Not-For-Profit Gaming Company?

[Ted E. Childers]

Being a Johnny come lately, I've only recently stumbled on an interview with John Tynes about the gaming industry.  In his interview over at Ogrecave.com (http://www.ogrecave.com/interviews/johntynes.shtml) he was asked what he would do differently when he started Pagan Publishing.

Here's what he said:

Set it up as a not-for-profit corporation instead of a for-profit corporation. The key difference in this regard is that a for-profit corporation expects to provide rewards to its owners, which has never been an expectation we've operated under; being not-for-profit doesn't mean you can't still hire freelancers, pay salaries, sell books, etc. We could have set this up as a not-for-profit instead and saved a lot of paperwork and taxes over the years. Also, I would have done a new RPG years earlier. We wasted a lot of time.

Has anyone else ever thought about operating this way?  Do the pros of a not-for-profit acutally outweigh the cons?  I was floored when I read it, but it seems to make a lot of sense in a D20 entrenched market.

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[b_bankhead]

Has anyone else ever thought about operating this way?  Do the pros of a not-for-profit acutally outweigh the cons?  I was floored when I read it, but it seems to make a lot of sense in a D20 entrenched market.

  Of course the obvious comment is "thats how they usually operate..."

[Ron Edwards]

Hello,

Welcome to the Forge, Awesomeizer.

[Side note: b_bankhead, terse and flip commentary is never welcome here. Especially not to a new poster. Where're your manners! Seriously.]

I was surprised to find that for-profit expectations are rare in role-playing publishing. Given that, I suppose Tynes' notion is superficially valid.

However, I've always taken a profit-oriented approach to Adept Press (even before it was Adept Press), and to date, it's been successful.

Best,
Ron

[John Wick]

Hello,

I was surprised to find that for-profit expectations are rare in role-playing publishing. Given that, I suppose Tynes' notion is superficially valid.
Best,
Ron

Ur...
I've never heard of a not-for-profit RPG company...
Am I just on the fringe or what?

(The idea is compelling...)

[Matt Snyder]

At risk of stirring the pot a bit further, all while being totally unaware of whether a non-profit group is feasible for publishers of RPGs ...


What if a consortium of game publishers / designers formed a non-profit group for the publication, fulfillment and distribution of their games? It might be rather like an co-op, perhaps. Members pay dues, then the co-op "board" oversees the production and publication of a book. The book could be nominee one, or -- better yet(?) -- could be a compilation book of several games in one. All profits of the publication go to compensate an editorial staff (editing, layout, fulfillment, marketing, etc.), or even more simply roll back into the next book or project.

I'm not really suggesting we -- or anyone -- DO that necessarily, I'm just tossing it out there as further consideration for the non-profit idea.

[contracycle]

I started but abaonded a post on this before... my thinking is that as a profit making industry RPG is too small, and the fact of the matter is that, given how much is self-authored, we have only been going down this route to have something printed and distributed.

So, I too think that it is possible that, on the basis of print-on-demand and PDF and whatnot, a volunteer umbrella group which acts to consolidate resources (bulk purchase effect) and ccordinate activity is quite possible.  Big voluntary groups do exist and do work, they just need a clear social contract and official elections and so on.  

But there are some downsides; this is the death-knell of the FLGS as we would no longer produce physical product.  Maybe thats no big deal, maybe it is.

[Valamir]

Matt, I hinted at this idea in the Wallis thread with John.  I think its a great avenue to explore the possibilities of.  Order taking and payment collection for direct sales have become incredibly easy via technology.  Its fulfillment that's still a labor intensive PitA (save for PDFs which if their use was universally accepted would make even fulfillment incredibly easy).

Seems to me that every group I've heard of that will "handle fulfillment" for you does so as a third party looking for a profit.  Obviously...

But it also seems to me that there ought to be a way that a number of like minded small and mid tier companies could combine their fulfillment needs in such a way that they aren't duplicating the same cost center functions.  By spreading out the expenses and charging realistic amounts for shipping and handling, there should be a way to pay for space and a fulfillment person so that it essentially breaks even.  That is doesn't incur the excessive cost of trying to establish a fulfillment center by your self and doesn't involve giveing some distributor a large chunk of your potential revenue to handle something as routine as shipping.

I've just been throwing ideas around in my head, but it seems to me that if each publisher through 100 copies of their product into a central "warehouse" (likely just a closet at first) and payed a $1-2 stocking fee; and shipping and handling were charged at an appropriate rate, that between those two sources, the entire fulfillment center operation could be paid for free and clear (with a sufficient number of participants for economies of scale).

