IPR, Publisher Choice and Distribution; Don’t flame-war here please.

Posted: July 17, 2008 by Guy Shalev in Uncategorized
Tags: , , ,

I’d like to begin with some notes: Do not flame-war here. I’d rather if you didn’t flame-war at all.
I’m not going to attack anyone personally, I’m questioning a business model. I am aware that if we criticize say, paper companies for using bleach in their products, the people in charge of that decision would feel attacked. This is not the intent.

If you wish to post anonymously, feel free to do so, do note if you are a publisher or just a consumer. If you post anonymously just to fling attacks, I’ll screen your comments.
I will screen comments without hesitations if things go south, if things go south enough, I’ll screen all incoming comments, and will only reveal them after I’ve had a chance to read them through.

Please avoid going “You’re not a publisher on IPR, shut up”, as that will not address my points, and will merely by a cowardly diversionary tactic. And seeing the “Indie sentiment” of “Anyone can publish”, I too am potentially affected by this, and since as a consumer I’m affected by the prices charged for the books I buy, it also affects me on that end.

Erm, there’s a bit more Math when expected, if you see a section beginning with **, you can go down to the next section with **, for the conclusions.
Now, that’s out of the way…
I’ve talked about this to a friend, and today to another friend, so this post goes up.
This post is about Indie Press Revolution, from here on now, IPR, where most books are from Indie publishers (used to mean “Creator owned, creator controlled property”), but with recent additions by small-press companies.

Back in April IPR raised its retailer discount to 45%, from 42%, a question which brings forth, who is IPR here to serve? What is its mandate, what are its goals?
They do mention they did it because the 42% discount was not good enough for the retailers. I’m going to present (some of) the publishers’ side here.

I am going to go from memory for a bit here, but I remember IPR as coming forward to be a tool for the publishers, something that enables them to go out there, and not use the three-tier model distributors, where if I recall correctly, the money breakdown was: publisher 40%, distributor 20%, shop 40% (percents are of cover price). The three-tier-model is decidedly not what the indie game designers want, they wanted to cut the middle man, they wanted to keep a higher percent of their game’s value within their hands. They couldn’t rely on selling thousands of copies to make back their investment by sheer numbers; each copy counts when you may only sell a hundred or couple hundred copies in say, 5 years (making back your money after 50 years is all great and good, but I have a feeling that most people are looking for shorter term investments).

IPR has two purposes (not in goals, but it fulfills two functions):
1. It serves as a store, two-tier model. Books go from author to IPR, IPR sells books to customers, taking a modest 15% of the cover price. Author is left with 85% of cover price.
2. It serves as a distributor, 3-tier-model. Books go from author to IPR, IPR sells books to store, store sells books to customers. Shop gets books at 45% discount, IPR takes 15% off of the remaining 55% (For a total of 8.25%). Leaving 46.75% of cover price for the author to work with.

This is more of an issue because it’s a global discount; the individual publisher not only doesn’t have an option of setting how much he desires his discount to be, he has no option of making a choice of whether or not he wishes to sell at a discount to stores at all.
This poses two problems: It goes counter to the indie sentiment of being in control of your product and its fate, of deciding how much to spend on art, how much to spend on advertising, deciding how much discount to give to each person you sell it to. Yes, you do sign up to IPR knowing how things stand, but this leads to the second problem, and another issue that will be discussed later;
The second issue is that many of the people who want to use IPR, don’t want to get entangled with the 3-tier-model, and I believe given the choice, with the current conditions, with retail stores. But IPR comes as a package deal, they want to use it only in order to sell to customers, to sell direct. And no, leaving IPR does not seem a viable option (more on this later).

The current model also seems to nearly ‘force’ publishers into using larger print-runs, and to choose more economical printing-services (even if they’d rather use a more expensive one for its other features). Let’s take Lulu as a case study. We’ll print a 6’*9′ softcover book (which most indie games seem to be), 120 pages.
**Really small publishers, who publish 50 copies of the game, will do so at the cost of $5.87 a copy.
Publishers, who’d publish 100 copies (seems not much lower than the initial print run of many games, and about right for re-prints of many more games), would pay $5.33 per copy.
Big publishers, who can pay for printing 1,000 copies, and trust it to sell within a reasonable period of time (or at least enough to cover the expenses) would pay only $4.09 per copy.
Let’s assume the book is sold for $20 at IPR.
If we look at how much the publisher earns in a direct sale versus a store to retailer, we find no surprises, he gets (0.85-0.4675=)38.25% more of the cover price.
Income for book, direct sale: indirect sale $9.35, direct sale $17.
This picture is different if we look at how much he earns once we deduce the cost to print the copy he had just sold:
The publisher who printed 50 copies will make $3.48 in indirect sale, versus $11.13 in a direct sale.
The publisher who printed 100 copies will make $4.02 in indirect sale, versus $11.67 in a direct sale.
The publisher who printed 1,000 copies will make $5.26 in indirect sale, versus $12.91 in a direct sale.
**The 1k book publisher got his copies for 1.435 times as cheap as the 50 book publisher, but earns 1.55 times as much in an indirect sale, as opposed to the MUCH lower 1.15 times in a direct sale.
And a bit more math.

As we had seen, indirect sales are greatly slanted towards those with the funds for a big print run (whereas if all your sales are direct, you may go with a pricier printer/smaller print runs with much more ease). This also recalls to us the one of the major points of the indie publishing movement: do not invest too much money into your game, do not print too many copies, or you may get seriously burnt out. The indie sentiment is to make small print runs, which seems very well suited to direct sales, which is where IPR began.

