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<blockquote data-quote="The Sigil" data-source="post: 1062243" data-attributes="member: 2013"><p>This one I don't quite understand. Outside of Malhavoc, for the most part, the companies that are offering their print books in PDF form at RPGNow.com are offering books that have sold 95+% of all the "print" sales they're ever going to see. They are released as PDFs well after their "print run." It costs the publisher little extra to make the PDF available (they already have the book in the ready-to-publish format that they sent to the printers months ago - now you just send the PDF to RPGNow.com), and it gives them a shot at picking up a few extra sales, albeit at a reduced price. It's akin to walking into your FLGS and finding a "bargain bin" of products that are a couple of years old and are "reduced to sell" - I know I can go to the local WotC and get quite a few 3.0 products at 70% off (or at least, I could a few weeks ago - maybe their inventory has run dry). Same thing... it doesn't cut into sales.</p><p></p><p>As to companies that go exclusively PDF, well, RPGNow.com doesn't exactly pay them directly... RPGNow.com works "on commission." Publishers pay RPGNow.com 20 or 25% (depending on their vendor agreement) of the amount of product moved at RPGNow.com - so if I am at the 20% commission scale and RPGNow.com sells $100 worth of my products, I see $80 and they see $20. Since RPGNow.com collects the $100 from the customers and forwards me the $80 payment, you could say "RPGNow.com pays" but it's not strictly accurate. </p><p></p><p>And from what I am told, the amount of the "sale price" that a PDF publisher sees is considerably greater than that of a print price (IIRC, a publisher sees about 25% of the "print price" come back into his pocket from each sale, and at RPGNow.com he sees 75-80% of that price come back into his pocket) - that means that a company sees about the same amount of money on a $5 PDF sale as they would on a $15 Print sale - and if all the "art" and "layout" and "writing" costs are identical, they STILL come out ahead in PDFs because they don't have to shoulder the cost of actually printing the book.</p><p></p><p>Why doesn't every publisher "go PDF" then? The profit margins are bigger, the cost to the consumer is smaller, so consumers can buy more products... both the consumer (through lower sale price) and the publisher (through greater profit margins) see benefits of going PDF, so it's only natural, right? Well, no.</p><p></p><p>Right now, the difference is that the print market is several orders of magnitude larger than the PDF market. So while the "per sale" profit is larger, the number of potential sales is so much smaller that you can make more money in print - if you have the initial capital to do so.</p><p></p><p>Also, there is a certain minimum cash (or time) outlay required to produce a quality product. You need to pay for art, writers, layout, and so forth, regardless of the product. That means that there is a certain bare minimum cost for any product that does not scale with copies printed. For huge sales figures of books (e.g., the Player's Handbook with sales well into the tens of thousands and possibly into the hundreds of thousands), this cost is split among so many books that it becomes a relatively minor component of the final price. For sales figures of a couple hundred (a moderately successful PDF), it's still a high percentage of price.</p><p></p><p>In other words, cost to produce a product can be given as:</p><p></p><p>X + N*Y</p><p></p><p>Where X is the initial outlay required for writers, art, etc. to create the product, N is the number of copies printed, and Y is the cost to print each copy. Total profit is of course M * Z where M is the total number of copies sold and Z is the amount a publisher makes from each sale.</p><p></p><p>In order for a business to succeed, M*Z must be greater than X + N*Y</p><p></p><p>The advantage that PDF publishers have is that Y = 0. The advantage that print publishers have is that M(max) for PDFs is in the hundreds, while M (max) for Print is in the thousands (since most print runs aside from WotC Core Books run into the thousands, I'll assume that's about what the market will bear).</p><p></p><p>Right now, the differential in M(max) makes print publishing far more potentially profitable. But as the relative market size shifts and M(max) for PDFs becomes closer to M(max) for print, at some point, the fact that Y=0 will take over as the factor that makes PDF publishing more potentially profitable.</p><p></p><p>So I don't see this as a "doom and gloom" scenario for the game publishing industry. Or for the consumer. I think that should the PDF market ever become even close to the same size as the print market, consumers (of PDFs) will see products of comparable quality to print products at vastly reduced prices - allowing their gaming dollars to stretch further. Because of the far higher profit ratio - both in terms of % of the MSRP that gets back to the companies and the elimination of the cost of printing a book (to say nothing of the lack of need for shipping, warehousing, etc.) - publishing companies will eventually see an INCREASE in profits. That's probably still years away, but I can definitely see it happening. It's basic economics, really - cost to produce goes down, percent return from sale price goes up, and highly competitive marketplace will all lead us to a point where PDF products are far cheaper than print (probably 1/3 to 1/2 the print cost - about where they are now) and yet the publishers are doing JUST AS WELL financially (assuming similar total sales).</p><p></p><p>Now, the bookshelf makers of the world will be unhappy, as most hard drives are more than capable of storing PDFs in a much smaller physical space than print products, but this story was never about them, was it? ;-)</p><p></p><p>--The Sigil</p></blockquote><p></p>
