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Forgites,

Concerning Traditional vs. Indie Publishing Models, and/or ethics, and in reference to this thread (http://www.indie-rpgs.com/forum/index.php?topic=24659.0):

For the sake of enlightenment, and posterity, I'd be interested to read people's latest takes on everything that is wrong with the "traditional publishing model" as it relates to RPGs.

Specifically...In a nutshell, what makes traditional publishing poison, or at least something to be avoided by Indie game designers?

By what primary ethic, and/or model is that poison nullified, or avoided? What publishing model best exemplifies the Indie ethic?

Ron, I'd love to see that essay, even in its unfinished state.

Regards, Brad

Hi Brad,

The good news is that I'd love to provide my thoughts about all the stuff you're asking about in this thread.

The bad news is that the new school year is now upon me and my wife is about to deliver twins. My capability to answer completely and well is very limited.

Since the thread topic arises out of specific values and statements of mine, I'd prefer to address it myself first. I know that dozens and dozens of others can add insights and experiences and nuances. But with everyone's permission (that is not a figure of speech, I mean it) I ask that everyone let me get to it first. My time limits will make it difficult to do quickly.

That's not a moderator point! It's a request with only peer-ness backing it up, not Forge-authority power. I do mean to get to the thread, as helpfully as I can. It may drop a ways down the page before I can really do it.

Best, Ron

Darn, Ron got to it one minute before I posted. Of course my perspective can wait for later just as well as any other, even if the topic is interesting.

Also: Ron, congratulations for the impending family. Usually I get young-guy snide about it, but I can see how fecundity should work just fine for you two. I'd hardly characterize that as bad news.

Ron,

It seems congrats are in order before anything else. Congratulations x 2! Twins, wow...good luck wit dat workload!

Bleary-eyed, and so much the more enlightened, I just finished the last page of the list of archived materials you hyperlinked over in Site Discussion. Thanx...and I mean that!

Of course it makes for a whole slew of far more pointed questions when you can accommodate them. No pressure.

Total Bizarro Request –
Since you're headed back to school anyway, I was wondering if you could point me in the right direction for getting my very own copy (or laying my eyes on an electronic specimen) of a teaching publication (in prep in 2000) entitled Teaching Evolutionary Principles Effectively To Evangelistic-Christian Students? I am sincerely interested in reading it on a number of levels...believe it or not...

Regards, Brad
p.s. - Sorry you didn't get in at least a few pennies Eero, but I think it only fair we all respect Ron's dibs on first crack at it.

Thanks guys! The kiddies are certainly good news for me, but not for this thread.

I'll see if I can get at least an outline-ish answer up by the end of the week. Also, despite all this build-up, please don't expect the heavens to open or anything.

Best, Ron

A little bit of economics

What is a distributor? It is a person/company which buys the books from the publishing companies. This is a true purchase; at that point, the objects are gone from the publisher, who has received all the funds they will ever receive from them. Stores place their orders to the distributor, who supplies catalogues and acts in all ways as the marketer and policy-maker regarding sales to the stores. Then, the store-owners own the books and people buy them there. In other words, when Joe buys your game in a store, he is the fourth owner, and his money is specifically going to recover and add to the cost of purchase by the store owner from the distributor.

This is called the "three-tier" system for distribution. Details vary, but the breakdown of cost is usually in this ballpark: 40% for distribution, 60% for retailer. Let's use my game Sorcerer as an example.

The game's Manufacturer Suggested Retail Price (MSRP) is $20. The distributor buys some amount of them from me, paying me $8 per copy. That's all the money I make on those books; it must be enough to offset my printing, promotional, and shipping costs, or I go out of business. The distributor then receives orders from retailers, for however many copies per unit time, and the retailer pays him $12 per book. So the distributor makes $4 per book, and the equivalent from many companies. The retailer now sells the books at $20 apiece to Joe the customer, making $8 per book. (If he can't move it at cover price, he can put it "on sale" to sell for $10, at least recouping his cost and making a little money. Remember, MSRP has no real meaning; the retailer is free to charge anything he wants for something he owns.)

The terminology for all this is bizarre: the distributor is said to be "giving a 60% discount," which in literal terms makes absolutely no sense. He's buying it at 40%.

The reason for distribution is simple and non-problematic: stores simply cannot deal directly, independently, with every publisher. Invoicing, shipping, ordering, timing, and everything make that impossible. My criticisms of the three-tier distribution system don't stem from its central nature, but from the transfer of ownership and with certain scale issues, which I'll explain a bit later.

Various issues that have often shifted about within the three-tier system include returnability up the chain, responsibility for shipping costs, and the time scale of ordering and figuring profits. All of these are worth whole chapters of history and discussion, and if you're interested, visit the appropriate panels and bar-discussions at the GAMA Trade Show for serious ear-fuls. I'll talk about the time scale in a little bit.

For comparison and clarity's sake, consider consignment sales, in which the retailer sells the book and sends part of the profits to the publisher. Also consider fulfillment, which is the physical act of invoicing orders and shipping the books. Fulfillment should not be confused with distribution. I'll post more about that later too.

There is no point to anyone posting "what [term X] means to me." It's a futile exercise. What I've listed above is how it is, for game publishing. I don't mind being corrected or adjusted as long as we're talking about real economics, but please, leave "gee when I think 'distribution' it means ..." posting for some other website."

A little bit of history

The original role-playing games didn't have a fixed venue. The mall store didn't exist; hell, malls hardly existed. The game materials first began to be available in classic hobby stores, which were small crowded shops in secondary locations (ours, in Monterey, was continuous with a gas station). They typically carried a full selection of train gear, military-colored paints for models and miniatures, trading cards, and everything one might want for building models, as well as novelty items like toy gliders and sundry small objects. They'd recently incorporated a wide range of Star Trek and monster-movie products, mostly rubber novelty stuff and glow-in-the-dark models. The main promotional device for the new hobby was a banner reading "Dungeons & Dragons Headquarters." The trouble for them was a lack of product: the 1,000 copy print run that debuted at GenCon didn't really have much of a follow-up, so exactly what you bought at the D&D HQ was a bit vague: a kid tended to walk away with a staple-bound Judge's Guild supplement, a box of lead miniatures, and a meetup date with local gamers, usually including one or more guys from the local military base.

The first important economic shift included the advent of Lou Zocchi, one of gaming's more interesting personalities, as the first distributor for D&D and soon, other games. I don't really know which is chicken and which is egg, but at this time, whole racks of D&D modules, RuneQuest stuff, T&T stuff, Metagaming (later SJG stuff), Dragon Magazines, and the higher-end boxed-set wargames started to appear at game stores in more upscale mainstream venues, the kind of place specializing in cool chess sets, Fimo clay kits, those semi-abstract wooden dinosaur skeleton models, and "thinky" games based on intricate structures. When the hard-cover AD&D books first appeared ('77-80), they went into Waldenbooks, although I have no idea how that does or doesn't relate to Zocchi's distribution.

Moving into the middle 1980s, more games-specific U.S. distributors appeared, both regional (i.e. several states, like Blackhawk) and national (Alliance; a companion company to Diamond Comics, a comics distributor). Also, games themselves moved into new commercial outlet: RPG-centered games stores, modeled on and often combined with the new mall/strip-mall version of comics stores. This is more-or-less the same commercial situation we see now, which was already stumbling in the early 1990s, to be revived by Magic and the successive wave of similar games, only to stumble again badly in the last few years. However, back in 1990 (a key approximate date for this thread), these shiny new stores were a sure sign to the hobbyist that at least, we had "made it," and they became both sales and social venues for the hobby.

A little bit more economics

Three-tier distribution creates three distinct markets in action: the profitability relative to effort/cost for the retailer (signficantly, taxes and rent), the profitability relative to effort/cost for the distributor, and the profitability relative to effort/cost for the publisher (significantly, printing). The first and the third have literally no contact with one another, and traditionally, distributors will not inform publishers about which stores are ordering how many copies. (Interestingly, the publisher sets the MSRP, which superficially appears to be a link/unifier among the tiers, but remember - that price means literally nothing in the U.S.; the retailer can sell it for whatever he wants.)

The assumption, or myth as I think of it, is that all the tiers are minor modifications of a fundamental market process occurring between publishers and end-use customers. According to the assumption, consumer demand drives store orders, and store orders drive distributors' demand from the publishers. I do not think that any of this is, or has been true for role-playing games.

The reason why not lies in several factors. One of them is each submarket in the tiers system acts as a filter for the diversity available for the next step. However, that filter's "holes" do not operate in any way that is relevant to, say, a customer's needs or interests in the games. That is, what makes a game a successful venture-capital investment for a distributor is not what makes it a successful purchase for a customer. Another factor is the difference between long-term, repeat sales strategy vs. short-term, immediate-debt driven sales strategy. The latter has typically prevailed in hobby game retail.

Therefore, the distributor has no interest in whether the consumer actually buys or doesn't buy a given game in the stores. Repeat sales are of no interest - it's all one to the distributor, because he has a warehouse of more recent orders. What works for him are (a) orders for big-ticket, high-MSRP items, and (b) orders for the next installment of a given sequence of publications.

Here's another wrinkle: the game retailer has no window into the availability of games - what they are, how good they might be - except through the distributor's catalogue. He is, effectively, a captive market: he needs games to sell, and the ones he must buy are the ones that the distributor has to give. The distributor will even tell him which ones are Hot Hot Hot, which is to say, the ones the distributor would be most happy to unload. The retailer is basically the distributor's bitch.

This problem is compounded when one considers the time-unit of decision-making on a retailer's part. It's short: somewhere around six weeks, varying slightly. It's barely adequate for comics; it is 100% inadequate for assessing how well a given role-playing product actually does what it purports to do, per play-group and per customer. Therefore product performance (whether the game is any damn good) plays no role at all in the retailer's decisions about what to order. The retailer paid no attention, whatsoever, to how a customer liked a given game or how much fun it was to play. What matters is the unsold stock - all of it, raw debt, his latest deep-order - sitting on his shelf, and which one this gamer is likely to buy today.

So, effectively, the retailer is screwed from the get-go. He's a debt-bunny, frantically representing the distributor's interests, believing deeply in the existence of the New Hot Thing, and seeking to blame customers and publishers when things don't go well, as they typically do not. I'll have to hold off from discussing (i) desperation measures like deep-ordering based on the ceaseless cauldron of "industry" rumors, (ii) unbelievably poor tracking of actual sales in the stores in both short and long term, (iii) the role of light-fingered fanboy staff in the stockrooms of both distributors and retail stores, and more.

To shift to the other end of the chain, the publisher now confronts this set of doors or hoops even to have his game appear in stores at all. None of the priorities of those "doors" has anything to do with a customer actually playing, liking, and promoting the game itself, among the gaming community. The publisher must accepted, or "picked up" as they say, by a distributor, or his games are just a bunch of paper in a basement. In just a few years following the mid-1980s, publishers either realized they needed to conform to the distributor's economic needs (including the features of dominating retailers) or vanish. Whether this was a deliberate decision or based on imitation of what they saw apparently working, is not important. The realization is apparent in the physical nature of the games. Staple-bound booklets, ziplock bags, and boxes became replaced by perfect-bound paperbacks in the form most gamers now know well, with the AD&D hardbacks essentially setting the standard as the "real men" version of RPG format. SJG, The Chaosium, Hero Games, and Iron Crown Enterprises all illustrate the transition during the late 1980s.

Effectively, a strange kind of supply-side economics came into action. Not the classical form, but a stepwise form operating in both directions from the center. A publisher's success relied solely upon his ability to convinced distributors to carry his books, and therefore, upon his ability to pump out new, periodical product. A new publisher in the 1990s encountered advice cobbled together out of survival tactics, all based on pleasing distributors, but none of which were working anyway. In the stores, customers could only buy what they saw, and they could be easily fooled into thinking a company is "successful" because its books are all over the shelves. They could easily be trained by a retailer to accept him as the voice of the hobby, informing them about what is good and what is popular, not knowing that he was desperate to recoup whatever funds he'd sunk into ordering whatever Hot Item he was effectively told to order.