A major component of this issue is the initial costs of publishing an RPG, aside from the printing costs, we have the layout, editing and art costs (not all apply to all games). These costs must be recovered before the product begins earning back its money.
In order for a publisher to recover his costs, a publisher will have to go through more print-runs the smaller each print-run is, and of course, if he goes through the retail stores. Assuming each print-run would sell in the same time-frame, and that pre-publication expenses are $500, the 50 books a run publisher would make back his money and then some if all books were sold to direct customers ($556.5), but would have to go through 144 books (nearly 3 print runs) if all his books were sold through retailers (And of course, if your print run was bigger, you’d need to sell considerably less books to make back the money, not including the print run’s expense).
I am not talking about whether or not retailers would claim sales that were otherwise going to be made direct (though that issue will be brought up later), but the number of print runs the publisher would have to go through, each frought with new risk, each one more unlikely than the previous one (I know of a couple of games that got relatively good press that don’t seem to have broken the 200 copies mark, who knows if when they sell through 200, they’d sell through 200 more, in their lifetimes?)

This brings up to IPR’s self-appointed mandate; is it to spread the Indie goodness, or is it to be a tool for the publishers?
Those two mandates are at odds with one another, and very likely a compromise is reached.
If you want to spread the indie goodness, you will give a higher discount to retailers, so they’d get more books (assuming retail sales are otherwise sales you wouldn’t have received online).
If you want to serve the publishers, and help them earn money, you’d give the retailers less of a discount, keeping their profits higher.
But if you want to be a tool of the publishers, you’d let them choose. This 120 pages book from the above example, if the publisher really only cared to get it in the hands of the players, he could have gone for that $3.48 profit to begin with (assuming 50 book print runs), and priced it at $11, for direct sales.
I’d tell you a secret, even before they began selling it through you to distributors, when indie games completely, or almost completely, relied on direct sales they sold their copies for more.
But hey, isn’t the point to give them a choice? I’m sure that they could price their games to fit their needs, and when they would want to find a balance between the two needs, they’ll find a balance that fits them.

So IPR’s mandate, it is self appointed (of course), and it is placed on all distributors who sell through IPR.
Now, maybe it is more beneficial(monetary) for a publisher to go through with this method, it’s a simple calculation: Figure 1: (Number of copies sold to retailers(Cr1)*profit per copy (Pr1)) + (Number of copies sold direct (Cd1)*Profit per copy (Pd1))
Figure 2: (Number of copies sold to retailers(Cr2)*profit per copy (Pr2)) + (Number of copies sold direct (Cd2)*Profit per copy (Pd2))
Assuming there is a different discount in each case above, and considering that the number of copies sold may change as a result, we just compare the two figures and see which is larger.
Publishers will also probably take into consideration other factors, because as artists, I feel they probably do want their creation out there. If they could sell 1 copies for X, or 100 copies for X, and they know that either way they’ll only earn X (earning $1 and selling 100 copies, or earning $100 but only selling 1 copy, lifetime), they’d rather sell 100 copies.

Now, whose choice is it, if they do want to maximize the number of copies in the market and/or the profit they make? An individual publisher.
(And I didn’t want to get into it, but I feel I must:) Unless, IPR looks at what will maximize its revenues (it is a company for financial gain after all), but then it does so in expense of the members using it, especially as it doesn’t seem to run the risk for additional print runs (they after all get money depending on copies sold and cover price, the risk of printing more copies is mainly the publisher’s).

Now, some indie publishers do want to make it in retail, they do want to break into the distribution model, heck, some publishers used the three tier model beforehands, but they chose it, they were willing to enter a model where all (or almost all) of their sales would go through the 3-tier and they’d get back the smaller amount. Most indie publishers aren’t cut up for it.
They do however know how things stand when they list with IPR, which doesn’t lie to them. They know up-front how things stand, but as hinted at above, and will be written now, they don’t really have a choice.
Before IPR came to the fore, there were two options: Go through distribution, or sell direct yourself, from your site (sure most companies also sold direct, but it was a minor part, they didn’t move 10k copies of Dark Ages: Fae from their online store). So when you listed from your site, as an indie publisher, you didn’t really lose anything compared to other indie publishers. You did what most of them did, and people knew that if they wanted your game, they had to go to your site.

Now, IPR is the 600 pound gorilla in the indie/Story-Game market. People expect that if they want your game, they’ll find it on IPR. People both don’t expect to have to go to your site (or indeed, find it!), or have to pay shipping to you (IPR had free domestic shipping until April, and it’s still probably cheaper to buy in bulk through IPR (for domestic orders)), or to have to make 3-4 orders from 3-4 different people/sites for 3-4 different books. IPR is not only comfortable, it’s seen as THE store-front.
It has an upside, people will know where to look for your book if it interests them, and if they were going to look online anyway, then it’s most likely a direct sale.
The downside is, that if you come to the scene today, and wish to sell a book not through IPR (or any other place, which most likely doesn’t specialize in indie games), and you don’t already have one hell of a name/market penetration, you’re likely going to lose many sales.

IPR, by its presence, is now “The only game in town”, using it forces you to sell books at a steep discount to retailers, not using it forces you out of many sales, period.
From earlier, even if retail sales are sales that otherwise would not have been made direct, it does not completely alleviate the problem, because once those copies are gone, you’ll have to print more copies, and you’ve earned less money for the previous print-run, and you’d need to print even more copies to have more copies to be sold direct, from which you’re more likely to get the money required to cover your expenses, and actually earn money.