[QUOTE="The Sigil, post: 1062243, member: 2013"] This one I don't quite understand. Outside of Malhavoc, for the most part, the companies that are offering their print books in PDF form at RPGNow.com are offering books that have sold 95+% of all the "print" sales they're ever going to see. They are released as PDFs well after their "print run." It costs the publisher little extra to make the PDF available (they already have the book in the ready-to-publish format that they sent to the printers months ago - now you just send the PDF to RPGNow.com), and it gives them a shot at picking up a few extra sales, albeit at a reduced price. It's akin to walking into your FLGS and finding a "bargain bin" of products that are a couple of years old and are "reduced to sell" - I know I can go to the local WotC and get quite a few 3.0 products at 70% off (or at least, I could a few weeks ago - maybe their inventory has run dry). Same thing... it doesn't cut into sales. As to companies that go exclusively PDF, well, RPGNow.com doesn't exactly pay them directly... RPGNow.com works "on commission." Publishers pay RPGNow.com 20 or 25% (depending on their vendor agreement) of the amount of product moved at RPGNow.com - so if I am at the 20% commission scale and RPGNow.com sells $100 worth of my products, I see $80 and they see $20. Since RPGNow.com collects the $100 from the customers and forwards me the $80 payment, you could say "RPGNow.com pays" but it's not strictly accurate. And from what I am told, the amount of the "sale price" that a PDF publisher sees is considerably greater than that of a print price (IIRC, a publisher sees about 25% of the "print price" come back into his pocket from each sale, and at RPGNow.com he sees 75-80% of that price come back into his pocket) - that means that a company sees about the same amount of money on a $5 PDF sale as they would on a $15 Print sale - and if all the "art" and "layout" and "writing" costs are identical, they STILL come out ahead in PDFs because they don't have to shoulder the cost of actually printing the book. Why doesn't every publisher "go PDF" then? The profit margins are bigger, the cost to the consumer is smaller, so consumers can buy more products... both the consumer (through lower sale price) and the publisher (through greater profit margins) see benefits of going PDF, so it's only natural, right? Well, no. Right now, the difference is that the print market is several orders of magnitude larger than the PDF market. So while the "per sale" profit is larger, the number of potential sales is so much smaller that you can make more money in print - if you have the initial capital to do so. Also, there is a certain minimum cash (or time) outlay required to produce a quality product. You need to pay for art, writers, layout, and so forth, regardless of the product. That means that there is a certain bare minimum cost for any product that does not scale with copies printed. For huge sales figures of books (e.g., the Player's Handbook with sales well into the tens of thousands and possibly into the hundreds of thousands), this cost is split among so many books that it becomes a relatively minor component of the final price. For sales figures of a couple hundred (a moderately successful PDF), it's still a high percentage of price. In other words, cost to produce a product can be given as: X + N*Y Where X is the initial outlay required for writers, art, etc. to create the product, N is the number of copies printed, and Y is the cost to print each copy. Total profit is of course M * Z where M is the total number of copies sold and Z is the amount a publisher makes from each sale. In order for a business to succeed, M*Z must be greater than X + N*Y The advantage that PDF publishers have is that Y = 0. The advantage that print publishers have is that M(max) for PDFs is in the hundreds, while M (max) for Print is in the thousands (since most print runs aside from WotC Core Books run into the thousands, I'll assume that's about what the market will bear). Right now, the differential in M(max) makes print publishing far more potentially profitable. But as the relative market size shifts and M(max) for PDFs becomes closer to M(max) for print, at some point, the fact that Y=0 will take over as the factor that makes PDF publishing more potentially profitable. So I don't see this as a "doom and gloom" scenario for the game publishing industry. Or for the consumer. I think that should the PDF market ever become even close to the same size as the print market, consumers (of PDFs) will see products of comparable quality to print products at vastly reduced prices - allowing their gaming dollars to stretch further. Because of the far higher profit ratio - both in terms of % of the MSRP that gets back to the companies and the elimination of the cost of printing a book (to say nothing of the lack of need for shipping, warehousing, etc.) - publishing companies will eventually see an INCREASE in profits. That's probably still years away, but I can definitely see it happening. It's basic economics, really - cost to produce goes down, percent return from sale price goes up, and highly competitive marketplace will all lead us to a point where PDF products are far cheaper than print (probably 1/3 to 1/2 the print cost - about where they are now) and yet the publishers are doing JUST AS WELL financially (assuming similar total sales). Now, the bookshelf makers of the world will be unhappy, as most hard drives are more than capable of storing PDFs in a much smaller physical space than print products, but this story was never about them, was it? ;-) --The Sigil [/QUOTE]
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