(more)

More history

By the middle 1980s, a certain power/status structure had appeared among the companies, with AD&D (mistakenly) perceived as a mainstream class of its own, with wargaming companies like Iron Crown and Avalon Hill perceived as the hobby-specific power-hitters (when Hero Games was bought by Iron Crown and when RuneQuest was bought by Avalon Hill, these events were perceived as "success! success at last!"), and with SJG as the innovative, edgy move-us-forward company. Looking back, I think that by around 1986, most RPG publishers had bought their own marketing hype: that role-playing was the Big New Hobby Sweeping the Nation! Hitting it big, or getting into some kind of venue that was supposed to accomplish that, was the brass ring. D&D had "done it!" with Waldenbooks, short-lived as that was; everyone else was still in hobby-land, but if you could get picked up by a real (i.e. wargaming) company, then you'd "done it!" in that more limited way. None of these perceptions were to last past 1990, but they were the cultural foundation for the transition at that time, and that's where the hobby's "old dons" come from.

Given the change in the economic framework and the couple of years it took to sink in, a new context was created in which these older companies were ill-prepared. That context (the three-tier system) is the environment in which our current crop of self-described mainstream publishers came into existence. It informed their values regarding procedural game design and physical game presentation. The leading publishers that I described before - the ones that survived and adjusted the first few years of distributor-driven shifts - all hit the skids by the early 1990s, in various ways, some surviving and some not. Discussion of the very few mavericks (BTRC, Phage Press, a couple others) will have to wait. Discussion of the new companies that arose, including Wizards of the Coast, and these companies unquestioned belief that FASA offered the core model of success, will also have to wait. The fascinating story of R. Talsorian should be reviewed in full.

Other thing that have to wait include (i) the supplement treadmill tactic, which killed many companies and nigh-killed many others; (ii) the scorched-earth tactic, which saved a few companies but also destroyed what shreds remained of any functional hobby based on store culture, and (iii) the few retailers which managed to change their habits and values entirely, and who, not surprisingly, are the most successful stores today.

The content, or actual in-play procedures, of RPGs - what we call "game design" - also tracks nicely to the economic history and the context for publication, up until the advent of "post my game on the internet" as a common and mutually supportive practice. The late 1970s and early 1980s were a time of proliferation of techniques, diversity of goals, and expansion of scope and topic. From then until the early 1990s, several game lines settled into three distinct foundations of design: the AD&D approach, the GURPS/Hero approach, and the BRP approach. Just about all role-playing games built afterwards represent modifications of one of these chassis, and sometimes a little mix-and-matching among them. By the early 1990s, certain syncretic combinations were established, primarily using Cyberpunk, late-stage Champions, and Shadowrun as templates: this is where the so-called Storyteller system comes from. These combinations were now, for all intents and purposes, "role-playing" - a feeble, mismatched, and limited bag of techniques, especially compared to the spunky renaissance 15 years previously. Look over the 1990s game titles, especially those which were released as Hot New Things with promised lines of supplements stretching into eternity.

It's testament to gamer culture's wonderful imagination and drive that a certain spark of novel design did continue to show up here and there in the early 1990s. I can talk more about what that was and why it often failed during 1992-1996. I can also talk about why and how LARPing seemed like an obvious alternative, and why Magic boomed the way it did.

Oh, there is so much more to discuss, which I have to hold off from. The history of GAMA, the Trade Show (not the same things! did you know that?), and Origins; the debates and role of returnability up the chain; the hidden use of outside funds to start up companies and to keep them "alive," and more. I haven't even mentioned the economics of various forms of D&D, which left so many publishers' bodies floating in its wake while being perceived as the flagship of the hobby. My core point, in any of those discussions to come, is to identify the distributor-driven three-tier system, and its features I described earlier, as the unspoken, perceived-as-natural environment in which all these events went through their contortions.

A little bit of recent context

I won't be able to talk in detail about any of the following in this post. Maybe later.

1. The millenium ushered in the general failure of distribution and of many stores (see the retailer booths at GenCon: "Buy 1, get 3 free!"). The first step was when Alliance became the sole national distributor in the U.S., which effectively put all of the inherent flaws of the three-tier system into fast-forward. Another part of the change concerned the interesting beast called the internet, but not in the way that retailers howled about ("stealing our sales!") - instead, it was because gamers could actually communicate about what they played and what they liked. Such dialogue had been silent since the early 1980s. The all-important control over information about the hobby was no longer confined to the retailer environment.

2. D20 represents a whole case study of its own regarding late-stage tactics in a dwindling, dying economic infrastructure. The shift in retailer culture from "why isn't it D20," to "it better not be that fuckin' D20," took only three years. Those three years, though, allowed the next item to occur.

3. The illusory success of D&D was finally outed when its owners, $36+ million in debt, sold TSR to WotC; this was then made more interesting when Hasbro bought WotC, acquiring Magic, Pokemon, and TSR with it; it became even more interesting when Peter Adkison left WotC, bought GenCon from Hasbro, and formed GenCon LLC.

4. A few novel ventures appeared that provided different angles to the system, seeking to work with new publishers in groups. Sphinx Group, Wizards Attic, and Tundra Sales Organization were among the first, and others have appeared since. As I see it, they may be categorized along three independent axes: (a) helpful vs. exploitative, (b) clear-sighted vs. confused, and (c) successful vs. failed. There's lots to talk about. Some of these ventures are incredible, and others are no better than abusive chickenhawks.

5. Annnnnnd, so many other things. (i) New technological formats, like PDF and then POD; (ii) a new meaning for "direct sales," via the internet, ushered into full form with Paypal; (iii) independent publishing modeled on the 'green revolution' in comics a few years previously; (iv) new venues for dialogues among gamers, particularly about game design; and (v) new common ground among customers, publishers, and some retailers.

In conclusion, the three-tier was an artifact of current standards, venues, historical features, and a single legitimate need. That need can now be met in other ways, rendering all the rest completely obsolete. No matter that, as an economic system, it generated a value system which was internalized and still keenly felt. It's done.

In addition to the links I provided earlier, here are some examples of clashes and debates when people who'd internalized the three-tier values system encountered the Forge (please note the dates):
State of the Industry editorial (http://www.indie-rpgs.com/forum/index.php?topic=8855.0)
"the supplement treadmill (http://www.indie-rpgs.com/forum/index.php?topic=10986.0)
D&D specifically (split from Supplement Treadmill) (http://www.indie-rpgs.com/forum/index.php?topic=11075.0)

Best, Ron

P.S. Special note to Eero: none of this has anything to do with you. When you see the word "distribution," please don't hop into the discussion as if you were implicated. You're not. This is a U.S., three-tier, deeply embedded issue, specific to U.S. geography and to the marginal status of hobby game stores here.

I just realized I'd provided the first set of links in the Site Discussion thread, not this one, so here they are:

Phase One, Successful RPG line (http://www.indie-rpgs.com/forum/index.php?topic=979.0) and Channel conflict with distribution-retailers-manufacturers (http://www.indie-rpgs.com/forum/index.php?topic=1033.0); Phase Two, Distributor questions (http://www.indie-rpgs.com/forum/index.php?topic=12778.0), There *is* a problem: POD into retail (http://www.indie-rpgs.com/forum/index.php?topic=17722.0), and The Truth is Out There (http://www.indie-rpgs.com/forum/index.php?topic=19981.0).

Again, please note the dates.

Best, Ron

Oh, I don't cognate myself with American distribution, what a weird idea. I've never even met a distributor. (For those who don't know: I have a hobby of buying American indie games and retailing them here in Finland, all in the interests of developing our local roleplaying culture.) Your outlay here is really interesting, there're angles there that I haven't seen in previous outlines of this kind. All of this is really alien for us here in Finland in practice because there's not much of a retailer presence in the hobby here, as compared to the amount of hobby culture. The single rpg store in each city is far from a defining cultural nexus, and has been to my understanding as long as roleplaying's been practiced here. Things like hobby magazines, conventions and roleplaying clubs are much more important for Finnish rpg history.

I was going to participate here as a publisher (you know, to answer the original questions about the dangers and practice of publishing), but I think I'll hold off for a bit and see what others have to say. Ron's overview of the history of distribution is such a massive lump of material that getting from it to the issues of creator control and the hazards of traditional publishing requires a bit of chewing.

Ron,

First off, thanx for taking the time to write this "brief outline," as I know you're a busy man. I do truly appreciate it.

I'm reasonably familiar with Distribution, Fulfillment, and Mail Order Retail. I worked in those fields out of HS until the techie phase of my life in the early '90s. My experiences with Distributors while in the MOR field (MicroWarehouse/MacWarehouse, etc.) were a mixed bag.

I also saw first hand the ugliness, underhandedness, and unmistakable criminality that accompanied the three-tier model in the mid-90's. That my place in it all was also riding the tech bubble should tell the story well enough.

What I didn't know was how the liquor industry invented 3T really worked for Gaming. My own experiences as a game consumer from the '70s to the present are seen under a different light because of your post.

Yes, my first D&D set was purchased from a place like your gas-station. My first hardbounds from Walden Books. My next boxed set from a novelty store, Spencer Gifts to be precise, and then on to the "we've arrived gaming stores"...and the rest covers your map near precisely. It most especially covers my perceptions as a consumer, and sheds some light on why only one of the Hobby Stores I used to love to go to is still around, but doesn't sponsor the little Cons they used to at CTC. (They sell Cheap Ass Games now BTW.)

While I'm sure that someone out there might bicker with some of the fiddly little details you've presented here...somebody always does...I'd have to say that every bit of what you illustrated makes sense in my experiences...now.

I read the first set of links you posted over in Site Discussion, and will read the rest soon, but have some specific questions now...when you get time.

My perception is that the Indie Model then, and I think we can call it that, has closed the gap in 3T by a variety of means, and addressed the consumer demand issues. From what I can see fine folks like IPR seem to do a great job of retailing Indie Games under a "2T" Model, and at nothing like the traditional and misleading "60% Discount." Even without places like them, I see Indie Designers doing a way better job of rubbing elbows with gamers than any industry save maybe "House Party" consumer goods like Tupperware, Mary Kay, and Avon.

Where is the bulk of the volume in Indie Game sales being generated, eRetailers, Direct Sales, both, or something else?

What sorts of experiences have Indie Designer/Publishers had with Amazon, or Barnes & Noble?

Are Retailers of Indie Games, and as I see it that includes Indie Game Designer/Publishers, making a significant dent in the 3T model mentality within the RPG industry?

Do lots of folks have mountains of product in their garages, and basements?

What do you, Ron, and others, suggest as the method(s) of getting your product to the consumers that want it that best exemplifies the Indie Ethic as stated at the Forge?

Potentially Related Aside –
I went to WotC's website the other day, first time a long while, to get the scoop on 4e. As I suspected they're bringing a pay-per-view online content scheme into the mix for the two pubs they just nixed over at Piazo. What surprised me is that they're doing this "DnD Insider," or "DnDI" thing with 4e itself. I won't be buying any of it, but I can see some of the new kids liking it well enough.

How do you see that new tactic impacting Indie Games? Is it a an effort to keep up with the Indie Joneses?

Brad

Hi Brad,

Here's an older thread about fulfillment companies that you'll find interesting: What the industry needs (by me!) (http://www.indie-rpgs.com/forum/index.php?topic=3050.0) Some of what I was hoping for, then, has come true, although not with any of the players at the time. To be clear for folks who may not be picking up the distinction, neither Indie Press Revolution nor Key 20 are distributors. They warehouse games and fulfill orders for them, but are paid on commission. Both will sell to customers, and both will sell to retailers or distributors. As a very general statement, Key 20 tends to move more books to retail, whereas IPR tends to yield more money through direct sales. So I and a number of other publishers use both. (See the thread The merits of fulfillment houses (http://www.indie-rpgs.com/forum/index.php?topic=20358.0); I initially thought I was the only publisher using both, but was wrong.)

I'll answer the questions that I know anything about.

QuoteWhere is the bulk of the volume in Indie Game sales being generated, eRetailers, Direct Sales, both, or something else?

As far as I can tell, the majority of income is due to direct sales via the internet, whether direct payments to the publisher through his website (or Lulu), or mediated through a service like Key 20 or IPR . That may not be the case for every publisher, though. However, terminology is tricky here. I'm not sure what you mean by eRetailers vs. Direct Sales, and it may not match to what I'm calling direct sales.