Some solutions, to an issue that I feel is important: initial expenses. I think that small indie publishers (small of the small!), especially those who print their first game, are more concerned with the spectre of covering up their initial expenses, aside from the print run itself, money paid for art, layout, editing and such.
One solution is something I thought of for another context, since it doesn’t really solve the IPR hurdle, but side-step it: Semi-ransom. Take that $20 book, and sell it for $25 till you cover your expenses, and then drop the price some. I suggest telling people in advance if you plan to do this.
Another is the optimal solution, IMO, give the publishers a choice: they get to set up their retail discount. It can be 45% (or even higher), or it can be as low as 10%. If it’s hard to implement technically, have them choose “Retail” or “No retail”, it’s still more choice than they have now.
A third option is to marry the two above: till they make back their expenses, they’ll sell to retail at a reduced discount, or not sell to retail at all, and once they’re in the black, they’ll resume selling to retailers at full discount.

Final conclusion, again? IPR had taken choice away from the distributors regarding a very important topicl; their bottom line. And this chafes me, in order to “compete” with the three tier distribution they had adopted its techniques (for half of its functionality), in effect replicating them, becoming a three-tier distribution model itself.
Me? I don’t think they should strive to go there*, if you’re the only one selling indie games, and you sell them at 30% discount to retail, either they’d pay 70% for it, or they’d be left without. Which again leaves us with the “Mandate” question – sell as many copies as possible (and help the retailers make money), or serve the publishers, their needs, and help them earn money?**

* I thought most of “us” wanted to get away from the 3-tier-model, why go there, especially when you came to replace it? Those who wanted to go there to begin with, went there before you came along.
** Yes, this brings up the issue of the place of the (F)LGS, but is it IPR’s mandate to choose what the stance towards (F)LGSs is, from all indie publishers?

I did not bring up issues regarding control of IPR, affecting its decisions, shares, bigger publishers (who may or may not fit a certain definition of “Indie”), who gets to put a book on IPR (type of company, “quality control”, etc.) for a reason.
Please do not bring them up here. I may talk about them, but probably not, or not in public. But I didn’t bring them up here right now, so don’t do it either.

Also, because it shouldn’t go unmentioned, IPR does do a lot of things right. They do have the option of selling direct alongside many other publishers. They do represent you in conventions. They do have what seems to me to be very personal relationship to its publisher-members, who are quite small, and they do offer sales to retail to those who desire them.

If you link people to this post, make sure to tell them to read this post first, and not just jump into whatever fights may have opened in the comments (likely when I am sleeping).

  1. nikotesla says:

    Well, I’ve been questioning the value of having my games in retail stores from the beginning. I’m inclined to listen to Luke, who knows his shit, and says that they’re different markets, but I don’t know.
    My FLGS just ordered a bunch of stuff from IPR and it all arrived damaged, including the two copies of Shock: That means that I lost some $8 in that transaction. Accidents happen, of course, but IPR just moved to a new warehouse, and I’m now concerned that it’s cocking up shipping. Because of our low volume, these things have a greater impact on us as publishers than large publishers. Our non-BW print runs are a tenth what bigger companies’ are, and that means we pay more per copy, which means that more is lost when there’s a mistake.
    This goes for everything. I need to sell twice as many books through retail to make what I sell shooting books off my website. I’m not sure I do.
    I really appreciate what IPR does, but I’m pretty ready to try a no-retailer method of distro for a while.

    • drivingblind says:

      Previous shipping was screwing up stuff even more. I’d hardly think a single datapoint is a fair evaluation of the shipping service in aggregate. The new shipper is HIGHLY motivated to correct any problems as they come up.
      If you want to opt out of selling your product to retail, just let us know, we can do that.

      • nikotesla says:

        Hey, Fred, I’m thinking about a lot of things. Sadly, when I wrote that, I was thinking about only the cranky ones. (Like that single datapoint, which the FLGS’s owner was kind of asking me to answer for, which enhanced my crankiness markedly). He said there was no packing material around the books, and it showed. They looked like they’d lost a fight.
        That said, crankiness on my part is not a good state in which to make decisions, least of all business decisions. We’ll talk about this without a doubt, but I certainly haven’t yet decided a course of action, and we’ll talk well before I do.

      • drivingblind says:

        We’re having a bit of an argument with the carriers (FedEx, UPS) — not the shipper — about the degree to which they kick the shit ouf the boxes they’re carrying, too. Fun times. But we’re definitely examining the shipping damage problem at all ends of the spectrum.

      • nikotesla says:

        I have no doubt. Good luck!

  2. amnesiack says:

    I split my rpg purchases pretty close to 50/50 between direct and retail. Most of my direct purchases are in the form of pre-orders of books that I’m excited about because I want to help offset the cost of an initial print run. While IPR does some pre-orders, most people still do their pre-orders through direct sale (Luke Crane, Ben Lehman, Joshua Newman, Vincent Baker, Josh Roby, and many others) even if they also sell established products through IPR. I think it’s cool that I can support these people and give them my money directly.
    However, I think it’s wrong to think of retailers as faceless entities that are sucking away money from publishers. I find it equally cool that I can help give my friend Aron a livelihood by walking into his store and buying a copy of Spirit of the Century or Agon. Most of the shops that will sell games obtained through IPR are small, individually owned and operated labors of love that squeak by on a pretty thin margin. If nothing else, I applaud IPR for giving me another way to help support mom and pop operations like that.

    • Guy says:

      That is a question, when I talk about mandates:
      Is IPR there to support the retailers, or support the publishers?
      (And how much of it is mutually exclusive?)
      Edit: I also really don’t want to get into a discussion of “The place of FLGSs in the Industry and the companies’ obligation to keep them afloat”.
      Though it’s definitely related.

