You may remember last year’s kerfluffle over the formation of OneBookShelf, a merger between RPGNow and DriveThruRPG that resulted in some interesting fallout.
Expeditious Retreat Press was pretty vocal about their concern over OBS’s new fees, and their frustration has just borne fruit: YourGamesNow.com is a brand-new (as in January 1st) PDF retail site, helmed by Joseph Browning of XRP.
And there’s a promising twist: Your Games Now is a publishing cooperative. As their about page details, every YGN publisher earns a small percentage on the sale of any YGN product — not just their own material, but any product. Eeeenteresting.
Per their press release, the companies onboard at launch are: 0one Games, Arion Games, ComStar Media LLC, Dog Soul Publishing, Expeditious Retreat Press, Fiery Dragon Productions, Goodman Games, Hinterwelt Enterprises, Ki Ryn Studios, Majestic Twelve Games, Misfit Studios, Victory by Any Means Games and The Le Games. That’s a pretty solid opening lineup, particularly with XRP, Fiery Dragon and Goodman Games in the mix.
I see the potential in what YGN offers to PDF publishers, and it will be interesting to see how that relates to what YGN has to offer to PDF buyers — especially GMs. (Via Jeff’s Gameblog.)
I’m definitely taking a look as well as keeping YGN in mind in case I decide to publish something in PDF format. The whole publishing cooperative approach is really intriguing to me.
w00t! most excellent.
I concur most enthusastically that it’s nice that there’s some new competition, since it seems like everyone joined the whole One Bookshelf thing… Not just RPG Now and Drive-Thru RPG, but the ENWorld game store and some others I don’t recall at all…
I wish them the best of luck, but I’m also a little… hesitant to endorse their decision to make it a coop. I’m not terribly familiar with the terminology, but from your description it sounds like there would be significant barriers to entry in their store, since they’d probably only want to ensure that people who actually sell things that other people want to buy get in. This would mean, at the very least, that there’s an element of human vetting and bias in the selection process. One of the great things about the PDF market is that it’s so easy to enter and to create totally oddball, niche stuff. This could be a good thing or a bad thing, I suppose, as in theory it also means that there’s more likely to be a higher signal-to-noise ration than in a publisher where anyone’s allowed to do business for a fee.
Their “profit sharing” system might, in a technical sense, be profit sharing, but in reality, if you do the math involved, all it’s saying is:
“Josepsh Browning gets 5% of all sales up front plus an additional percent of all sales necessary to cover cost, not to exceed 20%”
That MIGHT be something to write home about IF we can trust Joseph Browning. I, personally, don’t know Joseph Browning. He MIGHT be a saint with A 4.0 GPA and an MBA from Harvard. He also MIGHT be a shady crook, or without three brain cells to rub against each other. I’m not making claims either way. That would in no way be fair.
By the same token, (most of) you don’t know me. I AM a paranoid doomsayer, so take that into consideration as you read on, for what it’s worth.
However, I have some concerns from reading the “About us: Your games now” page:
1) TECHNICALLY, the system as explained is profit sharing. The company charges 20% operating costs fee, and any amount left over (profit) is proportionately shared with all sellers. In REALITY, what this means is that the operating cost fee is a variable percentage of sales per month. They’re just taking 20% and then refunding the unused portion. Why masquerade this as profit sharing when it’s profit sharing in name only?
2) The phrase “First, the better the site performs the greater percentage each publisher effectively receives on their sales.” is highly misleading. YES, it’s true that the more units you sell, the greater percent of your sales you recieve, but it’s no different than any other fixed cost. If fixed costs are $100 (and variable costs are $0) to operate, and you sell 1 unit for $200ea, you’ve made 50% profit per unit. If you sell 2 units for $200ea, you’ve made 75% profit per unit. Your costs aren’t decreasing at all, only in proportion to your sales.
3) Under this model, the more sales a company makes, the greater proportion of the fixed costs they shoulder. That’s right! When I sell $1000 worth of units, and you sell $1000 worth of units, we split the fixed costs 50-50. When I sell an additional $1000 worth of units and you don’t, we now split the costs 66-33. See that? I just INCREASED THE AMOUNT OF THE COSTS I PAY BY 16%! This is a HUGE disincentive for companies that generate large amounts of sales to participate. Why should I as a company essentially support dozens of smaller companies?
