Self Publish with Fraxion Payments

[Danny2050]

Hi folks. I've been roleplaying since shortly after the first D&D brown box was published. I have played a number of indie games and I am a big fan of Universalis. I want to see more indie games and more experimentation.

A few years ago my friend Chris and I started an internet game company called TowerGames, which features pay for play wargames. It hasn't changed the world yet but it was a nice hobby that pulls in more than it costs to run. A year ago Chris suggested taking the Tower Games technology for payment and applying it to online journalism. The result of that suggestion is Fraxion Payments.

Fraxion Payments works at the moment as a plugin to WordPress. With it you can place a marker within the content of a page or post and readers cannot see past that marker until they pay. Payment is in "fraxions" which are worth approximately one cent US each and the readers buy them in blocks of 100 or more using PayPal. Once unlocked for a user that page is permanently unlocked for that user.

Fraxion Payments also has a central catalogue of web sites, to give users with a few fraxions to spare places to go and spend them. We are going to be expanding on this catalogue over 2011 to make it automatic and to provide meaningful search capabilities and a recommendation system (like you see at Amazon for example).

Anyway I can see uses for Fraxion Payments in self publishing of RPGs. Have a look at these sites for some ideas:

KwikReads A site that sells short stories by multiple authors. The site owner collects royalties and distributes them to authors proportionate to their sales, after taking a cut.

BattleAxe Books has a whole novel online with Fraxion Payments locks on each chapter, bringing the cost to unlock the whole novel to about $2.80.

Some discussion about pricing is probably a good idea. Do you match the shelf price of equivalent books? Do you work out the margin you would get on a physical book then add back the Fraxion costs to arrive at a far cheaper price? If sales are slow do you bring the price down or does that damage the perceived value of your game?

Let the discussions begin.

[Mathew E. Reuther]

There are also access-level permissions that can be configured in Wordpress allowing users to unlock sections. Essentially allowing you to offer subscriptions to sites. This is also something worthwhile to consider if you're thinking of doing some kind of online publishing.

As for discussion of payments, what precisely do you mean? Standardizing what x pages of x type of product should cost?

[Seth M. Drebitko]

This seems very interesting, especially from a freemium style web comic model. First thoughts are that your fee structure seems far to high; a 40% cut is huge when your talking micro payments! lets say I set an adventure up and let people pick what parts of it they want to use. Say they only want the monsters I created for it and drop 50 cents in. Under your fee schedule I would need to sell well above 650 copies just to meet pay out.

Is it possible to get the source for this whole thing as a white label set up so gamers could avoid such huge fees on their micro payments. I am not trying to put your system down as it is something I would be very interested in being able to use where in I could control my own network and avoid costs that make it non functional.

[Mathew E. Reuther]

The biggest issue with micropayments is the fact that merchant fees are large. Any of you who handle Paypal already know that you're losing a lot of income per transaction to them. Micropayments ARE supported by Paypal now, but to be honest they are NOT exceptionally good, and are really only perhaps beneficial for $5-$10 payments. I suspect part of the reason the cut is high is because Fraxxion is absorbing that merchant fee. So Fraxxion is maybe cutting 10% . . . doesn't seem all that off to me if that's the case.

I didn't read deeply, so I may be talking out my ass. (I'm not that interested in charging per page for anything.)

[Seth M. Drebitko]

True, but I think there is less room to charge large fees on a service where many free, or cheap one time payment, options exist. I just think it should be very carefully considered by interested folks if they are able to meet the high payout requirements and things.

[Danny2050]

Fraxion Payments fee structure is a sliding scale, based on volume, and yes the high % on low volumes is to cover our costs. Don't forget we absorb the PayPal charges so the Fraxion percent is the only cut of the value of fraxion used for the purchase. Larger scale volume becomes equivalent to the royalty payment for prominent authors in the book industry. Don't forget that as purely online sales you don't have the physical manufacture and distribute costs. Anyway, our position on percentages is only the first stab, we shall keep an eye on how this plays out. www.KwikReads.com has made some cash for its authors already so we are starting to get some data to review.

