Runester

First, let’s be honest here. I’m a technologist. I’m not a marketer and I’ve never (successfully) started a business with, you know, actual customers. But, that’s why I’m so fascinated by marketing and business models. It’s interesting because it’s so different than what I do! Marketing people can look on in fascination while I ‘fix’ their Excel by hitting the [Scroll-Lock] key. I look on in fascination while they spread the message of their client and motivate real people to spend real cash. Compared to what I do, they might as well be sorcerer’s.

Second, as I’ve recently blogged about, the book publishing business is going through a weird revolution. [From other online articles and blog's, it appears to mirror music and news, as well.] While from a consumer choice perspective, this is a ‘golden age’ – very few people are making any money from it. It turns out that without the few large publishing houses able to sell mass appeal books (and act as gatekeepers, which is a downside) that the half-a-million new books published every year garner very littler per-book attention. For every one Stephen King or John Grisham, there are literally tens of thousands of small time authors who will make nothing but the advance on their book. They will never see a dollar or dime of royalty money. Further, their publishers cannot afford to publicize or market their books! The author must, themselves, market and spread the word and organize book signings and arrange for all of the travel and even build and market the web site associated with the book, etc. etc. etc.

So, what does the publisher actually do? Well, there’s the ‘gatekeeper’ thing, which is supposed to be a type of intrinsic guarantee of quality. There’s also the editing, printing, and distribution through well established sales channels. There is certainly value in getting your book published through a traditional publishing house. But, if you thought that it would be it and you could just go back to writing your next book … think again.

The kicker is, even with the author having to shoulder the marketing, the average book only sells about 3,000 total lifetime copies! [Obviously, some more and some less, thus the average.] That means that no one is getting rich writing books, unless they happen to be the top 1% of 1% of authors. The other way to riches is to hope that auxiliary properties based on your work will generate real money, like a movie or video game. A comic book would be great publicity, but probably not garner you any great amount of money. And, for every book published in every year, only 1/1000th of that number of movies are made in Hollywood – and not all are based on current books. So, the odds of getting your book turned into a movie just aren’t that good.

Third, there’s been a great deal of discussion and blogging and tweeting and the like on different ways for people to market in this crazy new landscape. One school of thought is that the product should be ‘free’ but with a monetization model based on one of the following three tried-and-try patterns: 1) Advertising. This is how Google gives away free search results and email, then sells ad space and is very profitable. 2) ‘Freemium’, a portmanteau that refers to the premium-for-pay upgrade many services offer. Like how FlickrPro costs money but Flickr is free. The pro subscribers subsidize the free users. That is also the model the Drop.io is attempting to use; everyone can make as many drop’s as they want with 100MB of storage and a max connection count of 10 – but if you upgrade you can get more space or a subscription for a premium version of their product. We have yet to see if their model will work, but in order to work the upgrades and the premium service would have to more then make up for the resources they’re spending on giving away the free version of their service. 3) Loss-Leader, as in Verizon FiOS is giving away a free netbook computer if you sign up for their FiOS service. That’s crazy! A free $300 netbook, just for becoming a subscriber? Well, they’ve obviously calculated the average lifetime value of their customer and know that value is much more then the one time cost of a netbook. Even with churn and people who just want to take advantage of the offer, they will more then make up for the cost of those netbooks. [It still boggles my mind that they are now giving away laptop's for for free ... even if they are just 'netbooks' ... but in my day, those were valuable and not considered tchotchke's.]

There’s a fourth pattern, not discussed in the original essay I read, which I call “building a valuable network.” This is basically what Monster.com does. They give away their job search service, because they need the enormous list of potential employees to sell their actual for-profit service, which is an employee search feature sold to businesses. In other words, Monster only needs the applicants to make their real product valuable. Their ability to offer applicants to employers doesn’t mean much if there’s not hundreds of thousands of applicants available to offer and the best way to get those applicants is to offer them the “find a job in your area” service, for free! [Monster also advertises to applicants and offers premium for-profit services for those applicants that want to pay. They have an affective multi-path marketing plan that makes their 'free' service quite profitable.] Another example would be a free service that gathers user data and uses this database as a resource they can resell. This may be problematic with the way users feel about having their information sold, but it’s still done all the time. Again, the free product or service is simply a way to gather or generate the actual product or service that is then sold for a handsome profit.