4) The site says: “When making fiscal decisions, members’ votes are weighted according to the percentage of their sales in relation to the site’s sales. When voting on membership matters, such as adding new members or determining a SOP on the site, each company receives an equal vote.” Do I need to point out that the owner of the site is one of the members? As long as their company makes the most sales, attainable by the fact that they are in sole control of advertising, placement, software, etc… they can basically do whatever they damn well please under this setup, from making everything better for everyone to raising the site commission and walking off with it.
To add to these concerns, based on what I can see on their site, here are some strictly based on my paranoid imagination:
5) What happens to profit attained from other sources than sales? What other sources? Advertising for one. I don’t see any advertising right now, but let’s assume there was some. According to the current setup, all of THAT profit goes straight to the website’s pocket. The “profit sharing” pool is filled only by the dollars of the sellers. Under a TRUE profit sharing environment, any additional revenue streams would also be up for grabs by us, the members. If that would happen, however, without failsafes that aren’t currently in place, once the site reaches a certain critical mass, it would be incredibly easy for small publishers to acctually MAKE MONEY off of their membership. I won’t go into detail about how to scam Joeseph Browning, and all of the participants of YOURGAMESNOW.COM in some theoretical future, but it’s sublimely easy.
6) They note that “Once the bills are paid, the realized excess is distributed to publishers” That in itself is too vague to be of use. What PRECISELY is in that cost? Without a rundown, or even WITH one, it could very well include
– Salary, Browning, in the amount of a believeable proportion of everything left.
I’d like to see yourgamesnow.com respond to these questions. (Hence I’m sending them a link here, though I assume they already have one) I honestly feel that Joeseph Browning is setting up this site because he feels it’s a needed alternative to what is currently available and is aiming for a fair and equitable solution for all of his members. I’m just too paranoid to act on those feelings without further clarification.
Ian said
“I wish them the best of luck, but I’m also a little… hesitant to endorse their decision to make it a coop. I’m not terribly familiar with the terminology, but from your description it sounds like there would be significant barriers to entry in their store, since they’d probably only want to ensure that people who actually sell things that other people want to buy get in. This would mean, at the very least, that there’s an element of human vetting and bias in the selection process. One of the great things about the PDF market is that it’s so easy to enter and to create totally oddball, niche stuff. This could be a good thing or a bad thing, I suppose, as in theory it also means that there’s more likely to be a higher signal-to-noise ration than in a publisher where anyone’s allowed to do business for a fee.”
First, just want to say hi to everyone and hopefully this post will answer a lot of questions concerning the operations of http://www.yourgamesnow.com.
So with that preface, let’s jump in with responses:
Ian said: “I’m not terribly familiar with the terminology, but from your description it sounds like there would be significant barriers to entry in their store, since they’d probably only want to ensure that people who actually sell things that other people want to buy get in. This would mean, at the very least, that there’s an element of human vetting and bias in the selection process.”
There are significant barriers to entry to our store. Each member company gets a vote to decide if they want a prospective member to join. The reasons behind this “yes or no” vote are up to each individual member to determine and there is no set requirements as to who and who should not be allowed membership.
Ian said: “One of the great things about the PDF market is that it’s so easy to enter and to create totally oddball, niche stuff. This could be a good thing or a bad thing, I suppose, as in theory it also means that there’s more likely to be a higher signal-to-noise ration than in a publisher where anyone’s allowed to do business for a fee.”
Yes, just like a fee is a barrier to entry our membership vote is a barrier to entry as well because at least 75% of our members must vote yes before a new member is allowed in. And considering that http://www.yourgamesnow.com is cooperatively run, membership is a consideration that has fiscal consequences to each individual member so it is not something lightly considered.
Rick the Wonder Algae said: “I, personally, don’t know Joseph Browning. He MIGHT be a saint with A 4.0 GPA and an MBA from Harvard. He also MIGHT be a shady crook, or without three brain cells to rub against each other. I’m not making claims either way. That would in no way be fair.â€
I’ve been in publishing for almost 4 years and we have a respectable reputation in the industry. And, for your information, I only have two brain cells, but they are very large. 🙂
Rick the Wonder Algae said: “1) TECHNICALLY, the system as explained is profit sharing. The company charges 20% operating costs fee, and any amount left over (profit) is proportionately shared with all sellers. In REALITY, what this means is that the operating cost fee is a variable percentage of sales per month. They’re just taking 20% and then refunding the unused portion. Why masquerade this as profit sharing when it’s profit sharing in name only?â€
The use of the term “unused portion†should show you that yes, it is profit share. The “unused portion†is profit – that which is left over after all the bills are paid. Unlike every other site, this profit is then shared with our members. At other sites, the site owner pockets this and that’s his profit.