      • amnesiack says:

        I would say that it’s not really there for either one. Since it is a for-profit business, it’s there to support/supply the end consumers. Maintaining good relations (in whatever forms that takes) with both publishers and retailers is an important part of being able to do that, but if supporting either one became the single most important goal of IPR, it would likely fail in the long run because it would cease to exist.
        EDIT: I don’t think anyone is obligated to keep anyone afloat financially. I’m just saying that, from my personal perspective, supplying Aron with business is just as important as supplying Joshua with business, because they’re both cool people that I interact with and like.

      • Guy says:

        Maybe IPR’s marketing/human relations works too well, and that is where the disconnect happens:
        People don’t think of IPR as a company that will do everything to boost the bottom line.
        Heck, I avoided writing that, maybe it’s my socialist nature, that made me think they’d consider that an attack.
        But I also think there was a value-drift.

      • amnesiack says:

        I don’t think being consumer-focused necessarily means being soulless and greedy. Brennan is also a person that I’ve enjoyed interacting with. I think you were correct when you said in your OP that a compromise was reached. Brennan, Fred, and Chris are trying to walk a line that I do not think is easy. After all, Brennan and Fred are also publishers, and Chris is also a retailer. I definitely don’t see IPR’s primary purpose as being a self-sacrificing tool for publishers, but I also dbout that anyone there is acting with the intent of screwing the publishers over either.

      • Guy says:

        I did wonder about the use of the word “Everything”, but there was no better term…
        Also, no, I don’t think it’s anyone’s goal to screw anyone over*.
        * Call me naive, ok, I think my sister and I might do things just to screw one another over. But she does it more!
        Also, I disagree in general with the “soulless” claim, in general, as for “Greedy”, that’s attaching a value-judgement to a neutral term “Wants to maximize gains”.
        I too quite like Brennan as a person, which is why I think this point isn’t germane. I assume everyone is working from acceptable if not fully compatible causes.

  3. merb101 says:

    I know very little of the retailer side of things. I’m a consumer, pure and simple. But I know from conversations with those who are a part of IPR and those who sell indie games, that actual play is heavily touted by both. It is a lot harder to do the actual play thing when it is online orders only. Not saying that is the reason for the IPR retailer discount, but I wouldn’t be surprised if that wasn’t one of the factors. You really need to ask someone like Fred Hicks about this one. I think he was one of the people who announced the new rate and I’m sure there were reasons.

  4. I think of IPR as just another choice. They are somewhere in the grey area between “selling from your website” and “hosting through Alliance”. They’re an alternative. Not the only one (Paul Czege IIRC still sells 100% of all his games direct, frex), but a good one for people who want to bridge the gap between getting all the dollahs (selling through their own site, with lower purchase numbers because of low visibility) and getting the game out to people.
    Personally, as a consumer I like the fact that I can choose to buy three games at once that I am inclined to get, all from one source. And not having to track down 3 individual websites. It’s convenient for me.
    Currently, I’m contemplating how to release Maid and Tenra Bansho. Let’s put it this way: If I am going to go the route where I sell the game in a way where it gets into game stores, I’m absolutely going to make a beeline for IPR first (and last). Maybe Key20 as a backup. The benefit to me is that I don’t have to spend that much time pimping my own shit, and manually processing orders. That’s worth a little off the top IMO. If I didn’t have a lucrative day job (that keeps me very busy), I’d totally focus on sales through my site by myself.
    Instead of “paying myself” to be frustrated with keeping a closet full of 1000 books, shipping them out by hand every other day at the Hell that is the US Post Office, and dealing with shit like “the game didn’t arrive at the recipient/mail damage/oh my online credit card system died again”, I’d be paying IPR what I currently perceive to be a fair amount to deal with that BS for me.
    ps: I think you have too many disclaimers against flamewars: I honestly think people will take your words at face value and not view them as an attack. πŸ™‚

    • Guy says:

      That’s great, those are exactly what you can use IPR for. Unsurprisingly, I did mention as all those things as things that IPR does great, and reasons to use it.
      But here’s a question, if you don’t want the games in game stores, what would you do?
      And I definitely think IPR’s percents for themselves are totally reasonable, modest, and worth it, I never complained about those.
      And well, can’t be too careful with flamewars. And this is the internet, one gets wary after being on it for so many years.

      • I would look at it the other way, that I put things in IPR *too* have them sold to retailers, because its the thing I am not going to practically do from my own site. Yes there are casual direct sales at IPR that I won’t get on my own website, but the people who *want* to buy Solipsist would probably find my website if needed, whereas the retailers won’t.
        If anything I’d be better asking IPR to sell to retailers only πŸ™‚

      • Another thought, that I’m waffling with (and honestly, this is the hard plan for Tenra, and probably MAID too): For the first 1-3 months, sell only direct from your site. After that, then move to IPR for future sales in conjunction with direct. If nothing else, that makes sure that you can get the maximum bang at the beginning, and after that utilize a good relationship with dedicated partners like IPR. (key20, Alliance if you feel like throwing your money away)

      • drivingblind says:

        Yeah, you can totally do that. That said, I’ve seen a fair amount of success with preorders run through IPR for many more publishers than myself.

      • Guy says:

        “If anything I’d be better asking IPR to sell to retailers only :)”
        See, that’s perfect. That’s you using IPR as mainly a three-tier-model distributor. It fits your needs perfectly.
        I have to say, this is mind boggling. I’m talking about A, and then you come in and point out why A is wrong because of B, when I stated B is fine but it’s not what I’m talking about:
        If you want to use the three model tier, IPR is perfect for you. This was about not wanting to use the three-tier-model, and using IPR for the direct sales.