At that point you have a system that is efficient and has access to a sizeable liabrary of games, particularly if they are games by designers with name recognition among retailers and fans.  Not all, but a sufficient number of retailers should become willing to order those games from your website to be fullfilled by your fulfillment center directly...cutting out the distributor and their cut entirely...the retailer can get a bigger cut and the publisher can keep a bigger portion.  The added profit per book should go a long way towards making up for those stores who continue to refuse to order that way.

If you have enough product with enough quality with enough hype with enough designer cred being only available through such an alternative source, game stores will have to get on board or explain to their customers why they can't get game X that everyone is excited about.  But if the retailers make more money per book too, eventually that number should be less.

At the very least I think if enough "name people" got involved, the distributors would be forced to take notice and make some changes in their business practices...which would be a success in an of itself.

I don't know enough about the mechanics of it to know how every detail would work...but conceptually I don't see a reason to assume out of hand that it wouldn't.

[b_bankhead]

Hello,

Welcome to the Forge, Awesomeizer.

[Side note: b_bankhead, terse and flip commentary is never welcome here. Especially not to a new poster. Where're your manners! Seriously.]

Okay how about this? In a quarter century of looking at the shelves of rpg outlets I have seen hundreds of little oblivion press and nowhere games march across those shelves and into the bargain bins of rpg history.  Pretty much all of Ron's 'Fantasy Heartbreakers ' are this category In this field a 'gusher' amounts a company of  a handful (or less) of guys living on crackers and beans for the privilege of being the creative Viagra for the rpg public.

 Thus this has made he somewhat cynical about the very concept of conventional profits in most of this field.  And that goes for the latest great white hope d20. How many of the 5 different d20 superhero systems or 3 different cyberpunk systems (that came and went) made money?  How many different prestige class supplements can POSSIBLY make money?  Wasn't the whole idea behind the OGL basically that this ancillary stuff was too unprofitable, and that the suckers who try to make a go of it will actually build the value of OUR core product if we simply make it possible for them to compete with EACH OTHER to do so.
read Dancey's lectures on RPG marketing , this is literally what all the blather about 'market externalities' boils down to.

However, I've always taken a profit-oriented approach to Adept Press (even before it was Adept Press), and to date, it's been successful.

Best,
Ron

  Really I am nothing short of amazed to hear this. To be honest a little $20.00 hardbound that seemed as far from D&D as anything I could imagine had all the earmarks of 'Fantasy Heartbreaker' in it's own way.  The single copy I saw at a nearby game shop  sold (to whom nobody least of all the shop manager knows) but I had really no Idea of how it was going overall.  

  Well I definitely think that new marketing models are ESSENTIAL to the field getting out of this funk.  So if Ron's found one more power to him...

[Ron Edwards]

Hi b_,

Yeah, I forget occasionally that you haven't been around here long ... several recent games illustrate a new level of success in role-playing publishing.

It begins by defining "success" as "staying in the black" relative to your costs. It continues by adding "... time unit" depending on the publisher's own plans and needs. I like to add "people continue to play the game" as a corollary or underpinning, because I'm idealistic that way.

Sorcerer is, in these terms, very successful. Adept Press makes enough money to fund its new products. Occasionally things are tight; this past year, I blew a lot of bucks on the big GenCon Forge booth, which largely promoted the success of others at the expense of Sorcerer (in terms of booth sales), and that redline corresponded unpleasantly with the demand for my second print run. But in the main, I do very well, both in direct sales and at the stores.

Sorcerer's sales profile is to sell slowly and consistently. Persons A and Q buy it, and over the next couple to six months, they play it. Some or all of their players buy it during that time. Word of mouth about these games percolates across friends, and eventually persons B and R buy it, and start up their groups. This continues steadily without evident slacking.

Another good example is Obsidian, from the Apophis Consortium. Another is Little Fears. Another is The Riddle of Steel. Another, although with a proviso or two about its own production costs, is Orkworld. All of these games have demonstrated enough store and direct-market power to meet "success" in my terms, or rather, in the respective publisher's version of my terms.

However, "success" in my terms (staying in the black, can afford the next book, people play the game) doesn't mean jack shit to most retailers. To most of them, "success" means Pokemon, for a couple of months. Or it means everyone who already owns D&D buying the next D&D book. They think in terms of relative quantity, comparing games against one another, rather than in terms of long-term use, comparing games against their own costs.