Rick the Wonder Algae said: “2) The phrase “First, the better the site performs the greater percentage each publisher effectively receives on their sales.†is highly misleading. YES, it’s true that the more units you sell, the greater percent of your sales you recieve, but it’s no different than any other fixed cost. If fixed costs are $100 (and variable costs are $0) to operate, and you sell 1 unit for $200ea, you’ve made 50% profit per unit. If you sell 2 units for $200ea, you’ve made 75% profit per unit. Your costs aren’t decreasing at all, only in proportion to your sales.â€
The difference is that the fixed costs for publishers at a traditional site is a flat % paid to the site owner. The site owner then has variable and fixed costs that are paid from the flat % he takes from each sale. The remaining cash left over is then profit for the owner of the site, and not for the publishers.
The phrase “First, the better the site performs the greater percentage each publisher effectively receives on their sales.†is a completely accurate description of what happens at http://www.yourgamesnow.com once the site has earned enough from its 20% take to have profit to return to its members.
What is being left out is the middle-man profit as described above. That profit is going back to the members in an equal percentage to their sales at the site. If a company earns 10% of the total sales at the site, that company receives back 10% of the difference between the 20% fee and the actual operating costs.
Rick the Wonder Algae said: “3) Under this model, the more sales a company makes, the greater proportion of the fixed costs they shoulder. That’s right! When I sell $1000 worth of units, and you sell $1000 worth of units, we split the fixed costs 50-50. When I sell an additional $1000 worth of units and you don’t, we now split the costs 66-33. See that? I just INCREASED THE AMOUNT OF THE COSTS I PAY BY 16%! This is a HUGE disincentive for companies that generate large amounts of sales to participate. Why should I as a company essentially support dozens of smaller companies?â€
Your not, don’t worry. The way it works is this way. If you are a large company and make 50% of the total revenue for the site and there is a surplus left over after all the bills have been paid, that surplus is then returned to the members in equal proportion to the earning. Meaning that you would get 50% of the surplus because you have 50% of the revenue. The surplus distribution is proportional.
Rick the Wonder Algae said “4) The site says: “When making fiscal decisions, members’ votes are weighted according to the percentage of their sales in relation to the site’s sales. When voting on membership matters, such as adding new members or determining a SOP on the site, each company receives an equal vote.†Do I need to point out that the owner of the site is one of the members? As long as their company makes the most sales, attainable by the fact that they are in sole control of advertising, placement, software, etc… they can basically do whatever they damn well please under this setup, from making everything better for everyone to raising the site commission and walking off with it.â€
I am one of the members through the company Expeditious Retreat Press, but it’s even worse than you think Rick, because Expeditious Retreat Press’s vote is weighted: we get an extra 10% fiscal vote and 1 extra membership vote on the site. Not only am I a member, I’m a member with an artificially weighted vote. 🙂 But every member knows that, and is happy with that before they can become a member. Because I do own the site, I’ve fully funded the creation of the site, and I came up with the idea of the site and brought it into fruition. All I’m doing with a weighted vote is providing myself a bit more say in what the site does from here on out.
However, the fact that members have any say to begin with in where money is spent for the site is vastly preferable to sites where publishers have zero say. There will be times when what I want to do is overridden by the member votes and then I’ll buck up and go with the flow and make what the members what to happen, happen. As you note, this is a matter of trust. But every business relationship boils down to trust.
Our members have a 30 day notice of termination if they feel the trust has been broken.
Rick the Wonder Algae said: 5) What happens to profit attained from other sources than sales? What other sources? Advertising for one. I don’t see any advertising right now, but let’s assume there was some. According to the current setup, all of THAT profit goes straight to the website’s pocket. The “profit sharing†pool is filled only by the dollars of the sellers. Under a TRUE profit sharing environment, any additional revenue streams would also be up for grabs by us, the members.â€
First Rick, you must understand that you’re not a member. 🙂
Second, what will happen to alternate revenue streams will be determined by the member’s vote.
Rick the Wonder Algae said: “If that would happen, however, without failsafes that aren’t currently in place, once the site reaches a certain critical mass, it would be incredibly easy for small publishers to acctually MAKE MONEY off of their membership. I won’t go into detail about how to scam Joeseph Browning, and all of the participants of YOURGAMESNOW.COM in some theoretical future, but it’s sublimely easy.â€
In fiscal matters (what the site spends), members have a vote weighted upon their sales performance and profits are shared based upon fiscal performance. If one doesn’t perform fiscally one doesn’t have much control on the finances of the site.
