The Power of Free

[Seth M. Drebitko]

So I have been doing some research for the Serial Design Challenge over in the Endeavor section and figured it was prevalent to the publishing section. A resource I found interesting was here http://www.webcomics.com/home/2009/9/29/webcomics-and-the-economics-of-free.html where the 4 types of free are mentioned for purposes of monetization. The types of ways people monetize their free content:
Cross-Subsidy:
This is the most commonly used method, where people direct their customer money to other products. These are your t-shirt, and book selling operations and even the ransom model has been used by webcomic operations. The trick being used by webcomics for ransoms is that while the core is free a related possible side story would be released om exchange for the ransom being met. In our end of things this could mean fiction, or even an adventure series could be released.
Third Party:
In this model things are primarily utilizing advertising, affiliate programs. Other than that it's pretty simply a case of optimization.
"Freemium":
This is one of those struggling models in which the best of the content is reserved for subscribers. The pitfalls the model faces is that the core benefit to giving your core material away is to generate more buzz. By hiding away the best of the content you're locking away the parts that will probably generate the most buzz. Though the model can be useful dependant on the audience or how you choose to offset your free content.
For the love of...:
For some it's just about the love of creation and they are not looking to monetize. These people are totally awesome and rock bet heck I am talking about monetization here.

So while I have conversion going on over at the project forum http://www.forums.goplaynation.com I would also like to get some opinions of how we might be able to take these webcomic principles and apply them to what we are doing from a general perspective.

[Dan Maruschak]

"Freemium":
This is one of those struggling models in which the best of the content is reserved for subscribers. The pitfalls the model faces is that the core benefit to giving your core material away is to generate more buzz. By hiding away the best of the content you're locking away the parts that will probably generate the most buzz. Though the model can be useful dependant on the audience or how you choose to offset your free content.

I think using "quality" as the separator between free and paid content is a mistake, but it's worthwhile to consider separating your fan base into highly-invested and low-investment segments and providing different product experiences to them.

In the "sell an identical product to everyone at the same price" model that most indie RPGs are using right now, your most ardent fan buys your product for far less than he'd be willing to pay (sometimes even less than your average customer, if you offer bundle discounts, etc.), and your marginal fan (maybe somebody who's only buying your RPG because the rest of his group wants to play, and he's just going with the flow) has to pay a price that's barely worth it to him. Basically, there's a traditional economics 101 "demand curve", where a small number of people will pay a high price and a larger number of people will be willing to pay a low price (there are other psychological factors that would complicate the analysis, but for the purposes of this thought experiment...). With commodity-style pricing, you have to pick one price point that satisfies somewhere in the middle. If, however, you can customize your product experience and pricing for different customers you can capture more of the area under the demand curve to maximize your revenue. Bringing this back to the real world, D&D has historically done this by offering one book that everyone needs to have (PHB) and two books that only the more involved customers will buy (DMG and Monster Manual).

Applying this to the "free" models: You can provide something for free to everyone, and provide different non-free content to the deeply-invested people that makes the overall experience more compelling for them. For example, if you have a traditional D&D style game, you could provide the player rules for free to everyone, and maybe even free pre-designed adventures, but charge for the instructions a GM would use to create his own adventures (assuming this can't be trivially reverse-engineered). Then there's a low barrier to entry for players and GM's who just want to give the system a shot, but a revenue path for people who become deeply-invested fans and want to have more of a hand in their specific experience. Finding the right balance (so that the "free" product is still compelling and not an artificially limited version of the for-pay product, and the for-pay product is actually a good value for the money) could be very tricky, though.

[Callan S.]

I'm gunna get philosophical and say you need to look at doing it for the love, again.

Or put it this way - say the market is saturated with entertainment. The market does not want your crap.

If that were the case, it is not rational to pursue money in that area. It's simply is not rational. And to try and honestly discuss rational income methods when your working from an irrational base premise - that's a stupid thing to do.

Now coming back to how things actually are, the market basically is pretty much saturated. And so, as much as it's saturated, it is fairly irrational to try and make money in it and best move on - the mine has been cleared of ore. But let's be honest, neither me or you are moving on, are we?

When your working from an irrational base premise, it's not about rational income streams, it's about managing your own irrational behaviour. It's about looking at your own irrational behaviour, whatever it is, then seeing if there are methods which garner some chance currency out of that behaviours content output.

There may be ways - there may still be a hidden stream of ore in that mine. But you have to accept that it's not rational to dig in that mine if you were genuinely, rationally pursuing money. Instead your doing it because you love that particular mine.

So I think you need to look at your love of it rather than looking outward at fiscal models. Because if there is a secret stream of ore to be had, your going to find it via some secret part of your love of it. You need to look inward instead and chart that love, gently looking at it's nuances and compare them to market demand, seeing if any perhaps forfil some as yet untapped vein. Or find one that matches the least tapped vein you can find.

I think all the methods you describe are leverage models, rather than income models. Once you have a product that gains income, they can be used to leverage that and gain even more income. But leveraging nothing still gives you nothing.

[Seth M. Drebitko]

Well the love of it all is really my thinking behind wanting the do the webcomic model. I don't really care about making money from my game, but at the same time I don't want to miss a potential opportunity to get something in return. In this way I get to do what I love design setting, and game stuff and let as many people enjoy it as possible without having to worry about those not willing to spend more money on a new game.