QuoteAre Retailers of Indie Games, and as I see it that includes Indie Game Designer/Publishers, making a significant dent in the 3T model mentality within the RPG industry?

I think the question's not stated right. The three-tier system for role-playing games has no structural integrity and no potential to survive, at least not in the form/power it had fifteen years ago. It's just a feeble shadow of what it was even four years ago. There's nothing to make a dent in.

Any number of its players, notably people who'd like to preserve their power-games in the so-called industry, have been sniffing around the Forge for a while. To me, that illustrates their desperation and their confused glimmering realization that something has actually happened in the independent scene, off their radar. I forgot to mention this illuminating thread: Challenges and solutions for the RPG market (http://www.indie-rpgs.com/forum/index.php?topic=17697.0); also, see my arty response, [A PUBLISHING STORY] The emissary (http://www.indie-rpgs.com/forum/index.php?topic=17810.0).

I should also clarify that a number of retailers have changed their ways in the last five or six years. I think I brought some new angles to some people's thinking when I was attending GTS, and Luke followed up on that very well a couple of years later. Even if those retailers continue to use Alliance or whoever, their direct contact with us (the publishers) and their fostering a more consumer-oriented, play-centered culture in their store has basically overcome the three-tier flaws. I absolutely do not want to demonize retailers, partly because they were always stuck in an impossible position, and partly because of the ones whose modern stores are a boon to all of us.

QuoteDo lots of folks have mountains of product in their garages, and basements?

For all I know, some do - but the technology is so different now, that I think many fewer publishers are uncritically paying for thousands of books to be delivered to their front door. There's Lulu, there're lots of POD companies, and many people are getting better advice about how to get their game physically published. The whole thing's changed now. I think a few people still get told "print 5,000 books and have three supplements in the pipeline," but it's rarer and rarer. Such advice typically came through retailers, and GAMA panels; now a lot of those retailers are out of business (or so scruffy that their advice seems less valid), and many of the folks on those panels have finally had second thoughts.

QuoteWhat do you, Ron, and others, suggest as the method(s) of getting your product to the consumers that want it that best exemplifies the Indie Ethic as stated at the Forge?

However you bloody well want. That, and no other, is the raison d'etre of the Forge itself. There is no single "Forge way," and anyone who says there is, I'll stick'em into the horse trough myself. Even if a publisher wants to make the worst imaginable choice, in someone else's (say, my) view, that's up to them. It's their own choice, which makes it Forge-y.

QuoteI went to WotC's website the other day, first time a long while, to get the scoop on 4e. As I suspected they're bringing a pay-per-view online content scheme into the mix for the two pubs they just nixed over at Piazo. What surprised me is that they're doing this "DnD Insider," or "DnDI" thing with 4e itself. I won't be buying any of it, but I can see some of the new kids liking it well enough.

How do you see that new tactic impacting Indie Games? Is it a an effort to keep up with the Indie Joneses?

I gotta tell you, I can't tell what you're asking. We're really talking about different arenas; what Hasbro/WotC does next has nothing to do with me. I can't understand your Indie Joneses reference at all. "Keeping up with the Joneses" is a peer-issue, right? Hasbro and Adept Press aren't even in the same economic universe, and not only because they are big and I am small. I think this issue (whatever it may be) needs to be a thread of its own that's specific to D&D 4E, because such topics have a way of taking over threads.

Best, Ron

Game distribution today is a VERY different animal than it used to be.

Back in the day...way back, there was Avalon Hill, a number of war game manufacturers and a hodge podge of hobbyist historical minis producers. By in large these companies distributed products through general hobby stores and catalog mail orders. Conventions eventually, though I have to admit back then I have no knowledge of what sorts of conventions even existed. The novelty of the hex and counter war games sort of caught on a bit and through the late sixties and early seventies some of those games sort of edged their war into the mass market via JC Penny, Toys R Us and an assortment of other places. They did "ok" in those venues but were never HOT. A few high profile titles made some good money in the mass market, but the bread and butter was made through the hobby markets. Hobby stores would stock historical minis and war game (bookshelf) games in a tiny beginnings of a games section back then.

When D&D was introduced the same venues that sold the historical stuff picked up on the fantasy stuff and it had a ready market...D&D being new caught on like wild fire got into the same mass market venues that some of this historical games had opened up and the more. D&D's rapid rise also gave rise to a whole new field of RPG publishers and such outfits like Meta Gaming, etc. This was happening at the time when the hex and counter war games had already peaked, but the number of titles and number of publishers putting them out was at high water mark. That couple with the new micro games and RPGs as a field made it possible for a decent hobby store to have an entire gaming section within its store. A very large number of hobby stores did so.

At this stage there were few to none dedicated purely hobby game distributors. Games operated as just a category of items distributed through the hobby distributors and game publishers selling direct to retailers was not uncommon. The hobby market in general and games as a category all worked with evergreen type products, with a focus on maintaining stock and selling to a broad base of people. During this time period distribution actually worked. It worked for the hobby distributors, worked for the manufacturers that sold through them and worked for the retailers buying from them. Thats because the distributors could carry a decent portion of what was available, stock it well and thus provide both manufacturers and retailers a good and reliable service.

As the breadth of games grew as a product category under the wing of stable distribution and TSR revenues of the early 80's injected a fair bit of revenue into the system, you began to see a handful of dedicated game stores and then a few small regional games only distributors intend on servicing them. None of these became strong in numbers because games were still fairly niche and RPG players still only needed so many core books and modules before they had what they needed. War game buyers bought products even less frequently, though they had higher ticket prices. Throughout the 80s the number of games only retailers or game/comic hybred stores would grow and the games only distributors would gain a bit of market share, but predominantly the market was still run through hobby distributors and hobby stores. Under this environment the middle tier game manufacturers went through some serious ups and downs depending on forays at trying to put game books and twist a plot novels and other junk through the mass. Small press remained small press, but a number of outfits could maintain sustainability through distribution and con sales, even if not pull in enough revenues to actually support staff...even the mid tier companies at that time largely struggled to accomplish that with any sort of stability. The market got a surge in the mid 80s with Battle Tech, there to pick up some of the slack when D&D began to come off its fad peak.

Things pretty much remains that way until Magic hit. Once Magic began to really become popular a large number of Magic the Gathering shops opened up, more than doubling or even tripling the total number of games only stores. Some of these stores for a while were actually just collectible card game stores only, though those that survived Fallen Empires likely did so because they had taken their Magic profits and actually invested in other stock such as like board games, war games, RPGs and some miniatures. Now, with Magic and the big money flowing through the system from the more than 100 collectible card games released between 94-95 the dynamics of how cash flow affected both distributor and store operations began to change. They both began the need to hold large sums of cash back to "save up" for the next Magic release or other big collectible card game being released. And with the number volumes involved here, distributors had to compete hard for the pre orders on Magic and these other games, thus creating the start of the industry front list focus it has now. Back stock and evergreen products on which the industry had sustained itself on prior to Magic was frequently being forgotten under the new pre order focussed collectible craze. This began the real start of the RPG product treadmill...if an RPG company didn't have a new release to promote every month or two, their entire product line would get forgotten by both distributor and retailer.

The collapse of the "old system" began near the end of 1995, when a very large number of those 100 collectible card game releases had washed out as duds and sudden both retailers and distributors found they had massively huge inventories in dead card products and that they still owed huge sums on those invoices. Both the dedicated game distributors and hobby distributors had been suckered into that position in chasing the CCG fad money. The frenzie of Magic began to slow down so Magic profits alone could no longer help carry that debt burden. As a consequence, fill rates on everything that wasn't the next big Magic release and core D&D products began to falter and the purely CCG card shops began to fold and the distributor had to absorb the loss of mass unpaid invoices and huge inventories of dead product. From late 1995 through the middle of 1998 the existing distributors labored under that debt and struggled to overcome it. Service to most gaming products during that time really waned. GW was a growing revenue stream for the dedicated game stores, so that helped those stores to some degree so you will still find plenty of pre 1995 game stores among the retailers that run well stocker stores today. That diversity allowed them to survive. But even while GW grew leaps and bounds through the massive introduction of large numbers of young players to the industry through Magic, it too was not immune to the distribution difficulties from the massive debt at the distribution level and the faulting service as a result of that and the shift to front list marketing they had migrated to. So it is no surprise that 1995 was the year GW opted to remove itself from distribution and went direct distribution to retailers for a number of years (and remains that way for the bulk of its sales to independent stores). The Armory, Wargames West and Chessex knew they needed that money, so they got together and actually attempted to sue GW for chosing to bypass them.

When the Guild of Blades first got serious about game publishing in 1996-97, we found that some of our best business with sales through the hobby distributors. By then a few had existed the market, but the better hobby distributors were still working their way through that debt. Game distributors were more spotting. Now, through 96-98, another major problem had arisen. Chessex Distribution was attempting to dominate game distribution altogether by dropping its discounts to its strongest retail accounts down to 54% and darn near any retailer could get 49-50% on most products. Of course, to accomplish this Chessex was also going hip deep in debt. I wasn't privy to the logic behind the move nor where they thought they would see profit at the end of that tunnel, but prior to their near collapse and buy out by the Armory (and thus the creation of Alliance Distribution that is the 800 pounder in game distribution today), they had gone a long way towards winning many accounts. However, they had also put the last nail in the coffin to the majority of game distributors and hobby distributors that had been trying to work their way our of the CCG debt load. 1998 was the year 90% of the distribution tier collapsed. It was also the last year that hobby distributors in any meaningful way attempted to distribute game products beyond the hot handful of collectible games of the moment.

The loss of all those distributors cause many games stores on the brink to collapse and many manufacturers went belly up from 98-2000 as well. It put Alliance onto the road to domination in games distribution and effected lost most of us manufacturers any real access to distribution through the hobby markets....a good 50-70% of our pre collectible card games retail market. Additionally, all those hobby stores that previously had a game selection either had to open all new accounts with game distributors to keep their games department or drop that department. Most chose to drop that department rather than deal with the hassle. I suspect the loss of that department has been a contributing factor in why hobby stores have also been struggling greatly since then.

The last real hope of the distribution tier ever becoming viable again pretty much ended when Diamond bought Alliance. Prior to that point, after the formation of Alliance (via Armory buying Chessex), Alliance had been working its way through its back load of debt. Service to non top tier games suffered greatly during that time period and that is when Alliance had essentially moved to a shoddy JIT/Back order practice on most titles and fill rates plummeted to all time lows. Alliance began to dramatically decrease the diversity of games that it offered. Chessex back in the day stocked and sold some 22,000 game titles. Alliance stocks and sells well less than half of that today and maybe even more like a quarter (and maybe even less than that if you got a chance to walk through its warehouse and see what they have zero actual stock on compared to what they supposedly distribute). The hope back then was as their debt load shrank, service to the core of the hobby industry would be restored. After the Diamond buy out, it became clear that Alliance was merely to become a clearing house for the hot collectible games and a handful of top tier RPGs and board games...and their fill rates and stock outs on even much of that is much worse than it once was.

In essence, there is no hobby game distribution system any more. Its a myth. There are a handful of game distribution companies that have little to no interest in servicing the game "hobby" but are there to simply collect the easy cash on the movements of the hot collectibles and front list sales on titles such as D&D. Literally everything else they move through the system they move through with the intent to JIT and back order all inventory and they do that as only as much as they feel retailers will demand short of taking their accounts to another distributor who might. But since no distributors compete on service of core hobby gaming product anymore, there really has been no pressure on them there. The collectible products sell to some 3,000 stores that are a mix of game stores, comic stores, hobby stores and a smattering of other types of retail outlets. And of course, they are just biding time to another collectible like Pokemon comes along when some 5-10K other retail accounts will come out of the woodwork to try and buy said product from them. Meanwhile, dedicated game stores now number less than 750, and stores that stock much diversity behind the minimum "hot stuff" Alliance or ACD try to present to them is more like 250 stores. None of them seem to be taking measures to attempt to revive the lost 50%+ portion of the market and expand game sales back into hobby stores.