A big advantage with the Fraxion system is that once a reader has some faxions in their pocket, spending them is a single click affair. That allows impulse buying and it seems to work that way.

So, down to a nitty gritty example of pricing considerations. When I bought Universalis it cost $15 for the book afew years ago. I don't know what their return was on that sale but lets say it was $5. To get the same return with fraxion lets assume that it there are only low volume sales that have a 40% cut for fraxion, so the return for the author is 60% of the sale price. That means the online sale price is ($5 / 0.6) = $8.34. That gives the same $5 in the hand after a sale.

So, then a question becomes, does that lower price, but in a different medium, equate to more sales, fewer sales, or the same? Factors that might influence this is the breadth of the physical distribution, the ease of using the game right off the screen instead of printed and in your hand, and the number of potential customers willing to buy content online.

Of course, breaking the book into parts, as with Handar, brings new considerations. The first is one of buyer confidence in the product. If you buy it all in one hit, how confident does the buyer have to be to purchase it, compared with buying it in parts and evaluating each part? Does the many parts method annoy buyers or do they appreciate the process? Although that means that some sales of the product may be incomplete, only the first few parts purchased, its possible that those incomplete sales may not have ever been complete sales in the other method.

What about the sales volume? There are discussions about print run sizes elsewhere on the forum that should be considered when trying to predict likely sales volumes. On the other hand online sales systems have the potential (IMHO) to increase the overall market size for indie games. At the very least the Fraxion Payments catalogue will bring new customers into the arena. Some innovative group marketing could also help.

And no, sorry, we aren't going to give away our code to let you avoid using our expensive to develop commercial product ;-)

[Mathew E. Reuther]

Conventional wisdom seems to be PDFs are to be priced a) free with paper product, b) low cost (10-25% of paper product) with paper product purchase, or c) 60-80% of paper product.

This appears to be tied directly to the author/publisher take on what the use/value of the pdf is.

I do not see any reason why I would change the price of a product based upon the method of payment. A book costs what it costs. There are methods which are preferable (direct fulfillment) due to higher margins of profit, but that does not mean you don't want to see sales from other sources, so it makes no sense to undercut yourself simply because you have access to a different payment gateway.

My take. May not be anyone elses' but I see no reason why this would cause any real shift in what I'd price a book at. And again, I'd go with a sub, not a micropayment for access to premium content online. Personal preference again, I like the sub model better.

[Mathew E. Reuther]

Damn the lack of an edit button.

I also meant to add in the fact that 40% is high for a digital cut, and VERY high for something coming off your own site unless it is a tiny amount of money. As I understand it 35% is about the typical cut for a digital reseller for a pdf which is non-exclusive. On a $10 product I fulfill for myself using paypal, it's 5.5% to 5.9% depending on if I'm using their microtransactions plan or their standard plan. Even dropping to a $1.00 product, I can self-fulfill via paypal for a 10% cut with their microtransactions plan. Comparing that to your 40% seems like a huge bite for what I cannot at this time see as a compelling pool of exposure.

I am not saying you're not going to be adding things people will find attractive. I see merit in the idea. I just question the math on the percentages for the amount of work you are actually doing. Essentially setting up a gateway website, making a merchant account, and handing out a Wordpress plugin. Now, if for example you became a destination site, then you could up the percentages, because what you are providing is exposure, which is far more than just operating as a central merchant with a specialized technology addon for a single platform. (A platform I personally use, for the record, so it would arguably be very easy for me to adopt this technology. Others might find it more challenging.)

My suggestion would be to not exceed 30% even at the absolute worst sales volume at this point. But it's your endeavor, and you should work it out how you believe it is viable.

That was a bit longer than a little edit I guess, but still.

[Seth M. Drebitko]

Yea I would second going no higher than 30% at the worst, which is still pushing it considering users are primarily selling from there site. Overall there are to many low to no cost options, like this one, that don't charge people an arm and a leg.