  5. I like IPR very much, but they’ve never been a big source of sales for us. Now this is probably almost entirely due to the fact that we’ve done a shitty job of keeping our books in stock with them. I believe that the total number of copies of Panty Explosion we ever sent them was 50. Same with Classroom Deathmatch. Both sold out fairly fast,and we never bothered to resupply them (we’re finally sending them a new box of books next month). This is publisher apathy on our part, but it also comes from the knowledge that 60% of our sales come from our own site. The other 40% come from IPR, Key 20, conventions, stores we deal with directly, Lulu, e23 and other PDF download sites.
    My point here is that IPR is just a small part of our overall approach to selling our games. Over the last 2 years every place that we sell through has changed their policy and practices to some extent. I wasn’t surprised when IPR decided to. I didn’t feel particularly betrayed or surprised. I’m sure I might feel different if IPR was my only outlet for sales. I know some publishers have made that choice. I feel like that’s a big mistake.
    I really think that if you want to sell at full cover price (or close to it), your own site is the place to do it. You can’t rely on another company to do it for you. Because stuff like this does happen. Companies, despite their best intentions, do change.
    IPR may look like the only show in town, but it really isn’t. Selling through your own site is a completely viable option. We sold close to 500 copies of Panty Explosion before we ever signed with IPR. Most of those sales came from people who we drove to our site through positive word of mouth and targeted promotion. Using IPR as an additional storefront is probably the best choice.
    I think your concerns here are valid, but I also think that they stop being real concerns for publishers who haven’t put themselves in a position of relying on IPR as their only source of sales.

    • drivingblind says:

      A very large portion of your lack of success with IPR comes from the fact that you let stuff go out of stock with us, and we cannot tell our customers with confidence when you’ll get it back to us. The publishers who do best at making sure we’re never out of stock seem to do well enough.

  6. eyebeams says:

    I think the indie community should reevaluate the “three tier” model it spent years shitting on now that practical business decisions ensure that they virtually all use a lookalike. People should consider that, Jeez Louise, there was a *reason* for its existence after all.
    IPR is a business. Asking it to damage its prospects with a confusing pricing scheme for stores is unreasonable. If you want a co-op instead, nobody’s stopping you from starting one. Plus, it is clear that IPR got this way because it reacted to the realities of the business, and it’s earned its place. I for one would love to see an alternative model. Go for it. It’s just not IPR’s job to do it for anyone.

    • Guy says:

      The three-tier-model certainly works, and certainly has its uses, but it is slanted.
      It works, for those with bigger print-runs. It fails (or doesn’t work nearly as well) for those with smaller print-runs, for those for whom the production costs are a higher percentage of the lifetime revenue they’ll make from their game, or the not-completely long-term revenue.
      In other words, the indie community had been shitting on the three tier model, because it doesn’t work for most of them.
      Maybe they should change their business model, but for the current business model, the three tier model doesn’t seem adequate.

      • eyebeams says:

        The three-tier-model certainly works, and certainly has its uses, but it is slanted.
        It works, for those with bigger print-runs. It fails (or doesn’t work nearly as well) for those with smaller print-runs, for those for whom the production costs are a higher percentage of the lifetime revenue they’ll make from their game, or the not-completely long-term revenue.

        This strikes me as code for “unsuccessful games and unviable business models.” If you can’t muser a combination of patience (long tai, remember? — takes time) and thrift to make a game worth it on IPR, chances are it’s a vanity project with no business pretending to commercial success. We’re talking about the nicest distributor with the best arrangements. If you can’t hack that, the problem is not IPR’s.
        In businesses, as opposed to vanity hobbies, you really can just be doing it wrong, you know?
        In other words, the indie community had been shitting on the three tier model, because it doesn’t work for most of them.
        Maybe they should change their business model, but for the current business model, the three tier model doesn’t seem adequate.

        See above. This is as easy as it gets. Companies have to get themselves out of the bullshit, funded by my buddy doing art for nothing, cracked software and putting my hand in the till and the end of every day at a Con, mentality. That’s not business. It’s the gamer equivalent of fanfic in serlox bindings.

      • Guy says:

        How is “Selling direct only” not a viable business plan, it too banks on the long tail, even longer.
        How is the fact that it doesn’t agree with something IPR does make it non-viable?
        It can be worth it on IPR if you remove the retail sales, for some sellers (and yes, for many other sellers you do not need to remove the retail stores, and perhaps for the first group it is already viable, should they look long-term enough, but they want to make it more profitable according to their view – yours seems a bit myopic).
        Also, let us not get into a war on what “viable” means, because it can mean any number of things, where “Make money back, and money for next game” seems viable to me, for a hobby business.
        And I don’t see that as contradictory. It’s all about your goals.

      • eyebeams says:

        That’s a good point, but you’re talking about a scale of business and objectives that are incompatible with running a company like IPR, which is not a “hobby business.” Like I said, get together and try another model, but understand that *this* one has a reason to exist, and its threshold for compatible B2B transactions may be something other than what you’re happy with.

    • greyorm says:

      What “practical business decisions” do you refer to?
      I also see no reason for the indie community to re-evaluate “their” stance on the functionality of the three tier model given how using it doesn’t mean it suddenly, magically works well and didn’t have all those problems that have been talked about after all.

      • Anonymous says:

        What “practical business decisions” do you refer to?
        IPR adjusting its discount, shipping and other aspects. It’s done this in response to issues that have come up and has explained exactly why changes are needed every time. In other words, they tried to live up to indie business bullshit, but discovered experimentally that it was bullshit.
        I also see no reason for the indie community to re-evaluate “their” stance on the functionality of the three tier model given how using it doesn’t mean it suddenly, magically works well and didn’t have all those problems that have been talked about after all.
        The three teir model is the worst way to get stuff into game stores, except for all the others.