So as a independent game manufacturers, you can try and use the existing distribution system, but understand that it is broken. You might derive some short term value out of it, but count on it to sustain any meaningful portion of your business is just asking to be put out of business. Use them if you want, but focus your core distribution efforts on things you can control and which will provide you a stable base to grow your distribution efforts on year after year. Because let me tell you, treading over the same ground you tread over last year and the year before it just to maintain existing volumes through a broken system...done that, its not something I recommend.

So did game distribution ever work? Sure. Largely from the from say 84-94, but the bulk of that functionality actually came from hobby distributors during that time. Service to the core hobby game market has been going downhill ever since and is barely at the point of even being able to lie about it being functional anymore.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Hi Ryan,

Fantastic! Many thanks for contributing this.

It also clarifies for me, and corrects me, about the origins of Alliance. I'd thought it was older, and that Diamond had been associated with it from the beginning. I think I'd confused it with Chessex, backdating my understanding into the Chessex era.

For folks who aren't familiar with these names, if it looks like game companies have nothing good to say about Alliance, then you should check out what comics pros have to say about Diamond. Yikes! During the 1990s, executives at Diamond exercised moral judgments to dictate what did or didn't get through their filter, and thus into the stores.

Best, Ron

Hi Ron,

No problem. I had to deal with the changes in the later half of that directly. Otherwise I've spent a fair bit of time gathering data and old school stories from as many industry old school vets as possible, not so that I could emulate them, but rather so I could attempt to construct an accurate picture of the history of the industry and from that figure out where it was headed. I've always considered clearly understanding the economic forces that affect our market to be critical to my business so I can make the right decisions on where to put our limited resources towards building sustainable growth.

I'm still a little fuzzy on the actual distribution of game products pre D&D. As in I don't know the names of the major hobby distributors from that time period nor do I know even half of the places some of the hex and counter bookshelf games were sold into the mass market department stores. Still trying to ferret out that info but its difficult since most of the industry players from that time are either no longer with us or no longer involved in the industry.

For what's its worth, the Armory's reputation even before its acquisition of Chessex, the formation of Alliance, and later acquisition by Diamond was never a good one either. The folks running that fiasco have always made decision on what to sell and what to promote  based on fast cash and industry politics more than what is good and healthy for the long term healthy of the hobby or the actual interest of the consumers.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Wow, thanx guys. It seems to me that some of the same issues were facing distribution in the tech mail order retail industry in the '90s. In the late '90s I started having to deal with JIT, and "Virtual Warehouse" our pet name for drop shipping. Our inventory went from 156 million to 28 million in a matter of months. We were left bidding thrid party fulfillment ink cartridge contracts with Dell. They declined. No mystery what happened to our staffing.

The company (MicroWarehouse, MacWarehouse, DataComm, etc.) sold twice during that timeframe, and went belly up in 2002 leaving its staff without their last paychecks. Good thing I moved on before then.

I tried looking up our last few large distributors online yesterday. Not a one of them are there anymore.

How do big box Booksellers (Amazon, Barnes & Noble) figure into the mix for the history of gaming?

Ron, by direct sales I meant directly to the consumer from the publisher. Evidently you have another definition. What does it mean in your usage/experience?

Regards, Brad

>>How do big box Booksellers (Amazon, Barnes & Noble) figure into the mix for the history of gaming?<<

Book chains such as Barns & Noble and Borders and their like have had a toe in the water of selling hobby games for a long time. First they sold a handful of the most prolific of the bookshelf war games. These days they generally sell the most prolific of the RPGs (by this I generally mean the D&D core book...usually, and handful of White Wolf titles and a tiny offering of other licensed RPG properties) and whatever is the hot collectible games of the moment. The degree to which each store services hobby games at all varies based on the whims of the person in charge of that department within each store.

Generally speaking, they don't service the "hobby" at all, and just skim the cream of the crop of the highest turning titles. TSR/WOTC, FASA, White Wolf and a few other companies with sufficient enough capital to risk the returns potential of the big book chains carved out some pretty good revenues in selling fiction titles based on their role playing properties (and Battle Tech has had a fair novel line as well). These fiction publications and the core D&D books have served as gateways for new players into the industry in the past, with D&D core book sales owing over half their total sales volume to the book chains. In the past when these new players would then migrate to game and hobby stores for more depth of selection for their D&D and White Wolf, it tended to be a good thing for the mid tier companies and small press because it gave our products shelves in those store the potential to be exposed to these new players as well. More recently with small press all but squeezed out of most hobby game stores, the book chains lend no real value to anyone but the top tier manufacturers.

Amazon is a different animal. Its harder to quantify its impact. In part it allows mid sized and small companies a potential high profile retail outlet to sell their product. But with Amazon's deep discount methodology on product it gets from primary distribution channels, it has also created a perception with many gamers that games should always be discounted 25-30% or more and has played a big part in further turning high profile gaming titles into commodity items in the minds of consumers. This I suspect has had a twofold affect of both weakening the value proposition of brick and mortar stores and created a perception that many small press and indie titles are majorly over priced compared to the product of say a WOTC, White Wolf, etc. When in fact it is merely the inequities of the distribution process that drive Amazon to heavily discount that stuff, but not the titles by smaller companies, creating an additional gap of 25-30% different in pricing on those goods, added to any additional disadvantages that lack of volume pricing the small companies already receive in production.

All in all, my bet is Amazon has hurt small companies more than it has helped. But that's just my feeling and its not something I have any hard data on.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Hi there,

Direct sales is an inexact term. I've seen it applied to any movement of product that doesn't follow the three-tier system. It's even been applied to a store ordering the book from a publisher.

I tend to restrict my use of it to end-consumer sales which don't go through distributor or retail, whether at conventions or through on-line methods that are directly tied to the publisher. IPR and Key 20 count because there are only two owners, publisher and then consumer, and so does POD ordering of various sorts.

Again, though, it's not a defined term, and I'm not claiming to define it here for anyone but myself. That's why I asked, because I needed to understand the possible difference in use.

Best, Ron

Ron,

I see the logic in your definition, and how it contrasts the methods being discussed based on the number of ownership points between the publisher/manufacturer and the consumer.

My use of the term "eRetailer" came from a skewed sense of how folks like IPR, and Key 20 operate. Under your definition, yes, I'd categorize what they do as direct sales, based on the ownership criterion.

Would direct consignment sales seem a useful term to you?

Regards, Brad

Ryan,

Thanx for your take on big box booksellers. My sense is that they have hurt smaller booksellers, and mortar and brick shops on a number of fronts.

Regards, Brad

My brother now works for Top Shelf (http://www.topshelfcomix.com/), an independent comics publisher, and has been dealing with comics distribution for a while now, having previously run the comic library at Reed College.  I linked him to this thread and he responded:

Quote from: Leigh WaltonNot sure what to say. I don't have a real behind-the-scenes view of either the comics or gaming industry. I know that comics has moved through the whole "ignoble origins -> makeshift distribution -> great popularity -> crash -> rise of new generation with unconventional content/audience/distribution" narrative, except that we've appended the additional step of "begin integrating with mainstream industry & audience" that you haven't done yet. Once the important New York editors were convinced, it was relatively trivial for the giant Book Industry Machine to pick up certain graphic novels (Maus, Persepolis, Fun Home etc) and get them into every home in America -- they're just books, after all, and the Machine is designed to push books. Even if roleplaying was able to achieve that (the D&D manuals have made it into nationwide B&N etc), the act of roleplaying is fundamentally something that people aren't used to, and B&N isn't equipped to provide ongoing support for a hobby culture.

Hello,

Leigh's comments can be profitably read in the context of some important earlier Forge discussions. If you check out the threads linked in the post The Infamous Five (http://www.indie-rpgs.com/forum/index.php?topic=9782.0), you'll see that they're divided up according to the forum they began in. The ones I recommend right now are the Publishing ("Mainstream: a revision") and Actual Play ("Actual play in the stores") ones, in which I talk about how store culture and gamer culture promote a ghetto mentality and a pseudo-industry. One of my points is that before the hobby can be more connected to the larger society and economy, or rather if it happens at all, it will depend on whether role-players, themselves, re-connect with one another and with the activity itself. As long as one buys subcultural identity simply by pumping money into marginal and failed business concerns, and thereby one is a "gamer," then there is no hobby.

Comics reclaimed their position as a real industry when the speculator market did what all speculator markets eventually do (pop!) and all those shiny-covered no-story pieces of "hot hot hot" paper were revealed as nothing but paper. The creators of what I call mainstream comics (fantasy, drama, sex, mystery, horror, history, autobiography) just kept plugging along without worrying about or even paying attention to all the chicken-little talk. Finally the people who generated venues for this stuff discovered they'd make money with it alongside the cool political books and the hip zines, and with the superheroes settled into their perfectly reasonable niche in the store rather than fronting and defining it. It took about six years, at most.

Please bear in mind that nothing I'm saying has anything to do with role-playing (a) being liked in some kind of we''re-sorry-we-picked-on-you way, or (b) becoming huge and neon-lit and "almost as good" as movies. I'm talking about whether the hobby is fun to do, whether that fun is demonstrable, and whether demonstrable fun can be monetized. This isn't about taking the current (rather grievously threadbare) hobby and making people stroke it. It's about seeing what's good in it and doing that.

Any answers to the larger social questions will have to come from events, and eventually they will become historical, empirical answers. But I do strongly think that the three-tier system resulted in an impediment to any such thing - first and foremost, starting with separating "owning the next hot book" from "having fun with the hobby up to its its wonderful intrinsic features' potential."

Exalted, I'm looking at you as a prime modern example. Yet another supplement with the unspoken message "This one will make your game fun after all" is nothing but exploitative trash. Whole walls devoted to conning early teens and gullible college kids with that message, over and over. I'd rather see them spend their money on baseball cards, and I don't even like baseball.

When I took a 90-degree turn away from the three-tier as my primary means of sales, and when I made it possible for players of Sorcerer to join a real community of others who did as well (as opposed to an identity-club), the fun + demonstrable fun + monetizing lined up like cherries. As far as I'm concerned, comics met reality in the middle of the 1990s. I'm fully confident that now, role-playing is doing so as well, with some parallels to be sure and for some of the similar reasons, but with quite a few steps left to go. Some of those steps may leave all of us, as individuals, behind, but that's another topic.

Best, Ron

I forgot to say, "Many thanks," Jonathan, because I really appreciate the outreach to related fields and other people, to help us all understand what's happening with our thing.

Best, Ron

Creator-owned publishers (COPs) are almost entirely a subset of small publishers, so what I say here applies to COPs. The commercial viability for a small press publisher of selling through the three tier system depends almost entirely on the volume of sales the publisher makes. If you print large volumes using offset printing, and consumers are chasing retailers for your products, then the three-tier system will work for you commercially. This means that in most cases a COP is better off selling directly, or via IPR or Key20.

IPR and Key20 both offer publishers direct sales to the consumer at MSRP, and both charge a small percentage for this. There is a definite difference between IPR and Key20, in that Key20 acts as a fulfilment agent selling to distributors (in other words, you get 40-45% of the MSRP minus their fee) - effectively adding a fourth tier. IPR sells to a small stable of retailers directly giving publishers a much better margin, but to fewer retailers. IPR only distributes small press games, mainly COPs. A few publishers sell via both channels - but I have no data from Key20, so I don't know how they compare. Maybe someone else can supply this info.

I use Impressions - a fulfilment house. It's been around for a while, and like Key20, it sells to distributors (and some retailers). This is primarily for historical reasons, although they do a good job. I suspect if I sold through IPR, I'd make more margin but sell fewer copies, but I'd rather sell more copies to bring what we sell to a wider audience. If I sold only direct to consumer, I'd need to sell something like a quarter as many, and I think I could do that, but I wouldn't be happy with the number of people playing our games. However, if I was starting out now, I suspect I'd avoid the three tier system altogether.

The temptation is always there once you've reached volume to sell through the three tier system just because it's there, and a few of COPs have taken this decisions (I think Ron is amongst them). How overall margin is affected would be useful data.

In the interests of disclosure, I have a small shareholding in IPR.

Hi Simon!

A couple of the links I provided in earlier posts lead to discussions of the current retail system and the independent publishers. (COPs? Interesting. As good a term as any, I guess.)