Rick the Wonder Algae said: “6) They note that “Once the bills are paid, the realized excess is distributed to publishers†That in itself is too vague to be of use. What PRECISELY is in that cost? Without a rundown, or even WITH one, it could very well include
– Salary, Browning, in the amount of a believeable proportion of everything left.â€
Every member receives a monthly breakdown of expenses. If there ever comes a “Salary, Browning†charge the members will know about it and, more than likely, have pre-approved the charge to begin with.
It sounds like you have mostly an issue of trust concerning the behavior site owners. To be honest, if you don’t trust the site owner you really shouldn’t have a business relationship with him.
I hope that clears things up a bit with the details. Hopefully everyone understands that a press release, and an “About Us†section isn’t supposed to be a detailed breakdown of the internal workings of a cooperative. They are a simplification of a more complex procedure and are useful for providing the “gist†of the situation to someone who isn’t interested in the real nuts-n-bolts. When someone contacts us concerning potential membership they are then introduced to the complexities of http://www.yourgamesnow.com
Joseph Browning
Your Games Now, LLC.
(Rick TWA) That MIGHT be something to write home about IF we can trust Joseph Browning. I, personally, don’t know Joseph Browning.
I do, and Joe’s good people. 😉 He wrote my first freelance check back in 2004, and I’ve worked on small projects for him (by way of XRP) several times since then, and chatted with him via email and at GenCon.
I’m glad you raised such good points (and thoroughly!), Rick — and equally glad that Joe stopped by to respond to them.
I was very curious about Rick’s point #3 myself (profit sharing vs. percentage of sales), and it’s good to hear exactly how that works.
Thanks for keeping it friendly and above board, guys — that’s one of the things that TT is all about. 🙂
Rick the Wonder Algae said: “1)…Why masquerade this as profit sharing when it’s profit sharing in name only?â€
Joseph Browning Said: “The use of the term “unused portion†should show you that yes, it is profit share. The “unused portion†is profit – that which is left over after all the bills are paid. Unlike every other site, this profit is then shared with our members. At other sites, the site owner pockets this and that’s his profit.â€
As I said, your system is TECHNICALLY profit sharing. I don’t debate that. However, profit sharing is usually taking investiture, using it to generate additional profit, and sharing. Your system is only taking investiture and then returning a portion of it, which has the net effect of simply taking less investiture instead of the potential for returning investors MORE than their outlay. On the other hand, you provide a value-added service which is outside the realm of profit sharing. I’m not criticizing the system, simply the choice to market it as profit sharing as opposed to what it has the net effect of, a 5%variable cost plus a fixed cost spread proportionally by sales among members.
Rick the Wonder Algae said: “2) … Your costs aren’t decreasing at all, only in proportion to your sales.â€
Joseph Browning Said: “The difference is that the fixed costs for publishers at a traditional site is a flat % paid to the site owner. The site owner then has variable and fixed costs that are paid from the flat % he takes from each sale. The remaining cash left over is then profit for the owner of the site, and not for the publishers. The phrase “First, the better the site performs the greater percentage each publisher effectively receives on their sales.†is a completely accurate description of what happens at http://www.yourgamesnow.com once the site has earned enough from its 20% take to have profit to return to its members.
What is being left out is the middle-man profit as described above. That profit is going back to the members in an equal percentage to their sales at the site. If a company earns 10% of the total sales at the site, that company receives back 10% of the difference between the 20% fee and the actual operating costs.â€
You and I seem to be using different definitions of fixed cost. The definitions I am familiar with are:
Fixed cost: a cost that doesn’t change no matter how many units you produce.
Variable cost: a cost that changes depending on the units you produce.
What I find really interesting about your system is that it takes the traditionally variable commission cost and greatly reduces it (to your 5% commission) and then tacks on a fixed cost of your operation costs. I think this is a great reduction in cost to individual publishers, but it’s still a fixed cost, which means no matter how you look at it in terms of percentage of sales it never really changes. It’s still the same value. You seem to indicate that the more people sell on your site, the lower this fixed cost and while the fixed cost is a SMALLER PROPORTION of sales, it’s not really changing. If your costs are $100 a month, the members pay $100 a month, regardless of how many units are sold.
