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Message: <blockquote data-quote="MGibster" data-source="post: 8928472" data-attributes="member: 4534">What ultimately got TSR in the end was the way they managed their cash.  The first was their odd arrangement with Random House where they would pay TSR up front for their books on the assumption that they would all sell.  TSR used this to their advantage by overproducing books and sending them to Random House in order to essentially receive loans.  But around 1995 Random House said, "Nah, that's cool.  We're going to send you back this unsold inventory and you can pay us back for it."  Another factor in TSR's demise is something called, uh, factoring.  TSR would accept pre-orders from retailers offering them huge discounts, then they would go to a group of investors to get a loan based on those pre-orders.  The advantage of doing this meant that TSR would get paid upfront at the beginning of the year, but the disadvantage to this was two-fold:  They lacked the flexibility to make changes based on current market conditions and this loan ate 15-20% of their profit margin.  When Lorraine Williams knew Dragon Dice wasn't going to sell as many units as they produced, but because of factoring she didn't have much of a choice.  Of course TSR had other problems.  While I miss the cornucopia of settings in the 1990s, it wasn't so good for TSR as they were competing against their own products, customers didn't necessarily want to buy a setting knowing there was a good chance it'd be gone in a year or two, and there was no way some of them would ever be truly profitable.  But these were problems TSR could have weathered had they not structured their finances with factoring and those Random House loans.</blockquote>

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