Your point about volume of sales is a good one, but there's a hard limit to this principle which needs to be recognized, based on two factors. The first is that there's no guarantee that moving a book to distributors actually gets it into stores, reliably. Warehouses packed to the ceilings with long-forgotten RPG stock are legion. The second is that the customer base in all those stores may well set its own limit to how many you can sell, and this will tell in the time-unit that indicates market success (the tax year). As always, the market speaks: one might print a million books, using your reasoning, only to discover that 9,999,600 of them do not sell in that year, and that only 100 more will sell in the next year, and only 10 after that. I realize that you wouldn't make that error, but looking only at your text in the post, this needs to be brought up and recognized.

I'll quibble a bit about another term, too. I don't think Key 20 is a fourth tier, because ownership is not transferred. It is up to me, for instance, whether to mulch books in their care, or whether to send them to reviewers, or to call them back to my keeping, or anything of that sort at all. Policy over those books is mine alone. If they were a fourth tier, I couldn't do that. They are, effectively, the equivalent of paying a kid down the block to mail a package for me and to give me the receipt. That is not dismissive! That's an incredible and important service, especially since the "kid" is well-known to the "post office." It's another layer, yes, but I think calling it a tier is misleading.

Impressions has a different policy, or it did when I investigated all the fulfillment houses back in 2003 or so. I did not think that policy served the needs of the publisher well at all, primarily because of the ownership issue. I don't know about its current policy, whether it differs or what it is.

To be clear, I think the best policy for an independent publisher is to retain executive control over the product (amount, availability, price, and more, as much as possible) until a customer is holding it. It's not always possible in every particular, but as much as possible is what I recommend.

So! Why participate in the three-tier at all? For me, it's partly historical. Having printed a hard-cover, traditional-technology book, it was crucial for me to move several hundred at least into stores in order to get any kind of profit during that first year (the book came out in July 2001, so there weren't many months), in addition to sales at GenCon. It worked out very well. My plan from that point onwards was, upon the inevitable drop-to-zero of sales in the stores, to stay only with direct on-line sales.

Much to my surprise, which continues to this day, the stores kept selling the damn thing, and the supplements too. My margins are crappy: let's see, on the core book, about $8 per book, off-set by printing (about $6) and commission, so it comes to a dollar or so a book, I imagine. I get regular checks from Key 20, and I know from my accountant that store sales do not cost me money. But they barely break even.

The reason I stay with it at all is pretty much advertising. The books are in the stores they're in, apparently selling slowly but steadily at all times (retailers often mention it to me, that Sorcerer is one of the few "small sales but sturdy legs" games). They're even re-ordered routinely, heavens to Betsy - I'm serious, I never ever ever expected that. So someone is getting the game that way, which is nice in itself, but more importantly, the game is there on the shelf, basically a no-cost or teeny-profit testament to its existence.

Another reason is that a number of retailers have really stepped up to the plate - revising their business practices, revising the culture of their stores, seeking independent games to establish an "indie shelf," and otherwise participating in the industry, with no quotes. They've pursued me when a distributor or warehouser fell down on the job, and they've sought me out at conventions to say hello and to chat about games and gamers. If Sorcerer and Elfs are good games for these retailers to have in their stores, then I want these folks to have them. If, for whatever reason, they require that I work with distributors for this to happen, then that's OK with me as long as I'm not actually losing money.

Best, Ron

Quote from: Ron Edwards on September 11, 2007, 08:38:36 AM
Hi Simon!
Your point about volume of sales is a good one, but there's a hard limit to this principle which needs to be recognized, based on two factors. The first is that there's no guarantee that moving a book to distributors actually gets it into stores, reliably. Warehouses packed to the ceilings with long-forgotten RPG stock are legion. The second is that the customer base in all those stores may well set its own limit to how many you can sell, and this will tell in the time-unit that indicates market success (the tax year). As always, the market speaks: one might print a million books, using your reasoning, only to discover that 9,999,600 of them do not sell in that year, and that only 100 more will sell in the next year, and only 10 after that. I realize that you wouldn't make that error, but looking only at your text in the post, this needs to be brought up and recognized.

Cripes - if you took this as an incentive for publishers to print huge volumes in the hope of selling huge volumes, then others are likely to as well. No, you absolutely shouldn't do this. I've called this the litho print barrier in the past, and to quote me " The scalability of the new publishing model means that although it is very hard to make money, you are much, much less likely to lose it through an expensive litho print run. If you read that someone you haven't heard of is about to print 3000 copies of a new RPG, by all that's holy, stop them."

Quote
Impressions has a different policy, or it did when I investigated all the fulfillment houses back in 2003 or so. I did not think that policy served the needs of the publisher well at all, primarily because of the ownership issue. I don't know about its current policy, whether it differs or what it is.

Impressions is strictly a fulfilment house in the same way Key 20 is, and I am very impressed with Aldo's proactive approach to getting product into retailers via Games Buyer Magazine and now Free RPG day. Publishers own and control their books at all times. Aldo solicits products for the publisher. IPR does not own publisher's products either, so in that sense they differ from a standard distributor.

Quote
Another reason is that a number of retailers have really stepped up to the plate - revising their business practices, revising the culture of their stores, seeking independent games to establish an "indie shelf," and otherwise participating in the industry, with no quotes. They've pursued me when a distributor or warehouser fell down on the job, and they've sought me out at conventions to say hello and to chat about games and gamers. If Sorcerer and Elfs are good games for these retailers to have in their stores, then I want these folks to have them. If, for whatever reason, they require that I work with distributors for this to happen, then that's OK with me as long as I'm not actually losing money.

It's exactly these proactive retailers that IPR is seeking out, so that they have a stocked indie game shelf and an advocate in store. Brennan made it very clear at Games Expo and GTS to retailers that indie games only sell with a distributor who is behind the games. There are distinct advantages to the retailer for treating indie games in the same way you'd treat an individual publisher or publishing category, but that's a topic for another thread.

Quote from: TwoCrows on September 07, 2007, 04:02:29 PMWhat do you, Ron, and others, suggest as the method(s) of getting your product to the consumers that want it that best exemplifies the Indie Ethic as stated at the Forge?

The quote below seems to answer my perhaps poorly worded question above.

Quote from: Ron Edwards on September 11, 2007, 08:38:36 AMTo be clear, I think the best policy for an independent publisher is to retain executive control over the product (amount, availability, price, and more, as much as possible) until a customer is holding it. It's not always possible in every particular, but as much as possible is what I recommend.

It seems to me that creator owned, and published is the core value of Indie games, and creator control of delivery channels a refinement of that value.

While Lulu seems a good option on the point of extremely low startup costs, I wonder if anyone is concerned with them being the publisher of record?

Regards, Brad

Hi Brad,

When I published Spione via Lulu, I used my own ISBN from my own purchased block. So I think that makes me the publisher of record. I think!

Anyone who can confirm or correct me using actual legal-eagle links, please do!

Best, Ron

Oh yeah.

Brad, you wrote,

QuoteIt seems to me that creator owned, and published is the core value of Indie games, and creator control of delivery channels a refinement of that value.

This sentence inspires a weird "this is where I came in" sensation for me. Because, well, it is where I came in. This is why the Forge exists, and why it was invented. Is there some question about that, or some reason why this can be seen as a conclusion of a discussion here?

Especially in this forum, this is why we came here. It's not something that needs to be discovered or teased out of a discussion.

Best, Ron

This seems germane, but perhaps it will become a split topic:

In my talks with the local FLGS owner, he mentions how it can be hard to deal with ordering and stocking COP/POD/publisher-sold books or RPGs simply because of the time it takes him to do all the clicking from site to site and hunting for the "Buy Now" links and filling out forms at each channel. There is also the lack of an account--where he can order things on Net30 or Net60 terms and, thereby, sell some (or all) of it before he must pay the distributor for it--but I don't see that as being critical to his needs, as much as the time expenditure. (But it's NOT out of the question, for the general busniess concept I am about to present!)

So... knowing that, while I read this thread, I got to thinking, "What would bridge this gap?" It seems that a "clearing house" online business that would aggregate orders for COP/POD and then purchase and fulfill them on-the-fly could work for all involved. Yes, this is a form of "distributor," but its cost of operations is, effectively, nil: it runs some servers with some forms that, in turn, fill out other web forms at various sites (complete with per-purchase shipping details) which, thereby, saves the FLGS owner from doing the data entry and site hunting. Thus, it never becomes a "tier," as it never owns anything--it is little more than a portal, an aggregator site.

Then, ANY publisher--indie or not--need only go there and fill out a "Submit Product" form which asks for the actual ordering site and which walks though associating fields at that site with fields on the aggregator site. Thus, it "morrors" the main ordering site BUT it is smart enough to hide things it already knows (ex: my billing info, once I've logged onto the aggregator) and so I am only asked to fill out what I NEED to fill out: how many of what item, to where (and if the latter is my store, then that could be just a "Send to Me" checkbox, not a whole address form).

Further, customers could use this as their main site for shopping and browsing, rather than having to hunt down all these "weird" and varied POD channels, just to see "what's new." The aggregator, again, provides the portal--the unified interface and one-click buying--while the POD/COP/dude-with-stacks-in-basement get its orders through the "back end"--which, in turn, looks just like they expect it to look (because the aggregator site actually uses the POD's own interfaces to commit an order!).

Benefit to FLGS: One-stop shopping for items not carried by a major retailer.
Benefit to consumer: Broad range of small press options on shelves, because the FLGS can easily and at fairly low risk order one or two copies of all kinds of stuff.
Benefit to this business: A SMALL percentage of every order is held, as a "listing fee" or whatever. I'm thinking, like, 0.5%. Cost of operations: one serious web hosting service's monthly fees and some coding.
Benefit to all: Centralized billing, as the aggregator could both bill (Net30, here!) and cut single checks monthly for sales (to the POD, who sends it along to the publisher), reducing total paperwork involved per-transaction.

Would this work, or is this already out there but not being used by FLGSs (or does my local FLGS owner not know about such a service)?

Thanks;
David

Quote from: David Artman on September 11, 2007, 12:29:01 PM
So... knowing that, while I read this thread, I got to thinking, "What would bridge this gap?" It seems that a "clearing house" online business that would aggregate orders for COP/POD and then purchase and fulfill them on-the-fly could work for all involved. Yes, this is a form of "distributor," but its cost of operations is, effectively, nil: it runs some servers with some forms that, in turn, fill out other web forms at various sites (complete with per-purchase shipping details) which, thereby, saves the FLGS owner from doing the data entry and site hunting. Thus, it never becomes a "tier," as it never owns anything--it is little more than a portal, an aggregator site.

You have pretty effectively defined what businesses like IPR (www.indiepressrevolution.com) do.

Quote from: Ron Edwards on September 11, 2007, 11:17:13 AM
Oh yeah.

Brad, you wrote,

QuoteIt seems to me that creator owned, and published is the core value of Indie games, and creator control of delivery channels a refinement of that value.

This sentence inspires a weird "this is where I came in" sensation for me. Because, well, it is where I came in. This is why the Forge exists, and why it was invented. Is there some question about that, or some reason why this can be seen as a conclusion of a discussion here?

Especially in this forum, this is why we came here. It's not something that needs to be discovered or teased out of a discussion.

Best, Ron

Ron,

Hmmm. I'm not exactly sure how to take this, but evidently you see it as important to the discussion, so I'll give it a shot to answer each point from my perceptions.

Where you came in, and where I came in are very obviously different places. This doesn't really have to be said as I see it, and I wonder why you pointed that out.

I have no questions about why The Forge was founded, though without shame, for there is a vast difference between ignorance, and stupidity, it took me a little while to grasp those reasons. Maybe you feel I've yet to grasp them?

If I did have questions about why The Forge was founded, I'd start a new thread in the forum that seems most appropriate for such a question to me ...Site Discussion...and wait for moderation to expose the wisdom of my choice.

What needs to be discovered by founders, and old hands most very probably differs a great deal from what newer participants on the forum feel they need to discover.

Teasing does not seem a common practice in these parts...that's a joke.

It seems to me that the substance of this discussion could be titled "Channel Management Decisions and Indie Game Publishing." The conclusion that I drew was in response to your recommendations concerning creator control of distribution channels, in light of your well documented opinions concerning traditional three-tiered distribution, and most especially your points regarding the criterion of ownership of product within that system.

