EN World GameStore Closing

[JohnNephew]

In the constructive ideas department...

What I wish was that publishers set a wholesale price for their PDFs, and the PDF outlets who sold their products gave them that price per sale. Then the outlets could include whatever markup they thought the market would bear, either to compete with other sites on the basis of price or by justifying a higher price through offering convenience, superior services and features, etc. Just like the regular retail world. This would encourage competition and benefit the end consumer, unlike the current situation which both puts the squeeze on the publisher, and then turn and blames the publisher for being responsible for the price the consumer pays.

As a variation, publishers could set wholesale price tiers based on volume or other factors, just as they do in the offline world. For example, a publisher could offer all their PDF vendors a 5% discount any month that gross revenue due to the publisher exceeds $1000 (or some other number, based on typical volume). Or a publisher could offer different wholesale rates based on the frequency of accounting and payments (i.e., a PDF vendor with the systems and willingness to process payments weekly might get a better price than the PDF vendor who only did it monthly or quarterly -- similar to the "rapid payment discounts" that many publishers offer print distributors who pay faster than the standard net 30 terms).

In these ways a large and successful PDF vendor could still get a bigger slice of the pie, but it would be based on concrete performance measures that actually benefit the publisher, rather than ambiguous and unenforceable promises to grow the market. And other PDF vendors could be given specific targets to reach in order to get the same terms as the biggest.

-John Nephew
President, Atlas Games

 

[Bacris]

I am not familiar with any case where a publisher sold a product at a lower price on their own storefront than at some other online provider. (I'd love to proven wrong.)

I'll see if I can find the post again... but one publisher publically stated that he would be posting PDFs at his site initially and, after a set amount of time, would release it to the e-retailers and then increase the price (both at his site and at the e-retailers).

 

[jgbrowning]

However, I'm optimistic that his bottom line won't be affected in the way he thinks it is.

Unless you can provide me a reason as to why I'll suddenly generate around 15% more sales when the switch is flipped to start up the old site, I don't know why you're optomistic.

When the switch is flipped, I'm losing 10%, my vendor is going to gain my loss. And that's going to happen everyday, for every sale, until the site growth generates 15% above and beyond what DTRPG and rpgnow.com was already growing.

So, please explain where that's a mistatement if you think my bottem line won't be affected in such a manner.

Obviously, I have no way of knowing, but my belief is that RPGNow, DTRPG and ENGS publishers will see stronger overall sales. And I believe this makes is easier for OBS to grow the market more successfully.

One of my questions that hasn't yet been answered is how? Seriously Morrus, you've been doing this for a long time as well. Where are those new sales going to come from? The new site will have roughly 90% of the market already. I'm not going to gain access to any new market share: I was already on everysite involved. I ran my numbers and determined that the 5% better take I'd make by going exclusive with the new site would result in the same loss of revenue since I'd also lose all the revenue at e23 and Paizo.

There are no big publishers left to sign on excepting Steve Jackson (won't happen, e23, edit: maybe I'm wrong ) and Palladium. Palladium signing on would be great, for themselves, for the new site and for the potential new customers that would be then drawn to the site and to the PDF concept in general. But I'm far from optimistic about Palladium signing. I'd only rate is a no, as opposed to a hell no. They're the only bigger rpg company I know of not doing some sort of PDF sales already.

So I'm back to wondering where these new customers are going to come from? But again, it's not just having the new site reach 15% new rpg pdf buying customers in order for me to make the same amount as I was making before, the new site has to reach 15% new customers on top of what the old independant sites were reaching already when they were competing against each other for business. If DTRPG, rpgnow.com and ENGamestore had a historic growth rate of 15% a year, the new site has to make a 30% growth the first year for me to see my profit remain the same. But that would only mean my profit remained the same for the very last month of that 30% growth, while the site's profits went up the instant it upped our rates and continued to proportionally increase with every 1% of additional new rpg pdf customers growth: unlike my increase which would result only in a reduction of a loss.

I think everyone can understand why I'm discouraged. I'm facing the grim fact that a solid and healthy 15% growth rate in the PDF purchasing market next year isn't going to result in any increased revenue for me. All the profit from a 15% market growth is going into the the new site's coffers because they're taking it from me up front and telling me "You'll make it up."

Can I switch that arraingment if they think its so damn peachy? Can I get a 5% reduction in my fees and tell them they're going to make so much more money based upon "growing the market"? I mean seriously, a lesser cut of a greater market is still a bigger pie piece, right?

Yeah.

I'm roughly 40% up this year in PDF sales. I'd be interested in how much of that increase is the result of sitewide revenue growth at the sites that are merging vrs. how much is the result of only my hard work. If new customer growth was 20% in the past 12 months, I would account for 20% of the growth of my PDF sales. Such a situation would be a perfect example of how the sites benefit publishers and how publisher's benefit the sites. However, I'd be surprised to find a 20% growth rate in PDF cutomers last year based upon what information I can glean from the sources available to me.