So, can we put all of this together? I think we can. I believe that there are already people out there that make money as “writer’s” but not from selling books. They use their free or near-free book sales to distribute their message and market themselves. They then offer a ‘freemium’ service, such as a weekend seminar or an onsite presentation. They may also use it to subsidize other, premium products and/or subscriptions. They use their customer information as a marketing list for other products, even products owned by other publishers. They write, publish, and market a book .. but the book isn’t their product. In any case, they’re making money.

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In a previous blog post I asked whether or not having a non-profit as an RPG publisher wouldn’t further the general goals of having a long lasting entity hold the intellectual property of something like a game, and act to foster the community of players and publishers that have a stake in the survival and even success of that game. Here, I’m going to ask whether or not one of these monetizing schemes can turn something that’s hard to profit on, an RPG, profitable.

I’ve already seen the ‘freemium’ method used. Several companies will give away an electronic edition of their core rules for nothing or very close to nothing ($1 or $5). Then, they hope that if you like the core rules, you’ll come back for supplements and settings, which they sell at a nice mark-up. This probably has some success, but I’ve never seen a huge response to this. I’ve only seen an actual subscription model used once or twice, and I believe the publisher already has to have a well known property and/or author before they can successfully sell a subscription. In a way, a subscription is like a promissory note. They promise to produce something of value at regular intervals, and you promise to keep paying for what they produce. If it’s a new author or new company or even a new product, the public may not believe or trust the promise and will not be as willing to pay in advance for it.

I’ve also seen two new models come forward in RPG’s but not other fields, like books or music. One is the ransom; in which an author writes a product and than says that until he raises a fixed amount, say $2,500, he’s not going to release it. But, that once he does raise that sum, he’ll give it away for free. Again, if the author and product are known they can be expected to be good and an audience will gather knowing their money isn’t wasted. Interestingly enough, the initial investors are subsidizing all of those that will subsequently download the product for free … so it’s a kind of ‘freemium’ service, inverted, and with no special price for those that actually pay the premium. A related model is the patronage, where a small group of investors are gathered with a minimum entry fee, and they not only get special access to the product but have an intimate hand in directing it’s growth and production. In this case, the patrons usually get a beautifully printed hard-bound copy of the book (or at least the ability to purchase such) and then the product is sold for less as an electronic copy only to the non-patrons. In the patronage model, not only is the special access being sold as a premium service, but the special relationship with the designers and the ability to influence the final product.

One of the big advantages of the patronage and ransom model, is that the consumer testing is built in. There’s no need to through a product out there and hope that someone, somewhere wants it. In both cases, if there is not sufficient interest then the author is free to move on to something else. If there is sufficient interest, then the audience is built-in and marketing is successfully happening before the product is even ready to be shipped.

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I now imagine a hybrid, in which an author or small group of authors, form a not-for-profit company as caretaker for a set of intellectual properties tied to a game. The authors then use patronage and ransom (or some hybrid variation) to profit, up front, from the production of their product. After the price has been paid and the product produced and all of the special version/access/service agreements satisfied, then the not-for-profit get’s the rights to the work so that it can be kept available and actively advocated for. The back catalog then acts as the free product that markets both the authors and their IP, while advertising the next project they’re working on. It can even be stated in the contract that certain rights are reserved by the author, such as movie or video game rights. That way, just in case one of the IP’s goes big, the author will still see the lions share of profit. But, there will never be an ‘abandoned’ property, because even if the author walks away from it, the not-for-profit can continue to make it available and assign those rights that it has.

I bet something like this may even work for traditional fiction, as well. How many fans clamour for a book that the author spends years and years and years ‘working on’ but never produces? What if the fans could directly pay for it, and act as patrons for the project? The author gets much needed feedback from the very consumer he needs, and he gets an infusion of cash well before the books sells.

Anyway, these are some of my thoughts on how to do the (seemingly) impossible: make money by writing gaming books.