It was from my perspective that it was seen as a conclusion to not only a discussion here, as in this sub-forum, this thread, but also here, as in The Forge by virtue of the library homework I so dutifully undertook. The conclusion drawn was mine, and at least from the perspective of my aspirations Creator Control must be a member to my appreciation of the Indie ethic/value/modality, if for no other reason than the very illustrations detailing the fate of those who have chosen otherwise.

As I see it, "Creator Owned, and Published" falls down whenever a Distributor becomes the owner of your creation. Likewise, in my perception, it falls down when another company owns the publishing rights, or even record of publication of your creation.

Just adding my opinion to the smelly bunch of puckers. Others may well disagree.

Regards, Brad

Quote from: iago on September 11, 2007, 12:58:10 PMYou have pretty effectively defined what businesses like IPR (www.indiepressrevolution.com) do.

Have I? Hmmm...

"...we selectively recruit the creator-publishers listed on our site."

That seems to indicate that it's not an aggregator but rather it actually qualifies its listings. Put another way, I can't just go there and tell it "OK, here's my sales site at Avalon Innovations--associate to it and list me here." I have to qualify.

But after that... they do not actually stock anything, right? They are mainly a "pass-through" site that submits order to the "real" fulfillment site (i.e. the POD provider, the small-run publisher's order page), yes? In that sense, yes, they provide a "one-stop shop," but not in the sense that one must qualify (i.e. I don't have to qualify to list something on eBay... and eBay is just a pass-though--they don't hold stock to fulfill for me).

Also, if their order submission is in any way "non-standard" as compares to an order the provider receives through its own system, then they also fall short of my model (i.e. their pass-thorough order should be indistinguishable from an individual going to the provider site and filling out its forms).

Am I missing something about the IPR model that is documented somewhere other than the "About" link on their site?

Thanks again;
David

No such service exists currently for hobby games.

You are basically suggesting a virtual distributorship, which I see used in the discount and dollar store markets and other places. Its a viable concept and one I put a group a list of publishers together to discuss a couple of years ago.

If you are serious about wanting to make the attempt, I'll be happy to assist where I can.

Here is a short list of obvious problems that a virtual distributorship needs to arrive at:

1) Consumer orders. Shipping:
Any order containing more than one publisher's products would also incur shipping charges from more than one publisher. No way around this, but one approach would be to use a portion of the virtual distributor's revenue share to give the customer a "discount" on the total shipping cost. It would be much of a discount, but would be basically "throwing them a bone", suggesting they are getting a slightly reduced shipping as opposed to order said products from the individual publishers separately and paying separate shipping.

2) Shipping rates by publisher. Publisher have a wide range of shipping policies. The Guild, for instance, charges shipping based on the dollar volume of the order. Other publishers set weights for each products and then use shipping calculations to base shipping rates for UPS or Fed Ex ground, etc.

3) If you intend to take credit and debit card payments, then the virtual distributor will needs to have a payment processor system. Ideally a merchant account as well as being set up to work with Paypal (and maybe Google check out). This means the virtual distributor will incur payment processing fees, ranging from 1.5 - 4%.

4) As you noted, there will be server fees and also, the level of sophistication involved with coding such a site and the work load will be heavy. I can't imagine a single person doing all of that without at least the prospect of some kind of reward.

5) Charge backs. It happens. Credit card fraud. Somewhere between .5% and 2% of all online sales might get charged back to the virtual distributor ad fraud based sales and the virtual distributor would have to eat those as being the seller of record.

All of these above mentioned costs would need to be covered by the virtual distributorship. Realistically speaking I would think 10% would be a razor thin margin to operate the whole affair on.

6) Wholesale ordering. If wholesale amounts were offered to retailers some sort of process would be required for signing up retailers to with retail/wholesale ordering access (we would want to make sure to average joe wasn't ordering everything at a discount).

7) Wholesale shipping charges. Each manufacturer would have to decide if they wanted to provide free shipping to retailers or if they had a certain dollar volume worth of product they would want to be ordered before giving free shipping. Or they might never want to offer free shipping and want to base shipping amounts on some ratio of sales volume.

8) Each manufacturer would have to be allowed to enter their own wholesale discount structures and to set minimum order amounts. The system would have to be able to keep track of these things and flag minimum order quantities, or upgraded amounts necessary to "hit" the next discount level, or next shipping discount or free shipping order level, to notify retailers of their options. This sort of information would be needed on an individual manufacturer basis and should be able to be updated by the manufacturer. As you can see, we are entering the realm of some fairly complex programming.

9) Manufacturers would all need to have their own login system in order to add and edit products, product descriptions, images, set discount rates, set wholesale minimums, free freight minimums, shipping preferences, etc. Manufacturers also need to be able to flag a product as being out of print or temporarily unavailable due to out of stock. The ability to auto link orders for select products into a POD printer would also be very cool and save the manufacturer the trouble of patching said order info in themselves on a per order basis.

10) What happens when a small manufacturer goes belly up without telling anyone and it takes time for us all to realize they aren't filling orders anymore. The virtual distributor as the entity actually doing the sale, is responsible for this. Holding no inventory means you have no actual ability to fill the order, leaving the only recourse to refund that portion. Part of this can be solved by a system that would send out sales notification e-mails to the manufacturers with sales info and order info and the system would not actually credit the manufacturer's account with their share of the order until they replied to that e-mail, with a reply being an indication they have shipped the order. A reply to an auto address that could receive the data and mark it as shipped and then update the system would work fairly well. And it is assumed that a manufacturer that is out to lunch and folded up shop and not filling orders has probably ignored such e-mails. This would leave the money in the virtual distributors hands making it accessible to handle the customer's refund.

11) Money processing. You can't realistically patch money to the manufacturers on a per order basis, but perhaps could set out an auto cash out system like OBS has where the manufacturer can chose to cash out their earnings at any stage. That leaves them in control of when to cash out as best fits their needs.

Those were the biggest issues that I can recall, but its been a couple of years now so I'm probably missing some key things yet.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Quote from: David Artman on September 11, 2007, 01:16:32 PM
Am I missing something about the IPR model that is documented somewhere other than the "About" link on their site?

Ahhh, no.  I did my usual "read the first paragraph reasonably closely, with less attention paid the more text there is, since the first paragraph caused my brain to run off in a different direction" gig.  Apologies.

I can see all sorts of pitfalls, but I think other folks are detailing those well at this point.

Wow, Ryan... OK, you've clearly thought longer and harder (and with more direct experience) than I have about it. No, I won't be launching this endeavor anytime soon; though you make it sound viable, yes, even as you list the pitfalls. Known hurdles don't scare me; the unknown ones do; everything else is finding the margins.

That said, you think 10% is a viable potential cut... less than an agent's cut, FWIW. I've heard worse.

The flow of money is a bit awkward--though not much different from standard distributor models, excepting the fact that the Virtual Distributor (VD) doesn't ever take ownership. You still have to compensate manufacturers (who have to flow money further down to the authors) and you have to provide all the retailer elements (wholesale, bulk, Net30, etc) with additional consumer-level burdens (MSRP sales, pass-through fulfillment of single orders as well as mix orders and even bulk-but-not-wholesale orders).

I do not think the code integration element is a difficult as you imagine, however. It's basically just a bunch of forms translations--using a "common" form to populate several other, hidden/offsite forms--and, in fact, things like ODBC are designed to handle such things easily (i.e. no need to hand code a solution).

Basically, look at Google Product Search--it's merely an aggregating databases of product listings with pass-through links--and, IIRC, if you run Google Checkout, it will handle the whole transaction for you (yes, including splitting amongst different providers and handling bulk discounts, which is usually just another product item code, retailer-restricted or not). I do not know what kind of cut Google gets for this aggregation service... 10%, maybe? But it would seem they just require some kind of API to your site's catalog, so that they can "crawl" it like they would a web page--and ODBC or MySQL or any number of other transports are available to do these things for us out of the box.

Anyhow... cool to read all those additional details and, thereby, know it's a possible (if maybe not terribly viable) channel for sales. If nothing else, even if it were retailer-only (obviating a lot of the pricing and identification issues, not to mention fraud, possibly) it would solve the basic issue raised in this thread and by my suggestion: that retailers are too time-strapped to hunt down POD and COP sales channels, and that's a large part of what keeps the 3T model alive--those "evil distributors" provide a convenience and centralization (and billing) value-add to the retailer, even while their "Hot Hot Hot-Profit NOW!" focus ultimately undermines the stability of the whole "game store" retail concept.

VERY interesting thread, guys... thank you (I'll be in the thick of such decisions soon enough, with GLASS);
David

Hi David,

>>and you have to provide all the retailer elements (wholesale, bulk, Net30, etc) with additional consumer-level burdens (MSRP sales, pass-through fulfillment of single orders as well as mix orders and even bulk-but-not-wholesale orders).<<

Frankly, I suspect net 30 is a mistake for any sort of online ordering system for wholesale distribution. As the 3 tier model continues to become less functional for the average retailer  and big larger market manufacturers begin to invest in games and take the "high profile" toy and collectible type products through the mass markets and non core hobby channels, the less and less viable the existing brick and mortar retail store business model will become. As such, over the next five years I fully expect to see 50-75% of existing dedicated game stores to be folding up shop. If one is not extremely careful where they extend credit terms then one will lose their own shorts in extended invoices that turn into unpaid bad debt.

Frankly, if such a virtual drop ship distributor with no real financial back bone behind it was to extend dating terms down channel, I expect any "sales" I would be willing to do through it would have to be pre paid to me before I shipped. It *might* be possible for the virtual distributor to bare that credit risk, but no, I doubt it can do both that and all the other functions we listed and stay functional on a 10% cut of revenues.

Additionally, if people wanted this entity to become a well recognized distributor in the market place, I'm going to guess it should likely have a booth at GTS, Gen Con, etc, and do other sorts of direct marketing to retailers and a bit of consumer marketing via other conventions and the internet. These functions cost money also and do have that money, again we're talking about a margin cut above and beyond 10%. Perhaps 15-20%. And suddenly that begins to be enough money that this virtual distributor would either need to be run as a for-profit deal operated by a single company or it needs to be run as an association with a board and such to make decisions on how those operating revenues would get spent.

Is it doable? Sure. But I think it would be a major under taking. Who knows, 2-3 years down the road once we really have built out our online gaming network to full maturity, if no one else has tackled such a beast by then, we might. But I would be just as happy to see it come to be via someone else sooner than that.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Quote from: David Artman on September 11, 2007, 01:16:32 PMBut after that... they do not actually stock anything, right?

No, IPR warehouses physical items and keeps downloadable items on their server. The stock number you see on IPR's item listings are their actual stock. They have a person who then fulfills orders from the warehouse.

Firstly, to everyone who has contributed to this thread, thankyou it's been an enlightening read.

I've been apart of the Australian Roleplaying community for over 15 years now, and have been a part of a fairly large consumer electronics distributor/retailer (with over 350 stores, and sitributing to a hundred more). So I've seen the 3 tier model in action, I've also seen the "rise and fall" of roleplaying through a number of waves. I'd never really thought to put a lot of this stuff together, so this thread has been a true thought catalyst for me and things make a lot more sense.

So a few points...

1. Now I understand why a few game publishers didn't want to touch my work in the early 90's when I had a good idea for a one-off product that didn't "NEED" supplements. At the time I thought that supplements would just dilute the ideas that I had.

2. I had always considered selling a product into a distributor as a method to keep the industry growing while expanding the market range of my eventual product. I figured that it was the distributors who kept the lifeblood of the economics flowing, while the retailers were the front line who needed the support of the distributors whom I was in turn supporting. It was always the 5000 print run that stopped me from ever getting serious about the project. I've realised in more recent years that this was no longer a reality, but thankyou for dispelling this illusiory barrier for me.

3. As a follow on to point 2, I had always been told that 10% was a decent expected return on sales for the author of the work. And I remember a few friends who were published by "major companies" during the early to mid 90's who didn't even recieve that much on their first book because this was considered their test run. It's good to see that this is no longer considered the case.

4. I guess it's time to get back to writing and illustrating if I hope to have a polished game out by next year.

V
A.K.A Michael Wenman

Hello,

Threads about this stuff often get people talking "saving the industry." David, your posts are goin' in that direction this time, and I understand the concern and the reasons for what you're saying.

