so perhaps it'll be possible to reduce the amount of Kickstarter failures as well by making information about best practices more visible.

If you don't mind, let's talk about pre-ordering vs. not, the topic is interesting even if I don't agree with you.

First, I'm not sure I understand your argument about eating into your audience by selling the product you're making when crowdfunding. Is your point simply that selling something for cheaper than you could sell it later makes for a virtual loss of income in the long run? You sound like a crowdfunded sale that "eats" into your customer base is somehow a bad thing, but assuming that you're pricing your product correctly, how is it different if you sell the product in advance instead of selling it later? How is it preferable to delay the sale? Even in the situation you picture, where the small press publisher is definitely eating into his own audience, isn't that his goal? If I have a hundred potential customers, and every one of them pre-orders my thing in Kickstarter, then what does it matter that I don't have any more audience? I already sold stuff to everybody!

If we followed your line of thinking to its logical conclusion, shouldn't we also avoid selling already existing copies of product? After all, not only will you lose that book from your stock, but you'll also lose the chance to sell a copy to that customer later. By avoiding selling things to people who want to buy we can preserve their desire to buy, and our stock as well. We'll have a perpetually untapped market and a ready stock of product, with no danger of running out of either. What am I missing here?

In comparison, the kind of crowdfunding you're suggesting seems to be more about charity or patronizing culture than about pre-order sales. There's nothing wrong with that, I'd say, but I suspect that Kickstarter and similar are maybe not the best venue for it, due to audience expectations. If your business plan genuinely is that you want other like-minded people to give you money so you can make your art, with no concrete return value, then maybe a simple tip jar on a blog would serve the message better? Of course a crowdfunding site serves the purpose of regulating a minimum collection value and a schedule, so it's not entirely useless. The user base, on the other hand, might be largely commercially oriented. I for one would balk at the idea of getting to pay the print run of something so the author could turn around and sell it to somebody else. That's just counter-intuitive, I'd rather directly support an artist's lifestyle (and art) directly.

Regarding our example comic book project, I would not choose to fund my print run by selling loosely related knick-knacks and ego boosters ("Your name will be printed in the comics as a producer") in lieu of the real product. Tastes differ, of course, but what's wrong with just asking for money with no recompense whatsoever? That seems artistically more pure, and at least the audience will be absolutely clear on what they're doing: they're patronizing an artist they like. Maybe the artist spends that money on paying for a print run of their art, but that's on their head - some art wants and needs to be on paper, and that costs money.

Of course Kickstarter rules require your project to be about making something, so you can't just ask for general living expenses money. That's another way in which it's really more of a pre-order system than art patronage.

[Ron Edwards]

Quit saying things like, "You make it sound like it's a bad thing." You're fueling precisely the wrong take-away. I'm saying that if you crowdfund a product push, basically a pre-order plan, then a bunch of practices clearly considered normal and expected in our hobby need to be either avoided or applied with exquisite financial and logistic care. And that getting past that "normal and expected" is apparently going to be tough.

The first among those, which I forgot to emphasize above, would be stretch goals. If you're running a pre-order project, then stretch goals are very, very dangerous. The latest update from the Tunnels & Trolls kickstart shows that the publishers are feeling this pinch, reminding the customers (which is the right term in this case) that every stretch goal increases the delays, hassles, and expenses for them.

Your other points are sophistry. The difference between now vs. later is not an issue if you know you're running a pre-order plan and your customers know it too - including the fact that every pre-order plan is always a real risk, which is why I typically don't use that strategy, and which RPG customers are curiously blind to. If you and they don't know this, then you get into the whole stretch-goal, hidden-cost problem I'm trying to explain, apparently poorly, but which is again evident from the analyses so far available.

The real problem arises when the project literally is digging a hole and filling it in again; i.e., a pledge buys a book, but not necessarily pays for the making and supplying of a new one. When one plans to move one's books into distribution of any kind, or to have them on hand for a given time period of direct sales, then yes, there is a problem with printing and immediately seeing your stock vanish. Being sold out of a title is death squared for a small-press RPG company, and typically a big hassle even if your customer base is inclined to give you some slack. It's hard to plan for, too. A company which signs up for GenCon and eight months later finds itself with three copies left is looking at a yearly loss which most companies can't absorb, and in the exciting throes of the Kickstart, never realized that after it, they'd need another, non-pre-ordered pile of stock.

Since you acknowledged that you are not justified in pointing your finger and saying, "Well, they should have thought first," please don't do it now (again). Such a company is facing the fixed expectation that a pledge should get a book at a discount, the precise opposite of what the project actually needs, pledges which pay for books and provide more than an ordinary sale.