      • greyorm says:

        You know, you keep hurling around words like “bullshit” without ever defining what that “bullshit” “they” are selling is exactly. I’m not sure the “indie” business complaints about the retail distribution model had to do the specifics of retailer discounts, shipping, and etc. except in very broad terms.
        The three teir model is the worst way to get stuff into game stores, except for all the others.
        That still doesn’t make it a system without serious flaws or make the charges against it bullshit. Otherwise you’re back in the middle ages arguing “divine right of kings” is the best way to run a government, because it’s the way government is run.

      • eyebeams says:

        You know, you keep hurling around words like “bullshit” without ever defining what that “bullshit” “they” are selling is exactly. I’m not sure the “indie” business complaints about the retail distribution model had to do the specifics of retailer discounts, shipping, and etc. except in very broad terms.
        I speak of the multiple claims that It’s a Fool’s Game and Everybody But You Is Making a Business Mistake.
        That still doesn’t make it a system without serious flaws or make the charges against it bullshit. Otherwise you’re back in the middle ages arguing “divine right of kings” is the best way to run a government, because it’s the way government is run.
        The irony is that my comment paraphrases something Chrchill said about democracy. The reality is that there’s no flawless system, never will be and that this flawed one, in IPR’s case, evolved from previous iterations that were more in tune with the dogma. They changed because they had to. If you cannot account for these facts and adjust your global view accordingly, you certainly can’t prescribe and alternative.

      • greyorm says:

        I speak of the multiple claims that It’s a Fool’s Game and Everybody But You Is Making a Business Mistake.
        I’m afraid that doesn’t clarify your assertion for me: supposed platitudes do not arguments make (nor detail those actually made or by whom/where/when). It only makes dogma to rail against ‘Those People’ who are ‘Clearly Idiots Making Broad and Ridiculous Generalizations’.
        Nor does your following assertion about there being no flawless system make your circular argument regarding the three-tier system and IPR’s supposed caving-to-its supposedly superior ways any less of a circular argument, nor less than an attempt to whitewash the noted systemic flaws as not-really-problems.
        I also note that, even should IPR have caved (and please note Ralph’s argument below regarding such), deciding to work with a flawed system to get what you want does not mean the system is suddenly not flawed, that there are no better alternatives, or that following it is clearly a case of (as you seem to imply) rejecting dogma and embracing reality.
        It only means the 800-lb gorilla is still sitting where he wants, not where he should, and you’re deciding to let him.
        Meaning I am not convinced your argument is any better than the claim: “Those democratic separatists should just wake up and realize that the king rules by divine right, and if they want any power they’ll have to ask him for it. That’s just the way it works and has worked historically for good reason. Clearly, you have to leave the king in charge if you want anything done.”

      • Guy says:

        I think you’re mis-representing us Malcolm.
        We do not think those other people are making business mistakes, that’s exactly what we’re arguing, when other people tell this to us.
        We just don’t operate from the same model.

  7. benlehman says:

    Something that you’re missing:
    IPR’s retailer program is strictly opt-in. I know this, because I opted out for a while. Then I opted in, at the point when Polaris had sold most of the copies it was going to sell from the internet alone. Likewise, convention sales are opt-in.
    In light of that, any decisions about selling remain up to the individual publishers. IPR sells direct, at a fixed %age. They also sell to retailers, also at a fixed %age. As a publisher, you can do one or the other or both or neither.

    • Guy says:

      I didn’t miss it, I actively thought it didn’t happen.
      That’s much better than I thought, thanks for pointing this out Ben.

    • Guy says:

      Ben, it’d seem many publishers aren’t aware of this option.
      No one brought it up when I’ve discussed this point with them prior to posting this, someone seemed to re-consider his IPR relations because of the sale to retailers (maybe I misunderstood him).
      I just asked someone who is selling games on IPR if he knew about this option, and he stated he did not.

      • benlehman says:

        I don’t really care that other publishers aren’t aware of it.
        Like any business arrangement, IPR’s contracts are negotiable. It’s not their responsibility to lay every option on the table, it’s your responsibility to come to them and ask for the arrangement you want.
        I realize that in the internet era, where all of our options are supposed to be clickable radio buttons on an e-commerce site, this is bizarre, but it’s how business has been done since the invention of the contract.

      • greyorm says:

        Shit. Nice attitude, Ben.
        Contractual transparency and clearly noting available options isn’t a sin, and desiring it doesn’t make you a zombified internet dummy who can’t think for themselves. Not everyone has an MBA and would think of requesting no sales on retail channels.

      • benlehman says:

        The problem here is that you’re approaching IPR (cognitively) as consumers of a service, rather than as peers in a business relationship.
        TAO Games, as a business, had particular services it needed. So I went to Brennan and said “Hey, Brennan, here’s what I want. Can you do that for me?”
        Brennan said “Let me think about it.” Then came back and said “Yes, I can do that for you.”
        So we signed a contract.
        Later on, my needs changed. I went to Brennan and said “Hey, my needs changed. Can you do this other thing for me?” And he said “yeah, I’m already doing that with Vincent, so no problem.”
        IPR can do a lot more than they could easily lay on the table. For instance, if I said “Hey, I want to sell this book, but only to customers outside the US, because I have a different exclusive US distribution deal” they could probably do that, although they might say “actually, Leisure Games would be better for that.” As far as I know, no one has that arrangement, but it doesn’t mean it’s impossible.
        I have zero sympathy for people who think that they have to take a “standard IPR package” or nothing at all. Those people are conning themselves. Brennan has zero fault for it.