However, it's not necessary. Nothing needs fixing. No one has to make sure that retailers can do X, Y, or Z. No one has to save stores. We don't have to make the three-tier viable in some way. Right now, an independent role-playing publisher can see his or her game enter the market, and for whatever reason, it may or may not do well for that publisher. The good, even great news is that the game will not be stillborn or arbitrarily strangled because someone who was neither publisher or customer didn't get their needs met by it. That is, in a commercial context, pretty much all that one can ask for: the opportunity for the product to be bought and and used,

Adding the lion's share of the profits, and control over how much one wants to invest in it at any point, well, that's the independent side. But the wonderful thing, I claim, is that this is the industry: people writing games, people buying games, people playing games, and for all these things to be directly connected. Retail stores are an add-on which are, no punches pulled, a risk assumed by a person who hopes it will pay off for him. It may or it may not. But if that store fails, then the real industry remains. The stores, and any system of stocking those stores, is not, itself, the industry.

If someone wants his store to be viable, then it needs to be effectively founded on the real industry. That's where the stores and the three-tier system as a whole fell down. They didn't connect player enjoyment of games to sales-policy about games, and in fact, removed any such connection. They therefore removed actual customer demand from the entire process. A fake kind of policy-making or arrival at "what's popular" came into existence among publishers, distributors, and retailers. A fake kind of demand among gamers came into existence based on what retailers and industry magazines told customers, and a fake kind of fun came into existence among them too, primarily based on brand loyalty and sunk cost, as well as on a culture of silence about actual play.

There is no reason to help or save any of this. The issue is not the retailer's lack of time to find POD companies or to hunt down promising titles. This is not a mere logistic thing. The issue is that the retailer, with some exceptions, has no idea which customers are actually enjoying the games they buy, and which ones. Most retailers cannot even think in this direction; they are so addled by debt-stress, their culture of lies and rumor, and dreams of Magic Again (and the energy of denying how that worked out for them last time), that they cannot think at all. The exceptions have found that the independent games are readily and easily accessible, and that people like Jason Valore and Brennan Taylor do not lie to them. They don't lie about the books' availability, they ship on time and without hassle, and they don't pretend that the books will make anyone rich, either.

Ryan wrote that he expects 50-75% of existing games stores (of the kind we're talking about, RPGs and related) to close soon. I agree with that, but will also point out that over the last five years, a comparable percent of existing game stores before that closed. In other words, we are not talking about Doom Soon for the three-tier system. We are talking about Doom Arrived And Almost Over.

The dysfunctional retailers and their commitment to the three-tier system cannot be saved: it's like jolting a corpse with electricity to make its walking reflexes kick in, briefly. Whereas the functional retailers and their commitment to their customers, and their recognition of quality products and services, have no problem that needs saving in the first place. And whatever system they might come up with to facilitate their stores' success is on them to conceive and to implement. Not on us.

The foundation is the hobby-activity itself, based on actual play and on dialogue about actual play. A subset of the hobby is design, and a subset of that is the industry: commerce based on design and presentation. As long as this industry remains fully embedded in the culture of real play, then it has a chance to be viable. As long as money can be made, relative to money and effort invested, then that industry remains viable. No one knows how much money can be made; that's an empirical thing which plays out over time, and must be treated as a constraint (i.e., no speculation based on false promises, no expectations of living wages until they actually appear, and similar).

OK, so with that said, the potential store-owner has to say, "How do I hop onto this?" The first thing to do is to forget all talk of the industry as he has been hearing all his life.

It was all back to front, before. Role-playing's existence depended on sales at the stores, we were told. Stores' existence depended on the distributors' economic well-being, we were told. Publishers' existence depended on distributors' economic well-being, we were told. No distributors? Oh, well then, there'd be no stores and no publishers, so look, there'd be no role-playing. All of this was and is a sickening, stupid lie. Michael, this is what you encountered and why your desire to publish was aborted - literally, killed by people who were committed to this lie.

Now, the reality is naked and obvious for anyone who cares to look. If Bob wants to run a store which sells these sorts of games, he must keep the store policy (all of it, but particularly atmosphere and particularly ordering policy) close to actual play and actual publishing. But Bob needs to realize the truth in its entirety: that his store is an added feature to an existing, viable, small-scale but consistently successful industry. If he wants to make it work, and if he wants to find a way to make it more successful for him, then more power to him ... but the industry  doesn't need Bob and his store.

Best, Ron

Hi Ron,

This is an interesting topic and its always difficult to predict the role and the shape of future markets.

The way i see it, distribution is becoming obsolete for a couple of reasons. While they have offered consolidated warehousing and shipping, the even bigger role they have traditionally offered was consolidated information flow down channel. The value of that information flow has come into direct conflict with distribution's desire to for JIT inventory practices and gate keeping traditional hobby lines while focusing on high turn speculation based purchases. With the rise of the internet enabling more information flow and easy to access information via web pages and e-mail, the value of distributor consolidated information flow has radically decreased and its has also shown the end consumer how their buying options have been being filtered out by the system. This had led to rapidly growing dissatisfaction by portions of the consumer base with the role the retailer is playing in the market. No distributors are offering product based on a specialization of a particular product field (ala, specializing in a niche such as stocking all CCGs, all Board games, All RPGs, All OGL, All Indie RPGs, all War games, All Miniature games, etc), so regardless of the number of distributors to chose from, essentially even if ordering from all of them the retailer can not thusly specialize themselves. This means they are unable to satisfy, adequately, even one segment of the overall buying audience and instead are providing half hearted service to all segments.

Coupled with this situation you have seen the various categories of games grow massively in popularity and consumer awareness over the last decade and a half. D&D, War Hammer, Magic, Pokemon, Yugio and Clix have had long term presence in the mass market and been the primary focus of games stores for so long, that most any kind in America will know of their existence, weather they play them or not. Manufacturers in generally have grown, especially among the big market leaders with the multi millions of dollars of capital and a diversification of retail outlets, leading to a proliferation of the total number of games available. but smaller companies have grown as well, also in part due to a proliferation of titles available, made possible in part due to better education for small press start ups and the availability of POD and In house production options and electronic distribution. I see a much healthier selection of small publishers in not just the small press/indie RPG category, but also in war games, board games and PDFs. Back in the day a company such a Tri Tac was considered a prolific and successful "small press" and in that role was lucky to gross near $50K in a year and pocket 5% of that in profits. These days a number of small press companies blow that $50K number out of the water and a great many smaller companies can at least equal or get near that $2,500 profit zone due to more efficient inventory and distribution sales practices.

What does all this mean for the future. I believe the major distributors will ultimately collapse. A number of very small regional distributors will survive and they'll do so by eventually learning they can't base their business on the product flowing around them to the mass and will return to offering backlist support for the hobby or at least targeted product segments thereof. I believe upwards of 75% of the current crop of retailers will fold because they no longer ave a viable competitive position in the market with their current product focus. It will simply be a race to see which of them die before the product flow from distribution dies and which of them get killed of by the fall of the distributors. Back in the day many hobby retailers ordered games direct from manufacturers and in todays indie family board games arena, that is still how it is. I know a couple mall based game stores which order direct from well over 100 vendors per year. But after being spoon fed by distributors for a decade and a half, 95%+ of game stores cite they just can't handle the world load of ordering direct. Obviously we have stores that prove it can be done, so what they are really saying is they refuse to do the extra work that entails, even if it can be healthier for their business. And it is an attitude like that which will lead the retail collapse more than anything else.

However, post collapse, the survivors will have been those who learned how to specialize in hobby gaming products once more and will have learned to go through whatever product sourcing efforts necessary to provide strong service to their local customers. I do agree with you that there are, these days, many viable ways for a manufacturer to sell its products and it doesn't actually need retailers. Our own rapid rise in sales and profits the last three years is proof of that, as we went from one part time staffer to four full times and a couple part timers, while reducing down from distribution based sales to about 150 stores to direct distribution to less than 3 dozen and focusing on internet sales. But I do believe stores that survive the crash and learn to shed themselves of the current B&M retailing model will still be a valuable part of a manufacturers overall distribution strategy. Such stores will retain the ability to engage with younger consumers, introduce our games to them and win them over to our brand and style of games opposed to the collectibles that will surely still be flowing through the mass. There will remain a handful of regional distributors to service these stores and these stores will have to be much more willing to order direct what their distributors can't fiscally carry (for lack of capitalization or for products falling outside of the product categories focused on by particular distributors).

I believe store presence come that time will allow some small businesses a greater opportunity at growth than a comparable store presence today allows. I believe manufacturers will have a closer relationship with the stores they sell through and there will be a greater air of cooperation between the two with said efforts. The ability to "survive" without these stores will continue to rise for energetic small press who pursue direct and other sales channels, but after the "flush" out of the current mess, the market that reforms will be much more akin to what existed 15-20 years ago, pre Magic, only driven by the sorts of vital data that today's technology can enable.

I think working with a second or 3rd tier is not necessarily bad, but I think it has to give the manufacturer much better control of where and how their product is sold and how it is displayed and promoted at the retail level. Data has to flow back up channel to allow for better business decisions and the middle tier has to act like the partners to manufacturers rather than exploiters of such. With the wide range of alternative means to sell our products and the impending departure of the mass market game leaders from the product mix, distributors will have to facilitate product flow on those terms or they will fail to provide the sole function in which they have value.

Small manufacturers will still be at a disadvantage to handle direct to retail sales as we enter that market for lack of cost effective shipping options and due to a small number of titles offered for sale. IPR and Key20 could handle those direct sales, to a degree, but they still act as gate keepers in the same fashion that the current distributors do (albeit with a different set of criteria), so it would be nice if something like the virtual distributor concept could eventually develop to allow all small press potential access. Really, such a venture would still only provide centralized ordering and information flow, but no real marketing, so the marketing aspect and mertis and flaws therein would still have to be borne by the individual manufacturers, which they should be.

Of course, all this becomes moot if they can ever develop a Star Trek like transporter and we can "distribute" our products at the press of a button. Eagerly waiting for that day. :)

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Quote from: guildofblades on September 08, 2007, 12:51:25 PM
I'm still a little fuzzy on the actual distribution of game products pre D&D.

Ramadan is nearly over so my brain is beginning to work. Great thread!

My understanding is that in the 60's games started off being distributed through the Gift distribution system. This system still exists but we game makers don't seem to be involved with it as much.

Chris Engle
Hamster Press

Hi Chris,

I'd like to know what that distribution system is. Start from the ground up, because I have no idea.

Best, Ron

Quote from: TwoCrows on September 03, 2007, 10:55:12 PM
I'd be interested to read people's latest takes on everything that is wrong with the "traditional publishing model" as it relates to RPGs.

The ability to self-publish a TRPG, and self-distribute it means that you can sell a lot fewer copies and make the same amount of profit.  Since it is unlikely that any new TRPG will ever garner a mass audience, selectively selling to just those people who will buy direct from the publisher is likely the best strategy to pursue to maximize the return on the publisher's resource investment.

The "traditional publishing model" assumes that there is a mass audience of consumers who are actively shopping for a new TRPG to play, and that providing those games via a wide retail footprint is the best way to generate a return on resource investment.  The "price" a publisher pays for access to the retailer footprint has become so large, as a percentage of the real return, that it has become too expensive to use except for a small number of TRPGs.

Luckily for the publishers, in the unlikely event that a TRPG actually DID spontaneously generate a mass market interest, demand for the game can easily be met (there is vastly more production capacity available than is used, so a virtually unlimited amount of books could be printed as needed), and the distributors & retailers are compelled by the market they serve to bend over and make virtually any accommodation required by a publisher making a product that is actually in demand in large volumes.  So you don't even need to buy the "insurance policy" of having your product in the distribution system.  IF you win the lotto, and IF your game becomes The Next Big Thing, you can use the whole complex hobby gaming infrastructure when it becomes rational to do so, regardless of how much you participated in it before you got lucky.

A lot of mistakes people made in the past: color vs. b&w, book vs. box, make a whole new system vs. licensing one, plus a lot of technical challenges (laying out the book, preparing images for printing, etc.) have become either inconsequential or easy to fix, making being a publisher much easier than it has ever been.