[greyorm]

That's sharp, Callan. Good mention.

[pells]

Comments on those models :

For the love of...:
For some it's just about the love of creation and they are not looking to monetize. These people are totally awesome and rock bet heck I am talking about monetization here.

I guess this is a prerequisite !!! That said, why no try to make money out of what you love ?

Cross-Subsidy:
This is the most commonly used method, where people direct their customer money to other products. These are your t-shirt, and book selling operations and even the ransom model has been used by webcomic operations. The trick being used by webcomics for ransoms is that while the core is free a related possible side story would be released om exchange for the ransom being met. In our end of things this could mean fiction, or even an adventure series could be released.

This is kinda of tough !!! You really need to have a solid fan base for this. Webcomics model uses t-shirts, videos, even comic book (here's an example of one guy, who I think, manages to work that well : Ctl Atl Del). Maybe TSOY, if you consider the printed copy as a subsidy, did that thing : release the rules under CC into a Wiki and sell a printed book, illustrated with more examples and a good layout.

Third Party:
In this model things are primarily utilizing advertising, affiliate programs. Other than that it's pretty simply a case of optimization.

I do really, but really hate this one !!! First, it is very difficult to make money out of it (then again, you would need a lot of traffic, thus a large fan base). Second, you lose some control over the content of the website (those damned ads !!!). Third, and this is the worst : third parties, to generate "clicks" will tend to provide links to your competitors !!! So, you want to generate money, but, in fact, you're advertising your competitors ... thus dragging people out of your website. This is particularly true of MMO online : people play a little, get tired of the game and then go play other games they discovered thru the links !!!

"Freemium":
This is one of those struggling models in which the best of the content is reserved for subscribers. The pitfalls the model faces is that the core benefit to giving your core material away is to generate more buzz. By hiding away the best of the content you're locking away the parts that will probably generate the most buzz. Though the model can be useful dependant on the audience or how you choose to offset your free content.

This is my favorite one !!! BUT, be careful :
- Upgrading based on content is a bad idea !!! That might work for "large audience" website, like FlickR : you get some storage, and, as a premium service, you get more storage. About 5 to 10% of the "customers" go for it. That might be enough (well, not really, as no one makes money, except porn maybe), but with a "niche" audience, this wouldn't work.
- True enough, you don't want your customers to pay as to enter the "store". So, how can you do this ? Promoting your best stuff (showing it) and still have something to ask money for ?
- Think in terms of "service". You don't provide more content, you provide something else !!!! Something that would add values to your content !!!

For example, see the "mobile phone" model : they give you for free the phone, because that is not what they are selling. They are selling a service (the use of the network). Also, note that this service is scalable : some only want to speak a little, others will buy data package, more hours to talk, video download.
I think we also need something scalable as to address all your customers needs and financial status (what they are willing to pay). The real stake here is : delivering the right content to the right customer.

Well, that said, moving from paper to the web, and from the web to a service is not that easy. I really think it needs to be address as soon as possible, even in the design process. And you need to think wisely about the free stuff : what and how.

On a last note, you might check this out about webcomics (a little old, but still pertinent, and read part 6 too) : http://www.scottmccloud.com/1-webcomics/icst/icst-5/icst-5.html

[Callan S.]

Well the love of it all is really my thinking behind wanting the do the webcomic model. I don't really care about making money from my game, but at the same time I don't want to miss a potential opportunity to get something in return. In this way I get to do what I love design setting, and game stuff and let as many people enjoy it as possible without having to worry about those not willing to spend more money on a new game.

I think you can spoil things for yourself and your creative vibe here. I mean, how much money do you want to make - no one ever has enough money ever!! There is no native 'enough' with money. And thus your game will never be making enough money and so it'll be attaching disappointment to the creative process

Unless you put a cap on earning money and decide for yourself what is 'enough', like an amount per month or such like.

You can't just wander toward money because the idea of a return sounds nice...money is rather like a drug (particularly because you can never have 'enough'). You have to go in thinking about how much you want to take...otherwise it tends to start deciding for you.

[Seth M. Drebitko]

I do really, but really hate this one!!! First, it is very difficult to make money out of it (then again, you would need a lot of traffic, thus a large fan base). Second, you lose some control over the content of the website (those damned ads!!!). Third, and this is the worst : third parties, to generate "clicks" will tend to provide links to your competitors !!! So, you want to generate money, but, in fact, you're advertising your competitors ... thus dragging people out of your website. This is particularly true of MMO online : people play a little, get tired of the game and then go play other games they discovered thru the links !!!

Yea I would have to say any "advertising" would preferably be extremely focused, like affiliate products, as well as carefully selected ads.

Unless you put a cap on earning money and decide for yourself what is 'enough', like an amount per month or such like.

My goal for defining "monetary" success is $100 dollars a month which would cover hosting, art and showing up at some cons from time to time. However money is not a concern to me if I could get a super enthusiastic AP every single month that would be worth it.

That being said I still would not want to miss an opportunity to miss out on some extra dough.

Micro-payments are interesting and I have honestly never really considered them definitely something to look into.