d20Dwarf said:
Those numbers are great, but they completely ignore the other costs that go into having a print product get to market. I find it illuminating that out of the PDF publishers, not a single one has mentioned anything to do with distribution in any meaningful fashion (not to mention warehousing and shipping). PDF distribution is a matter of uploading a file to RPG Now and giving them their cut (what, 20%?). Print distribution *is* orders of magnitude beyond that, and accounts for much of the cost risk that a print publisher undertakes that you *don't* see.
Therein lies the factor that I had missed. Excellent point there.
I will, however, stand by my contention that the "time cost" is approximately the same for PDFs and Print products of similar "quality"/layout and that this is not orders of magnitude below the printing cost. The warehousing cost was not something I had considered. I don't think the time cost can really be quibbled about though - as a specific example, my guess is that it took Monte Cook the exact same amount of time to write/lay out the BoEM3 in PDF as it did to write/lay out the BOEM3 and then ship it to the printers, even if there is a little lag time before it hits the shelves.
However, again I ask, what is the "time cost" on a PDF as a
percentage of expected profits - even with RPGNow.com's exceptionally low commission?
I have an example I can throw out: The Enchiridion of Mystic Music. A top-30 d20 PDF.
Total profit from sales: ~$800.
Words: ~35,000 (it's 34,900+)
Cost for writing alone, lowballed at $0.02/word: $700
Cost for Elmore CD from which cover was taken: $25
Cost for editing, low-balled (my understanding is it's 1/3-ish of the writer cost, I'll round down to 1/4th): $175
What does that mean? It means that even doing horrific lowballing of myself, I am spending about $900 to produce a product that brings in $800. In other words, in a very strict sense, I am
losing money. Remember, this was a super-lowballed cost analysis, and it's on one of the better-selling PDFs.
In other words, it means I
couldn't run my ship like a print company - hiring authors even at $0.02 per word and then getting an editor (to say nothing of artwork and printing costs).
The profit margin is not what print publishers would like to think. Much as PDF publishers (myself included) probably underestimate the costs involved in the physical creation, storage, and transport of products, I think print publishers vastly overestimate the profit margin on PDFs simply because PDFs lack these costs (they - and probably the PDF publishers, too - forget the "hidden" cost of writing, editing, et al - it's "hidden" to the PDF publisher because he does the work himself and doesn't get a bill for it - but just because he doesn't get a bill for it doesn't mean the cost isn't there).
My guess is that most print publishers have an expected profit of greater than zero, and if their products are decent-to-good, they are usually able to make back the initial outlay of funds.
Again, I'm not asking you to look at absolute numbers - of COURSE it costs several thousand dollars to do print runs and warehousing and such and it doesn't cost that to do PDFs. I'm asking you to do a lowball cost analysis and tell me that RELATIVELY speaking, which is more profitable? My guess is that print is considerably more profitable RELATIVELY speaking.
As a print publisher, what
percent of return do you expect on your investment?
As a PDF publisher, what percent of return to you expect? The only way I can really claim a "profit" is if I'm writing for free.
It's easier for print publishers to pooh-pooh the PDF publishers and talk about how they put up more money at risk. They do - I'm not arguing that.
However, when you convert "time" by a PDF publisher to the equivalent "money" for a print publisher (e.g., paying the writer), you find they are closer than you'd like to believe. Print publishers have an easier time quantifying costs in terms of money, because they see a check that they send their writers. PDF publishers usually do the writing themselves - there is no check to send, making it harder to quantify the "writing" cost. But the cost is still there.
Yes, I know the PDF market is small. I'm not trying to overstate its importance, but I think it is often understated. As I understand it, a "typical" print run for a print publisher is about 1,000-2,000 copies for smaller, more focused stuff, to 5,000 copies for "broad appeal" stuff to 10,000 copies for a smash hit. I can't back it up with cold hard stats, but IIRC, PDF publications tend to do about 10% of that. That *isn't* small potatoes comparatively. It is one order of magnitude, yes, but it means that the PDF market is a statistically significant niche in the RPG market - so much so that WotC deliberately singled it out when creating guidelines.
I'm trying to tone things down a bit - I hope this post doesn't come across as rantish as my last post. I just think that when you look at the numbers, you see that (1) as a
percentage of their "RPG-company income," PDF publishers risk as much - if not more - than print publishers, (2) that the PDF market is a statistically significant portion of the RPG market - not the overwhelmingly important segment, but still enough to be noticed - most companies would love 10% market share, and (3) that PDF publishers don't understand all the costs involved in print publishing - and probably don't understand all the real costs involved in PDF publishing either.
In the end, I don't think it's right to belittle the risk taken by a PDF publisher - in essence, he's betting $2 to win $4 while the print publisher is betting $10 to win $30. While the absolute amount of risk is smaller, the potential for payoff - in terms of percentage - is MUCH smaller. Hence, I could argue that the PDF publisher takes MORE risk than the print publisher - probably due to the narrowness of his market segment. After all, to extend the above analogy, if the PDF publisher "bets" 5 times, he puts up a $10 bet to win $20 instead of $30. OTOH, he gets the benefit of "averaging" his bets and hedging his losses. It's a wonderful game, risk/reward... which bets would you rather take?
--The Sigil
Don't some of the D20 print publishers do their own writing? It seems to me that except for AEG, SSS and WoTC most of the other quality print operations do their own writing. Privateer Press, do their own writing and art. Don't the FFG guys write a lot of their own product, and Doug from Mystic Eye has written (and drawn) more than his fair share of D20 print product and that's just the tip of the iceburg.
or, at the least, was a relatively sparsley used medium. 