Ryan

>>The "traditional publishing model" assumes that there is a mass audience of consumers who are actively shopping for a new TRPG to play, and that providing those games via a wide retail footprint is the best way to generate a return on resource investment.  The "price" a publisher pays for access to the retailer footprint has become so large, as a percentage of the real return, that it has become too expensive to use except for a small number of TRPGs.<<

Hi Ryan,

Would you say the same holds true for most other games segments as well. Such as board games, standard alone or expandable card games, miniatures games, etc? That is if you aren't already one of the top couple of brands tat the structure of the distribution system and a publisher's ability utilize is for broader distribution is inherently too inefficient for the costs involved?

Thats been my experience. The Guild got into the gaming business small scale in 1996 and distribution sort of worked for us, on a small scale, the first few years. If you disregard the disruptions of steady service due to all the closures and consolidations, that is. But post 2001 or so I would say the cost to benefit ratio of using that system began a dramatic slide downwards. In 2004 we gave up the effort entirely and began focusing our efforts purely on direct distribution methods instead. Direct to the consumer and direct to a hand picked group of retailers that held the sorts of stores we felt would justify the expense of marketing and distributing to them. The result was like suddenly removing a damn holding back an entire lack and a massively and steady trending upwards in both sales and profitability.

I've begun, myself, to assume that the 3 tier system is only remotely economical for the top tier companies and in fact the "mid tier" that everyone cites as being the group dependent on it are actually just being hindered by it due to their willing reliance on it. If those companies began developing more direct distribution methods they would actually have an easier time expanding their reach. Smaller companies can only succeed by circumventing the system. Attempting to rely on the 3 tier system for them will lead to short burn out.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

Quote from: guildofblades on October 10, 2007, 05:28:02 PM

Would you say the same holds true for most other games segments as well. Such as board games, standard alone or expandable card games, miniatures games, etc? That is if you aren't already one of the top couple of brands tat the structure of the distribution system and a publisher's ability utilize is for broader distribution is inherently too inefficient for the costs involved?

No.  Especially not for a TCG.  If I wanted to publish a TCG, I'd do it with the 3-T system in mind. I'd just be sure to raise the $500K required to print & distribute using that system and the attendant marketing costs before starting the business.

Boardgames I think are actually the place where the 3-T system works best.  Boardgame publishers invest relatively little in channel marketing, and rely on the attraction of the boxes to sell the games (this is essentially what most books do; the "marketing" is the money they spend on the cover images & design).

Everything else I think is on a case-by-case basis, depending on your goal.

Essentially, if you think your sales will be <$100K in 2 years, you self-distribute.  If you think sales will be >$100K in 2 years, you use the 3-T system.  There are exceptions (on the upside); there are some games likely doing a lot more than $100K revenue rates that are being self-distributed.  There are also certainly A LOT of games doing less than $100K revenue rates that are in the 3-T system; however, those games are just mistakes, not indicators of a viable business.

QuoteThe result was like suddenly removing a damn holding back an entire lack and a massively and steady trending upwards in both sales and profitability.

Would you mind quantifying that?  Are we talking millions of dollars of revenue, with hundreds of thousands of dollars of profit, or hundreds of thousands of dollars of revenue and thousands of dollars of profit?

Ryan

>>Boardgames I think are actually the place where the 3-T system works best. <<

Ah, on this we would have to disagree. I think the 3 tier system works just fine for top tier board games like Axis & Allies, Settlers, etc, but not so well for non top tier titles. From my own experience, the performance of board games and role playing games through the 3 tier system have mirrored themselves fairly closely, perhaps with a slightly larger number of stores willing to try out new board games as opposed to new RPGs.

>>Would you mind quantifying that?  Are we talking millions of dollars of revenue, with hundreds of thousands of dollars of profit, or hundreds of thousands of dollars of revenue and thousands of dollars of profit?<<

Sure, I can talk ball parks anyways. I don't have a detailed break down on our 2007 numbers thus far, but I can give fairly accurate estimates off the top of my head. I can give you three snap shots of our company at different stages of its distribution history.

1) Our absolute best year through the 3 tier system, with regards to gross revenues achieved, was the year 2001. That was largely achieved through a very aggressively new product release cycle, which we figured was essential to managing that system and getting the most promotion and access to stores. That year we gross around $60K and had, sometimes, a one time staff member (myself) during that period. Revenues minus COGS and an extremely part time salary allowed for an annual profit of about $5k. During that time period we were moving 90-95% of our product volume through the 3 tier system with the rest flowing through convention sales and mail order. Mail order was a tiny aspect of our sales at that time, but likely still comprised 25% or more of the actual profits.

2) By 2004 the distribution system had stopped working for us completely. The cost and hassle to get distributors to pay enough attention to actually publish pre order information and then place timely pre orders and orders for product upon release was tremendous. Additionally, a great deal of time was spent trying to hand hold retailers through the process of finding a distributor who actually hadn't gone out of stock on the titles they wanted. That drag on time, energy and expense to "manage" product flow through the 3 tier system simply did not justify the effort that was being placed into. That year we gross around $55,000, but a shift in those revenues had begun. For one, we had largely stopped presenting at conventions because we were finding more success in handling online marketing. Further, of the retailers that had continued to stock our product in spite of the spotty availability, almost all of them were kept "in the loop" from direct communications via us, largely over the internet, and not by any kind of information flow coming from their distributors. By 2004 our web presence had begun to mature a bit and due to major problems in getting product through the 3 tier system and available to consumers who were looking for it, by default many had come to buy it at the one place they could find it: our web site. Another major difference in our fiscal structure by 2005 was that we had purchase more equipment for production in house. The overall result was more than $15,000 of those revenues that year came from direct orders and because of our in house production capabilities, we had a much lower COGS to handle that volume. We had the same one part time employee, but overall profits had grown to over $12k. When you drill down and look at the costs, all distribution based sales had broken even for the year due to the extreme costs of working within that broken system and all the actual profit had come from the direct sales. A couple months prior to the end of 2004 we decided if we were going to continue doing business with the 3 tier system some things would have to change and we created a wholesale contract which none of them chose to sign. So by the end of that year we had moved out of the 3 tier system entirely.

3) From the end of 2004 to present we had focused on direct sales and diversification of our revenues. When we actually began to pay attention to direct sales efforts we found a receptive audience and began to get a more complete picture of exactly how badly the 3 tier system had failed to deliver product where we had created market demand. Sales more doubled in the course of just a few months and just kept on rising.

For 2007 if things continue on course, we are looking at hitting the middle 300's. We employ 6 people more or less full time. Now, all of that revenue isn't purely from games, as we've diversified to generate a number of other revenue streams, including advertising revenue, membership fees, local printing jobs and warehousing and order fulfillment and a couple others. But 2/3rds of that revenue is still coming from games. The difference now is that 90%+ of the games are sold direct online, none are sold via the 3 tier system, none are sold at conventions, a small portion is sold at wholesale pricing to preferred retail accounts, an approximate equal amount is sold via drop ship retailers and a tiny fraction is sold to non preferred retailers through our online ordering catalog. We also move a bit of older games and one off projects through PDF downloads, but those currently gross less money than every other sales channel excepting direct to retail sales done by our non preferred store ordering catalog. With some of the plans we have now, its unlikely that 2008 will see as much revenue from gaming as from other sources, but I see no reason why gaming revenues won't continue to increase.

A couple years ago we took a very detailed look at the cost of doing business through our various sales channels and what we arrived at was that a single game unit sold online generated a bit over 4 times the profit that the same unit did sold at wholesale.

Regarding unit volumes, back in 2001 at the peak of our 3 tier sales, our best sellers were moving between 800-1200 units in their first year. These days our top seller for 2007 might hit 700 units while the "good" sellers are clocking in around 400 to 500 units and the lower profile games around 150-200 with accessories at 100 or less. Its clear that we could not be running the company that we do with a catalog of just a few games.

A continued observation of the market tells me that game stores continue to close and I'm not really seeing any massive innovation in the present business model that suggests to me an ability to grow and thrive in the future. At best it seems the larger, more professional, best stocked stores can survive the market pressures being brought against them, barring anything like WOTC or a handful of other top tier publishers all collapsing at once and taking the distributors with them. With those numbers continuing the decline, the value proposition offered by utilizing the 3 tier system continues to decline as well.

Meanwhile, games, comics and their IPs continue to have broader access to other media and licensing opportunities, the ability reach consumers online continues to improve and opens up MUCH broader audiences to a company well positioned online. POD technology is expanding sales outlets and PDF product is still very much an emerging market with a lot of future opportunities. The broad appeal of fantasy like computer games like Everquest, the Final Fantasies and now WOW coupled with past major exposures to Pokemon and then Yugio has many non traditional markets more willing to snatch up game properties to sell. While this leave the major mass market outlets to the industry's top tier, its also opening up lots of smaller alternative sales channels for enterprising smaller publishers.

But yes, I can see your point about TCGs. The same could likely be said of any major license coupled with a collectible gaming product. Because the 3 tier system can be used to reach an awful lot of smaller retailers besides just traditional gaming retailers. They can reach general hobby retailers, comic stores, indie music stores, gas stations, etc. All this really says is that the business of the "game distributors" is primarily selling top tier brands to non game stores rather than committing resources to servicing the core market better. They themselves don't really feel there is enough fiscal reward in trying to cultivate and support the core market, so why should we?

My last observation is, when trying to chase retail based sales, it doesn't matter what terms you offer retailers. We've offered 60% discounts, free shipping, free catalogs, free POP displays, no cost product exchanges and now even currently offer minimum price terms to protect their profit margins. But If they don't personally "like" your product they won't sell it. That is with very, very rare exception. Heck, some of the games we sell "I" don't like, but I'm not in business to fondle my darling creations, I'm in business to create games that people will play and to make money.

Ryan S. Johnson
Guild of Blades Publishing Group
http://www.guildofblades.com
http://www.1483online.com
http://www.thermopylae-online.com

There are many kinds of stores in the US that concievably could carry games. Hobby stores, Comic book stores, game stores we know but there are also greeting card/gift stores, museum gift shops, candy stores, educational product stores, heck even children's toys stores (of the boutique variety not Toys R us). Obviously many of our games are not appropriate for these venues but they might be.

I heard the story of Tactics II years ago. The grand-daddy of all military board games. The publisher thought there would be interest in a board game for adult men. At that time games were largely directed at kids. They made the game and sold it through gift stores. Gift stores can range from Spencers Gifts (that might actually go for some high end RPGs) to Greeting card stores, to mail order companies that sell all those bizarre electronic gadgets and golf equipment (that I keep getting in the mail - odd since I never order anything from them.)

Each kind of store type has a distribution system behind it. I know that there are the Toy Fairs in New York and Chicago but there are also Gift fairs in every region of the country. My wife and I were considering going to one this December but probably wont because we won't have our shit together. I can't say that I know any more about these systems that anyone else - just that they exist and have worked for selling games in the past. I believe that they are healthy systems. They are not operating on fad boom and bust cycles like the game distributors are.

Sorry I don't know more. I'm still exploring the matter.

Chris Engle
Hamster Press

One other distribution method I spotted at GenCon was a company called Simply Fun (http://"http://www.simplyfun.com/") who are selling games using the Tupperware model.They have even hired an ex-Tupperware VP. I chatted with the owner. The idea is that they will bring games into peoples' homes, demo them and sell them. I think this is a really, really good idea. It could work for roleplaying games.

I know a guy who tried to be a semi-professional GM via this type of route.

People would call him up for a game, and he'd charge them a nominal fee per player per hour. He was a university student during the day, but three nights a week he had regular fortnightly gaming groups, and if his study load wasn't too hectic he'd get regular players who would call on his services to introduce new groups of friends to the hobby.

After all, if your first experience is with someone who is good, then it gives you a better chance of continuing in the future. There were weeks when he'd pay his rent just with these "gaming funds", mind you those were weeks when he'd offer his services every weeknight and run two or three sessions each day on weekends.

I don't know how well this would work with actually selling the games, but selling the service of providing the games is definitely viable.

I lost contact with this guy a few years back, but I've heard that even though he now has a decent paying job he still hires his services out once every week or two to groups who are looking for a break from their regular games.

I guess that it's people like this who are looking at new avenues of distribution who will help the hobby evolve in the long run.

V