There are lots of solutions to be identified in already-existing crowdfunding projects, as well as new solutions to consider. But don't sit there and tell me there's no problem.

As for your comments about purity, sure, in Heaven Above, people generously provide money to see things they'd like to exist get made, and are perfectly willing for their funds to vanish into the ether aside from that goal's success. In grubby reality, the backers are shopping, and I see no reason to criticize that or to blame them. Shopping is not donation, nor is it patronage. When you serve customers who are shopping, they want product and they want a good deal. Reconciling this reality with the difficult other real point that as a publisher, by the end of any print-sales cycle, you need money in hand which was not turned into production cost is the task at hand.

Please let someone else talk for a while.

Best, Ron

[Dan Maruschak]

Such a company is facing the fixed expectation that a pledge should get a book at a discount

Ron, it seems to me that this belief about the current state of expectations is the crux of a lot of your issues, but I don't think it's accurate (or at least not universally accurate). From conversations I see in social media, discount pricing is one of the tactics sometimes employed by the hype-cycle carnival-barker strategy but it isn't a universal expectation from crowdfunding supporters. I don't think anyone would criticize a kickstarter campaign where the minimum reward tier was identical to the final retail price (bargain-hunters might not be enthusiastic, but most people don't expect Kickstarter to be the bargain bin).

[Christoph]

Thanks for the picture Ron.

How about I try to summarize what's been said?

A) Whatever the channel through which you sell your games, always make enough buck to be ready to print a subsequent run before your stock starts running out. This impacts the price per copy so that you get the required benefit per copy.
B) With Kickstarter & Co. there are expectations of stretch goals and "early bird" bonuses, which tend to push authors to eat away at the reserves they should be making as per point A.
C) Given the inevitability (?) of Kickstarter & Co., plan on selling your games at a bargain price (lower than the price per copy in A) to get a critical mass of buy-in and thus buzz (as per point B), but catch up thanks to the generous donors (pdf only, or high-level pledges). And definitely make them pay for postage & handling. So that, in the end, you get, on average, the necessary benefit calculated in A. Stretch-goals which wreck your average once you hit them are a big "no no" (like making custom dice for everyone just on the grounds that you made $100'000 turnover, because it will eat your reserve which was based only on a percentage of that turnover to begin with).
D) Better yet, don't sell your game on Kickstarter, but something else, get just enough money to do a print run which you then handle in the pre-Kickstarter era fashion, with a cost calculated as in A,  minus the initial investment. However, it is not at all clear that the customer base would appreciate this approach, so back to C. (?)

Note: Kickstarter & Co. give the impression that you're making tons of cash, but really, you'd be handling the same gross intake over a longer period in a more conventional indie fashion, it's just that nobody would notice. So selling many copies with an unoptimal benefit margin looks like the guy just made a huge stash of dough, but he'll never get further, because he won't be able to afford it. Whereas someone selling just enough copies at the right price will be able to continue making business on her own after the crowd-funding.

Question: say your printer grants you a decent price cut if you print a certain number of books (say 500). Is it okay to use some of that money you just saved by going from 499 to 500 to add a stretch-goal? (Of course, it's not clear if you're going to do future print runs of the same volume, so you still have to make reserves based on the higher manufacturing price.)

[Ron Edwards]

Hiya,

Dan, I'm talking specifically about the RPG crowdfunding audience, not about backers for anything and everything - I couldn't tell whether your post makes that distinction. I'm also going by my own experience, which is obviously limited, but turns out to be reinforced by some analyses by others, and also by the couple of truly notorious post-success failures in RPG projects. Based on those, I think it's at least arguable that backers of RPG crowdfunded projects are distinctively interested in acquiring physical books.

You're right that I can't state that as hard facts, yet. I'd love to see a good summary analysis done to test that claim; for my part, it's the first thing that was laid down to me in stone both here and at Story Games when I floated the project in the first place: no book, no backing. I made that $5,000 goal in 18 hours, but I'm certain as can be without the multi-project analysis that if I hadn't held out the possibility of getting real books at $10,000, that I wouldn't have seen the $5,000 that fast, or possibly at all.

Hans, what do you think of that? You self-identified as a nigh-archetypal crowdfunding enthusiast, and from what I've now seen, I think you're right. Do you mind speaking for the masses at least momentarily?

Christoph, I'd say you nailed it. The solution to the C-fights-D problem, I think, lies in identifying and with any luck subculturally legitimizing the distinction between pre-order vs. non-pre-order projects, so someone can say, "This is a pre-order project," and a lot of people will understand what that can and cannot do, and someone else can say, "This is isn't a pre-order project," and the same will apply. Or in my case, "this is a combination that's intended to work like X-Y-Z."