So to jump back to my point, where are those new sales going to come from? Even if I'm wrong and there was a 20% growth in new rpg pdf customers last year, if the same happens next year, I'm really only looking at a 5% growth rate. My partner isn't however. On my sales, if I grow my gross revenue by 20% next year, my parter's are actually going to see a 68% growth in their profitability.

For every $100 dollars I increase my revenue (gross), they used to see a $25 income for them. Now for every $100 dollars they'll see $35. And making more money doesn't solve that problem because they'll still going to get $35 out of every $100 I increase my gross revenue. They're giving me a hole to dig out of by increasing my fees and by increasing my fees they've made it harder to dig out of that hole at the same time.

Without making any sort of value judgement on the new store, I will point out that RPG e-publishers have been pampered compared to the greater book market. Spend an hour doing some research with online e-book retailers of fiction and technical books and you'll see them taking commissions of 40-60%. Personally I think that's outrageous, but that's market reality.

I'm in that market as well. PDF publishers haven't been pampered. The competition between PDF publishers is fierce, but in general, quite friendly. Compare average sales numbers for a new product from two years ago with one now: you'll find they're down across the board. A PDF released now won't make as much money in two years as the same PDF released two years ago. We're already seeing the downward trend as individual publishers and now we're seeing fee increases as well.

joe b.

 

[Yair]

e23.rpgnow.com

Hmm, does that mean that e23 has joined the dark side OBS?

JohnNephew: As I understand it, the argument against your model is that comparison buying through different store fronts is too easy online, so the prices will in fact be set to those of the lowest competitor. I admit that does sound right to me - do you think the selling sites could compete in such a market while providing quality service and not curtailing the growth of the PDF market?

 

[Ralts Bloodthorne]

I don't like.

Not one bit.

Everyone is pointing at increased traffic.

Of course there will be. DriveThru will be getting RPGNow and ENGame customers in addition to their previous ones.

That's increased traffic for DTRPG.

Anyone want to tell me what I'm getting out of being charged this extra?

Since, as a writer, I'll be taking a pay cut, tell ME what is going to be so special about all this.

I notice people from RPGNow and ENGame are happy, well of course they are. KA-CHING!

Still, the fact remains...

What will we be getting for the extra chunk of change? Increased advertising? Assistance to noobs about PDF construction? Continued Pick N Mix? Handjobs from midgets?

Seeing as DTRPG is a White Wolf spinoff, I'm having a hard time believing this is all to benifit the consumers and us publishers. White Wolf hasn't been exactly the foremost in great decisions lately.

Top it off with DTRPG's bad name (Where's my $10, BTW?) from DRM and the fact that a lot of people (myself included) got jacked at one point by them, this also seems as a perfect way for DTRPG to clean up their name.

People are pointing at small, tiny, almost unknown PDF sale points to assure everyone that this merger isn't constructing a monopoly.

So, our choices are:

DTRPG, with all their demands, bad rep, and deeper cut, where there's bonafide, well documented traffic from both themselves and the two companies they merged with.

OR

Tiny PDF Shop dot Com, which had 20% or less of the traffic.

Wow.



Personally, I don't like it, not one bit.

Some people have pointed out standard publishing percentages, and then stated: See, it's not that bad.

Well, writers get advances, bigger paychecks, and guarenteed sales. Books are bought in advance and/or in lots of hundreds or thousands. SUre, the writers only get 1-5%, but they still get a hell of a lot more money for that novel.

Can DTRPG guarentee coast to coast saturation, placement in Barnes & Noble and other books stores? Can they gaurentee distribution in over 10,000 locations?

What exactly are we GETTING for our 30-40% knock right off the top?

What services are we PURCHASING?

 

[JohnNephew]

JohnNephew: As I understand it, the argument against your model is that comparison buying through different store fronts is too easy online, so the prices will in fact be set to those of the lowest competitor.

By the same argument, all the online sales of printed games should be through the biggest discounters, but the full-price sales we get every month from Warehouse 23 (which handles all of our web sales) suggests it isn't so. Price is a factor, but there are elements of convenience, service, etc. A PDF site that offered superior customer service, one-stop shopping, loyalty programs and incentives, bundles and specials that they could do according to their own strategic plans, etc., could distinguish itself from another site that was cutting everything to the bone to try and up their sales volume (and as a result might not be able to respond to customer service issues in a timely manner, for example). I don't know where the magic mark-up level would be, but I'd rather have it decided by competition in the market rather than by PDF sites just taking more from the publishers' pockets because they can.