      • greyorm says:

        The idea you’re positing isn’t going to occur to many indie publishers — guys who are working out of their basement, not professionally immersed in the business culture where they would be trained/experienced enough not to “cognitively approach IPR as consumers of a service”.
        That’s how they’re going to approach it because…why wouldn’t they? Why would it occur to them not to?
        Nor am I “blaming” Brennan and wanting to spank him and call him names for being naughty. I am saying I feel the option to avoid retail sales and the positive and negative effects of that could be made more public.
        Insisting people should realize things they aren’t because they don’t have the background/experience/knowledge to do so and then calling them names, impugning their intellect/attention span, and turning your nose up because they don’t?
        I know you’re a better and more thoughtful person than that.

      • benlehman says:

        It doesn’t require an MBA not to buy something you don’t need.

      • Guy says:

        I think this specific branch of discussion can die now.
        Please do not post here, unless you have something new to add to a a previous point (preferably, back up to Ben’s first post in this mini-thread).
        I won’t freeze it, because who knows, someone might have an actual “Eureka!” moment.

    • drivingblind says:

      Well, it’s more that it’s assumed you’re opting in, but you can opt out. I would not characterize that as “strictly opt-in”, because that comes across to me as “explicitly opt-in”, which it really is not. “Implicitly opt-out”? Yeah.

      • benlehman says:

        It’s a distinction without a difference to me, but if it makes you feel more comfortable, sure.
        I think for future releases I may do a “no retailer month” followed by a two month “endgame, the dreaming, and leisure games only” period, followed by “free for all.”

      • Guy says:

        Please make no replies to the first sentence in this comment. They won’t lead anywhere, and it had been discussed above.
        Unless you feel what you have to say is beyond, “Feel”, “Opinion” and such.
        Ben, please don’t write it in any more comments, we get it.

      • drivingblind says:

        Well, it’s a distinction that makes the difference between inaccurate and clear/accurate, so yeah, that’s what makes me more comfortable.
        We don’t really have a way currently to restrict retailer sales to a limited set of retailers via IPR, as an FYI.
        EDIT: Whups, sorry Guy, I didn’t see your reply at the time I wrote mine.

  8. Guy says:

    Another Math piece:
    The ratio between retail sale and direct sale is 0.55(=0.4675/0.85), so the revenue ratio between the sales is the same.
    The more copies you print, the more closely you get to attaining this mark. Yes, everyone actually makes less than that when they sell retailer, because printing costs do not change (in other words, they don’t shrink to 55% of what they were before just because you make 45% times less now).
    The 50 book printer makes 0.31 times the profit on retail.
    The 1k book printer makes 0.40 times the profit on retail.

  9. greyorm says:

    Thanks for plotting out the math for that. It appears the retail discount impacts me much more than I realized. I need to crunch the numbers, but right now it appears I’m effectively losing money on every copy I sell to a retail outlet over the product’s expected lifetime, and thus far I haven’t seen those retail sales turn into higher payout direct/individual orders.
    That is not a good place. I have a very limited amount of money to put into publishing, so every dollar I can earn on a return investment is needed.
    I can see exactly why the 3-tier system has been rightfully maligned as crap and robbery, and I’m starting to wonder why IPR has it’s feet in those waters from a cost-benefit viewpoint for the independent publisher (it’s only worth it if the short term loss is eclipsed by a large gain: more sales via retail exposure, and enough exposure-driven sales to make up for the monetary loss of the retail sales. Usually, it isn’t, for the small press at least).

    • greyorm says:

      Then again, Andy makes a bunch of cogent points.
      But I’m still not sure if the listed benefits do outweigh the costs (unless one simply doesn’t care at all about the financial aspect).

  10. IPR started out with a very weak push to get into retail. The big push seemed to only come along for a couple reasons: namely Spirit of the Century, Don’t Rest Your Head, and Dogs in the Vineyard, which are the biggest sellers to retail stores, along with Burning Wheel, Polaris, and a few others. My sense is that Brennan had always been interested in pushing harder into retail, but before Spirit came through and sold a bazillion copies, he didn’t quite have the leverage he needed to make that work. Evil Hat selling exclusively through IPR provided that leverage.
    There is the problem that, yeah, IPR frequently seems to make decisions that most clearly benefit the highest selling titles and publishers in its stable, because that’s the easiest way to be profitable, as a business. For games like Spirit and Dogs, pushing hard into retail totally makes sense. For Push, it totally didn’t, because I hadn’t priced the book for retail sales. I wasn’t making any profit at all off retail, so I wrote those off as a promotion, more or less. But now I’m moving towards a non-profit model with Push and all my future publications, because I decided I really didn’t want to run a small business after all; I just wanted to participate in the hobby.
    But I don’t think you can blame IPR for making decisions that make it financially viable for Brennan. Having talked to him about it, there were times when IPR was just barely profitable, which was a huge blow after all the work he was putting into it, and the stress was putting a ton of pressure on Brennan and his family. Things have changed significantly since then, for the better, and I’m personally glad for that, whether or not I decide to sell through IPR in the future.
    Like other folks have said, there are other choices besides IPR that are financially viable. Paul Czege has stuck with the pre-IPR model of selling through his website and seems to do just fine. And the best way to discover other models, after all, is to invent new ones. Look at Greg Stolze and Daniel Solis doing the ransom model, etc.

    • Guy says:

      Look at this, Brennan said:
      “Distribution was a money-losing proposition for people like me, so why get suckered in?”
      Yes, he had been interested, but on the other hand, IPR’s message a couple of years ago was “Not getting into distribution.”
      And I don’t blame Brennan.

    • drivingblind says:

      See below. Business decisions were made which in aggregate mean that publishers are now getting more cash for their sales, not less, even with the retail piece factored in.

  11. the_tall_man says:

    IPR is a storefront/agent. A middleman. I’m not sure why it’s suprising that they do middleman things; that’s all I see those bits as.
    The only about IPR that I mislike is the slogan.

