Profitability of Online Distribution?

[Cthulhudrew]

I posted this in the "Paizo No Longer Publishing Dungeon" thread, but it got kind of lost/ignored in the gazillion posts that came after it. In any event, maybe someone in publishing (print and/or digital) has some insight to provide?

What I'm curious about is- didn't WotC originally give the license to Paizo because they were discontinuing the magazines due to lack of support staff to produce the content monthly themselves? Is a switch to digital format really going to make it that much simpler for them to put these magazines out on a regular basis, or are they simply making a decision to add or move staff over to a magazine department for whatever reason suddenly? (Presumably some marketing survey that shows it will be profitable enough to get back into).

Anyone in the publishing industry have any insights as to the change in attitude?

 

[Nightfall]

Drew,

I think they are doing it to keep people from "profitting" and cutting into WotC revenue.

 

[MoogleEmpMog]

Wizards puts out an amazing amount of content on the free portion of their site - if you're interested in any two of their games, there's easily a magazine's worth of content every month.

Writing fees, when you come down to it, are essentially meaningless to a publisher of even Paizo's size, much less Wizards'; Paizo paid between 5 and 10c/word for Dragon (I don't know the specs on Dungeon). I can't imagine that amounted to more than, say, $8000 an issue, if that. At the newsstand price, they would have to sell only 1,000 issues to cover those probably exaggerated writing fees - out of a circulation of tens of thousands. That's discounting ad revenue, of course.

I'm sure Wizards expects to sell at least a thousand subscriptions to their online service; between their various games, they probably get millions of visits each month; if even a tiny fraction pay for D&D content, they would easily cover the writing fees.

The big difference between online publication and print publication is that those (essentially minimal) writing fees are the ONLY cost. (There shouldn't be a significantly increased server load.)

I also suspect Wizards wants to push the non-magazine-style content with their new web launch. They may want to consolidate the magazines primarily as a way of introducing more people to the new things they're doing.

 

[Cthulhudrew]

I figure that lack of printing cuts down on a lot of the overhead, for sure. They still have to hire on staff to do the editing, layout, etc. which, to my understanding they don't currently have- or at least will have to split their interests/duties between what they are currently doing.

 

[mmadsen]

Writing fees, when you come down to it, are essentially meaningless to a publisher of even Paizo's size, much less Wizards'; Paizo paid between 5 and 10c/word for Dragon (I don't know the specs on Dungeon). I can't imagine that amounted to more than, say, $8000 an issue, if that. At the newsstand price, they would have to sell only 1,000 issues to cover those probably exaggerated writing fees - out of a circulation of tens of thousands.

But aren't those fees paid to writers (who are often excited to get in the magazine) a small fraction of the labor (in monetary terms) going into the magazine?

I'm sure Wizards expects to sell at least a thousand subscriptions to their online service; between their various games, they probably get millions of visits each month; if even a tiny fraction pay for D&D content, they would easily cover the writing fees.

What's interesting is how angry consumers get at the notion of paying for on-line material. They feel cheated; they instinctively feel that content should be free.

The big difference between online publication and print publication is that those (essentially minimal) writing fees are the ONLY cost.

Yeah, their variable costs should drop roughly to zero, which means there's a tremendous upside if they can sell more subscriptions.

It also has the potential to give them much more valuable market data. I don't know how well it will serve as an ad platform though.

 

[MoogleEmpMog]

Assuming they use a single web site template for all of their D&D content, they'll actually be saving a LOT more than just on production fees.

Layout for a magazine is constant work. For a web site, it's a one-time fee and everything else is completely forms-based. You don't need a layout person in any way shape or form after the initial structure is complete; any author or editor can paste into a form exactly like the one we're using to communicate on EN World and get a great looking article on the other end.

I imagine art is largely going to be shared across the D&D product line, but that may not come to pass.

Wizards will likely cut down on the size of the editorial staff relative to Paizo. The current Wizards site seems well edited, but I'm not sure who actually fills that role there. Editing a web site is generally much, much more efficient than editing a magazine, though, for the same reasons layout is more efficient.

 

[Nightfall]

*thinks it's just the New Coke attitude of WotC management*

 

[Cthulhudrew]

Wizards will likely cut down on the size of the editorial staff relative to Paizo. The current Wizards site seems well edited, but I'm not sure who actually fills that role there. Editing a web site is generally much, much more efficient than editing a magazine, though, for the same reasons layout is more efficient.

That makes sense.

When Wizards originally dropped the magazines, they said it was so that they could focus on their more profitable areas, like design and development. Specifically:

“This deal is another example of Wizards of the Coast’s ongoing initiative to focus on what we do best, design and bring to market great games for our consumers,” said Loren Greenwood, executive vice-president and chief operating officer of Wizards of the Coast...

What would this switch back then be reflecting? A change in the attitudes that they had then, or is the digital distribution model still compatible with these goals?

 

[Nightfall]

*sighs* If they want to market great games, they could try using better advertizing!

 

[GreatLemur]

What's interesting is how angry consumers get at the notion of paying for on-line material. They feel cheated; they instinctively feel that content should be free.

Yeah. That's a really serious cultural problem we, as a civilization, need to get over. I think we're on the way, too, what with people paying for music, movies, and television delivered over the Internet. (Note: I've got to admit that I'm seriously guilty of the same thing. I don't even buy music through iTunes.)