I admit that does sound right to me - do you think the selling sites could compete in such a market while providing quality service and not curtailing the growth of the PDF market?

Yes.

Also, the big gorilla with the most market share, working hard to attract brand new customers, will get a lot of customers at whatever price they charge simply because most customers won't even realize there are alternatives. Plus, they'll distinguish themselves with the exclusive agreements they have with many vendors, which they could still have under a different pricing regime (that would beef up their "convenience" factor).

 

[HinterWelt]

In the constructive ideas department...

What I wish was that publishers set a wholesale price for their PDFs, and the PDF outlets who sold their products gave them that price per sale. Then the outlets could include whatever markup they thought the market would bear, either to compete with other sites on the basis of price or by justifying a higher price through offering convenience, superior services and features, etc. Just like the regular retail world. This would encourage competition and benefit the end consumer, unlike the current situation which both puts the squeeze on the publisher, and then turn and blames the publisher for being responsible for the price the consumer pays.

As a variation, publishers could set wholesale price tiers based on volume or other factors, just as they do in the offline world. For example, a publisher could offer all their PDF vendors a 5% discount any month that gross revenue due to the publisher exceeds $1000 (or some other number, based on typical volume). Or a publisher could offer different wholesale rates based on the frequency of accounting and payments (i.e., a PDF vendor with the systems and willingness to process payments weekly might get a better price than the PDF vendor who only did it monthly or quarterly -- similar to the "rapid payment discounts" that many publishers offer print distributors who pay faster than the standard net 30 terms).

In these ways a large and successful PDF vendor could still get a bigger slice of the pie, but it would be based on concrete performance measures that actually benefit the publisher, rather than ambiguous and unenforceable promises to grow the market. And other PDF vendors could be given specific targets to reach in order to get the same terms as the biggest.

-John Nephew
President, Atlas Games

John,
Interesting points. Net pricing, when I owned my B&M retail stores was so problmatic though. A true pain. Do you think with the volume we see, just from publishers like Ronin Arts, that those problems would be compounded? Essentially, the store front would have to price these out. Now, they could just take the net price and add an across the board %.

That said, I think it is a great idea. I often wonder if net pricing will make it (in force) into the print industry. I think it might solve a lot of problems. For the PDF industry, it is early on and hopefully people will listen to this idea. It has a great deal of merit.

Bill

 

[Morrus]

Unless you can provide me a reason as to why I'll suddenly generate around 15% more sales when the switch is flipped to start up the old site, I don't know why you're optomistic.

When the switch is flipped, I'm losing 10%, my vendor is going to gain my loss. And that's going to happen everyday, for every sale, until the site growth generates 15% above and beyond what DTRPG and rpgnow.com was already growing.

So, please explain where that's a mistatement if you think my bottem line won't be affected in such a manner.

Remember, I'm not predicting the future, just offering an opinion. But here's what I think:

You may well be at all three sites. However, many, many, many publishers are not. I'm gonna pick a completely random example here - say Mongoose is only at DTRPG. Now DTRPG's "Mongoose" customers are seeing a whole lot more product in front of them. That will increase overall sales from Mongoose customers as they are exposed to products and customers they weren't before - and expand their PDF shopping habits.

That effect is repeated with every publisher who is not already on all three sites.

I'm not saying it magically creates new customers; I'm saying that the combined customer base of all three stores will have more choice and variety. And these things lead to more purchasing.

I'm not promising that you're wrong, Joe. I really hope you're wrong (remember, ENP was selling at 0% commission and stands to lose even more if you're right!). I believe it will work out to all of our advantage.

 

[seasong]

We have not been bought (or merged) with RPGNow, DriveThruRPG, or OBS. We're looking into what happened.

Thomas Weigel
e23 Manager
http://e23.sjgames.com/

 

[JohnNephew]

John,
Interesting points. Net pricing, when I owned my B&M retail stores was so problmatic though. A true pain. Do you think with the volume we see, just from publishers like Ronin Arts, that those problems would be compounded? Essentially, the store front would have to price these out. Now, they could just take the net price and add an across the board %.

I think it would work particularly well for digital sales. After all, you don't have to go applying price stickers to physical books.

One approach is the across-the-board markup. That's the simplest.

Some PDF vendors could decide to invest in software development that would give them a competitive edge, by polling current prices on their competitors' sites and offering a price matching, or beating it, or putting together bundles that would effectively price match if the customer is willing to buy something more as well. There are a lot of innovative possibilities here -- innovations that could benefit both consumers and publishers -- if there were competitive pressure.

Even without such sophisticated software, vendors would be given liberty to put together deals according to their own strategy -- having a "10% off everything" promotional day, if they wanted, or offering bundles (get a second item at the wholesale price if you pay regular price for the first, etc.), or whatever.