Best, Ron

Editing this in (man, I am doing that all the time in this thread!): One point worthy of discussion is simply to bag stretch goals, or at least to restrict them to things which are not "get more stuff." The core concept under that idea is that goal should be what the project founder wants, and reward should be what a backer gets ... but most stretch goals are actually more rewards, not goals at all. And it might surprise some people who aren't familiar with the sites - like me - that stretch goals are not part of the software-based mechanisms at all. They have literally been shoehorned into the system via the user base.

[Dan Maruschak]

Ron, yeah, I'm talking about RPG crowdfunding. You seem to be mixing multiple topics in a way that I'm finding confusing. Yes, most people want physical books, but they don't necessarily want cheaper physical books. From what I can tell, lots of people are perfectly happy to pledge at a level that's equal to the final retail price of the book for the reward of one book, i.e. a straightforward pre-order with no discount. Many people are also happy to pay higher prices for a product they can talk themselves into believing is "special" (e.g. signed copy, copy bundled with a limited edition tchotchke, had their name added to the credits, etc.), basically it lets you set up differential pricing so your alpha fans can pay you higher prices without feeling like they're getting ripped off for not going with the cheapest alternative.

I wonder if perhaps your somewhat unusual "PDF-only -> physical books" stretch goal is weighing too heavily in how you are framing some of these issues. Because of the way you structured things I think you had a lot more weirdness hit you than someone who had been expecting to ship some flavor of physical product from the beginning. For example, on some of the Evil Hat kickstarters they had stretch goals like "when he hit a number of orders where the per-copy printing cost of hardcovers would be the same price we'd normally pay for a small print run of softcovers, we'll print in hardcover instead of our minimum plan of printing in softcover". There are, of course, also the potentially problematic "if we hit $X, I'll also create this brand new thing for you!" stretch-goals, which you correctly note have caused problems for more than a few people.

[Ron Edwards]

Maybe so. I'll re-evaluate my points in that light.

Also, a good reference so I'm not always saying "analyses" like "unnamed sources": 2011-2012 Report on 150 RPG Crowdfunding Projects, Part 1 at the Geek Industrial Complex, followed by Part 2 and Part 3. It brings up the patronage vs. pre-order question but doesn't develop it. If anyone wants to post any other analyses of this kind, I'd appreciate it.

It's instructive and alarming to read the comments at the They Became Flesh Kickstarter page; start at the beginning (page 3) and work to the present ... which includes a post from just yesterday, at the time of this writing. (Links to related discussions are available in some of the comments.)

Best, Ron

[ndpaoletta]

Re: digging a hole just to fill it in

Personally, I view a Kickstarter project as marketing and advertising more than anything else (and generating goodwill as a side effect, I hope!)

In my case, for my microgames, I'm hitching Kickstarter (to generate an initial burst of enthusiasm and enable me to pay for higher production values on the front end) to a true-POD post-Kickstarter fulfillment model (I don't print a copy until someone buys one).

The fact is, 90% of my lifetime microgame sales are the ones through the Kickstarter, and then they are a nice little trickle of income that will always be in the black. But to enable me to fulfill the Kickstarter rewards AND do a reasonable print run, I would have had to either: charge more for the reward levels, or divert backer funds away from paying artists (which was the primary goal).

To continue the metaphor, I guess, I  aim to end the project with an even field, ready for someone to come by with a shovel.

[Ron Edwards]

Hey Nathan,

That's definitely a solution. My current strategy leans in that direction a bit, as I plan to shift entirely to strictly-defined POD after this print run, and never say the word "fulfillment" in reference to my books again. Stock for cons is certainly a consideration, though, right? Particularly if one is considering the GenCon presence strategy, something that you and I are perhaps not so much fixated upon any more, but which is still considered a gold standard for many in the hobby, and certainly one I can't criticize given my history.

Dan, I do see your point, but I think we might be stumbling over the meaning of the word "cheap." Pledging a perfectly reasonable retail price for a book is unfortunately not too great in publisher terms, when secondary goals are involved like stretch-based stuff or in my case, the art costs. (whoops - exterior concerns are interfering with my posting - will be back later to finish my thought)

Best, Ron

[Ron Edwards]

Back as promised: and apparently only to say, upon reading Dan's post carefully, "yes." My point to him (you, hi Dan) above is intended as a nuance, not an objection. A nuance of the nuance might also be that perceptions of retail price are important too: apparently PDF means $10, flat-out, to a lot of consumers, no matter how long or how good.

Although my PDF-to-book was a little odd, I think it highlighted an existing issue rather than generating it uniquely, because its appearance was quite visible rather than being built-in, as I think it might be a number of projects.

Best, Ron