  12. IPR
    There are other choices. There’s Key20, there’s setting up your own co-op, there’s simply setting up your own web site.
    I pay IPR so that I don’t have to shlep to the post office and keep track of shipping stuff. I’m happy to do so.
    If ever I’m not happy with the arrangement, we’ll part company and I will investigate other options.

    • Anonymous says:

      Re: IPR
      I’m rather troubled that IPR keeps getting referred to as a “Three tier” distributor. They are not.
      Three Tier means that ownership of the product changes hands 3 times. I start owning the book. The distributor buys the book from me (1). The retailer buys the book from the distributor (2). The customer buys the book from the retailer (3).
      IPR is a fulfillment house, what in another industry would be referred to as a broker. They never take ownership of my books. I start owning the book. I ship it to IPR to warehouse some stock. The retailer buys the book from me and IPR takes its cut / commission (2). The customer buys the book from the retailer (3).
      Three Tier distribution is especially difficult for small press publishers, because distributors typically won’t deal with me directly. So I STILL need a fulfillment house, and the fulfillment house’s cut ON TOP of the extra layer of middle man. I do sell quite a few books into the Three Tier (through Key 20) because even though its not very profitable it allows me to print larger runs and make more per book from the more profitable avenues.
      Conclusion. No, indie publishers do not need to rethink how we’ve shat on the three tier model…it still remains a pretty crappy (and as IPR and Key20’s direct to retailer service demonstrates) an unneccessary extra layer.

  13. Guy says:

    I suggest reading Ralph Mazza’s post here, on The Forge.
    I think almost everything he says is spot on.
    And no, it doesn’t counter what I’ve said, I believe.

    • greyorm says:

      I think you’re right: while he hijacked that thread, Ralph’s post is good and his numbers and admonitions do prove exactly what you stated above regarding the profit slant towards high-volume publishers doing retail, not us little guys, and the set-up forcing publishers into large print-runs.

  14. drivingblind says:

    “Back in April IPR raised its retailer discount to 45%, from 42%, a question which brings forth, who is IPR here to serve? What is its mandate, what are its goals? They do mention they did it because the 42% discount was not good enough for the retailers. I’m going to present (some of) the publishers’ side here.”

    I fully believe that the 45% discount is in support of publishers, in terms of getting their books out to the market in a way that is affordable.
    You may be missing a crucial detail that came along with the change from 42% to 45%: IPR also stopped charging the credit card and bank card fees to the publishers, on ALL transactions, not just retail.
    So in aggregate, publishers should now be getting more cash from the sale of their merchandise than they were before.
    Meanwhile, IPR has taken what amounts to an (approximately, so don’t get didactic on this figure) 25% reduction in its revenue: IPR takes 15% of the sale; the average bank fee is about 3-4% of the sale; so IPR is now getting more like 11% or 12% of the sale. 3 or 4 is a pretty hefty chunk out of 15, thus the 25%-approximate.
    IPR did this BECAUSE we were increasing the retailer discount. In nearly every case, this should net an increase in publisher income, even with retail sales going on.
    If that’s not looking out for the publisher, I don’t know what is. It’s certainly something we did with the publisher in mind. If folks wanna freak out about selling to retail in ignorance of the above, that’s fine, but it’s in ignorance.

    • drivingblind says:

      I should probably also point out that prior to this, IPR also made a decision to change the shipping policy. It used to be that over $35, any domestic order had entirely free shipping. These shipping costs got passed on to the publishers whose books were on that order.
      Then gas prices went insane, and the cost of shipping started rising at a near-meteoric rate.
      So we changed. Now, no matter what the cost of shipping, the publishers are only on the hook for up to $5 of the shipping costs per every $50 sold. This means that no matter where shipping prices go, the cost of shipping subsidizing for the publishers remains consistent and predictable, not to mention… less than it was before.
      That’s another publisher-supporting move we’ve made in the last year.
      I’d appreciate IPR getting some credit for making sure it’s doing more that puts cash in publisher pockets than its own.

      • Guy says:

        Fred, though I don’t dispute the last line:
        “I’d appreciate IPR getting some credit for making sure it’s doing more that puts cash in publisher pockets than its own.”
        on the whole, it is a bit senseless in regards to the shipping policy.
        While the change in shipping policy certainly means more money in the publishers’ pockets, it has no bearing on IPR’s pocket, since in either case the shipping subsidy came from the publishers, not from IPR.
        The problem is a technical one here, “Than its own”, but it has no bearing in this instance.

      • drivingblind says:

        Obviously, I was not saying that last piece in a specific isolated sense, but rather by taking all of what I’ve been observing above in aggregate. Please don’t focus in on something that is clearly not being focused in on in order to disagree. It will only amplify my annoyance.

    • Guy says:

      Thanks for the reply Fred.
      I want to note that the main point isn’t about the %3 increase to retail.
      Yes, a reading of the text makes it seem that way, but it’s not. The point was about the retail discount. Where it’s at (%3 here or there are not the crux), the lack of choice of setting it to a certain position, and, the mistaken belief (though not unreasonable) that you had to sell to retail.

      • drivingblind says:

        And it’s part of a mistaken understanding about IPR’s goals and history. As I understand it, Brennan founded IPR because he wanted to get Galileo Games’ products sold to retail but didn’t want to participate in the distro game to do it, as well as operate it as a direct sales site for his products, and he figured that other publishers might want to do the same.
        Working from that understanding, it should be pretty clear we’re here to make it possible to sell into retail without losing your shirt to the more-like-60%-discount publishers would be giving to a distributor, as WELL as provide a destination site for direct sales.
        But as we’ve said in earlier threads above, publishers are welcome to opt out of retail sales. Personally I would not recommend it, but hey, I like money. πŸ™‚

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