Sorcerer therefore is perceived to do well in stores which track customer satisfaction over the long-term and pay attention to continued sales based on that satisfaction. Role-playing takes a long time to organize and carry out; word of mouth about real play takes months to occur and more months to have an impact. Store owners who track "spike" sales only and fail to re-order anything else, if they think about it at all, think Sorcerer is a little by-product which ought to have vanished by now, and if they wonder briefly why it hasn't, maybe they incorrectly assume that it's vanity press (funded by some external source) and forget about it.

So basically, Adept Press is a hobby (insofar as it's part-time) and a business (insofar as it's profit-driven). It's a fine source of cognitive dissonance for people, but it's viable, and it's not a fluke.

As a thought-experiment, I suggest that you consider which "success" you are using. Considering the fairly high level of bitterness and disillusionment you've expressed in previous threads, I suspect that the store version has embedded itself, perhaps without your full consent, into the value system you're using.

Whups - this has been something of a detour from the post's topic. Back to the non-profit idea, eh?

Best,
Ron

[Mike Holmes]

So, if I have it correctly, the advantage of the non-profit company idea is that you only get taxed once on the income? Do I have that right? If so, why haven't more companies gone to this model. I thought that you couldn't legally hide profits from taxes this way. That to qualify for "non-profit" status that you had to be a charity, or public service (CPB) of some sort?

I think a lot of confusion here is that I'm not sure we're all on the same page as to what "non-profit" means. Can we get some clarification?

Mike

[Le Joueur]

That to qualify for "non-profit" status that you had to be a charity, or public service (CPB) of some sort?

I think a lot of confusion here is that I'm not sure we're all on the same page as to what "non-profit" means. Can we get some clarification?

I'm pretty sure the National Football League is actually a non-profit organization.  Probably the American League and National League (baseball) too; I think for them it allows collective bargaining and such.

I don't really know what a "non-profit" is outside of charities, but they are definitely there.

Fang Langford

[jrs]

I am definitely *not* an expert on non-profits, however, it's my understanding that there is nothing wrong with a non-profit orgainization making a profit.  Regulations governing non-profits deal with how surplus funds are used.

I've been browsing the Nonprofit FAQ at the Internet Nonprofit Center: http://www.nonprofits.org/npofaq/
In particular, checkout the section on "Can a nonprofit be a business?", http://www.nonprofits.org/npofaq/01/01.html

Your friendly librarian at work,
Julie

[contracycle]

Looks good.

Two Basic Types of U.S. Business Organizations:
For-Profit and Nonprofit

For-Profit Organizations
A for-profit organization exists primarily to generate a profit, that is, to take in more money than it spends. The owners can decide to keep all the profit themselves, or they can spend some or all of it on the business itself. Or, they may decide to share some of it with employees through the use of various types of compensation plans, e.g., employee profit sharing.

(We'll read later about the legal forms of a for-profit, including sole proprietorships, partnerships and corporations.)

Nonprofit Organizations (the following information, in large part, was developed by Putnam Barber, President of the Evergreen State Society in Seattle, Washington)
A nonprofit organization exists to provide a particular service to the community. The word "nonprofit" refers to a type of business -- one which is organized under rules that forbid the distribution of profits to owners. "Profit" in this context is a relatively technical accounting term, related to but not identical with the notion of a surplus of revenues over expenditures.

Most nonprofits businesses are organized into corporations. Most corporations are formed under the corporations laws of a particular state. Every state has provisions for forming nonprofit corporations; some permit other forms, such as unincorporated associations, trusts, etc., which may operate as nonprofit businesses on slightly (but sometimes importantly) different terms.

--

So the actual What To Do would be find out how to file papers under state, federal and potentially international levels.

The major distinguishing feature is that there is no owners equity, no extraction of revenues based on having invested.  There can be pay and benefits (but not for the board it seems).  You can't have performance-linked pay.  The board should be composed of the clients served by the NP; this would be a point of making a clear distinction as to the role of publisher I guess.  

I reckon it could be done; it would take work, some of it legal.  There would have to be a very clear mission statement and articles of association.

[Ron Edwards]

H'm,

Is anyone else thinking "fulfilment house" thoughts, especially in terms of small press direct to consumer?

Best,
Ron

[Valamir]

Small press sure.  That might be the place it HAS to start with people who don't already have vested committments to the status quo.

But for it to ever become something more than a small time experiment (potentially a very useful and successful experiment for those of us using it) it would really need to attract interest from the mid level players.

Ultimately if the "success" of such an endeavor is to be broader than "did it allow me to get my game to my customer" it would have to grow to the point where it provided a "proof of concept".  In other words, once the pioneering had been done, the distributors would be forced to reevaluate their business model to account for this new alternative.