Rick the Wonder Algae said: “3) Under this model, the more sales a company makes, the greater proportion of the fixed costs they shoulder. …â€
Joseph Browning Said: “Your not, don’t worry. The way it works is this way. If you are a large company and make 50% of the total revenue for the site and there is a surplus left over after all the bills have been paid, that surplus is then returned to the members in equal proportion to the earning. Meaning that you would get 50% of the surplus because you have 50% of the revenue. The surplus distribution is proportional.â€
But I am. If your costs are $100 this month and Martin and I (the sole members for this example) each make $1000 of the sales on your sight, we each pay $200, then you refund the surplus $300 equally (because we made equal sales) and we each pay a net $50. If I instead, sell $2000 while Martin only sells $1000, I pay $400 and Martin pays $200. Then the $500 surplus is divvied up proportionally, so I get 66% of it ($333) and Martin gets 33% ($166). This has the net effect of me paying $66 of the fixed costs, and Martin paying only $33. The way the math behind your system works, each member pays a proportion of the fixed cost equal to the proportion of sales they have made, meaning that the more an individual member sells, the higher percent of the fixed costs they shoulder.
Joseph Browning Said: “It sounds like you have mostly an issue of trust concerning the behavior site owners. To be honest, if you don’t trust the site owner you really shouldn’t have a business relationship with him.
I hope that clears things up a bit with the details. Hopefully everyone understands that a press release, and an “About Us†section isn’t supposed to be a detailed breakdown of the internal workings of a cooperative. They are a simplification of a more complex procedure and are useful for providing the “gist†of the situation to someone who isn’t interested in the real nuts-n-bolts. When someone contacts us concerning potential membership they are then introduced to the complexities of http://www.yourgamesnow.com “
Most of my issue was indeed a trust issue. All of the points I brought up above were ones that either seemed to be misleading or unclear, which doesn’t engender that feeling. However, it’s certainly understandable that you can’t be expected to list all the gross details of your business contract for just anyone to read and possibly steal, you’ve answered most of my questions very well, you’ve taken the time to discuss and clarify, and that DOES assuage a lot of hesitation I would have had about becoming a member.
Joseph Browning Said: “I am one of the members through the company Expeditious Retreat Press, but it’s even worse than you think Rick, because Expeditious Retreat Press’s vote is weighted: we get an extra 10% fiscal vote and 1 extra membership vote on the site. Not only am I a member, I’m a member with an artificially weighted vote. But every member knows that, and is happy with that before they can become a member. Because I do own the site, I’ve fully funded the creation of the site, and I came up with the idea of the site and brought it into fruition. All I’m doing with a weighted vote is providing myself a bit more say in what the site does from here on out.
Upon further thought, this is a really interesting position you’ve taken here. As time goes on, your +1 membership vote becomes less and less significant, because it’s static and every member also gets a static vote.
BUT as time goes on, your extra %10 fiscal vote becomes more and more significant because it’s static, but other members have a dynamic vote. As other members join, every members’ vote shrinks except yours.
That means you’re never more powerful than two member votes, but theoretically you’ll eventually be more powerful than dozens of fiscal votes.
Rick the Wonder Algae said: “But I am. If your costs are $100 this month and Martin and I (the sole members for this example) each make $1000 of the sales on your sight, we each pay $200, then you refund the surplus $300 equally (because we made equal sales) and we each pay a net $50. If I instead, sell $2000 while Martin only sells $1000, I pay $400 and Martin pays $200. Then the $500 surplus is divvied up proportionally, so I get 66% of it ($333) and Martin gets 33% ($166). This has the net effect of me paying $66 of the fixed costs, and Martin paying only $33. The way the math behind your system works, each member pays a proportion of the fixed cost equal to the proportion of sales they have made, meaning that the more an individual member sells, the higher percent of the fixed costs they shoulder.â€
My apologies Rick, I misunderstood the thrust of your argument. You are correct. The more one earns the greater the % in fixed costs one pays.
However (and the reason why I missed your point), the more money one earns the greater amount of resources one uses since the fixed costs we’re looking at are bandwidth and maintenance issues which generally follow along with sales. If one’s making 1/3 of all the sales there’s a good chance one’s using a relatively proportional amount of resources as well. That’s obviously not a truism, and there are certain fixed costs not associated with resource use, but that is really a small amount when considered all together.
Rick the Wonder Algae said: “Upon further thought, this is a really interesting position you’ve taken here. As time goes on, your +1 membership vote becomes less and less significant, because it’s static and every member also gets a static vote.
BUT as time goes on, your extra %10 fiscal vote becomes more and more significant because it’s static, but other members have a dynamic vote. As other members join, every members’ vote shrinks except yours.
That means you’re never more powerful than two member votes, but theoretically you’ll eventually be more powerful than dozens of fiscal votes.â€
You’ve hit the nail on the head and here’s my reasoning behind setting things up that way. In the beginning of the site I’d like to have greater influence on member selection and as the site matures I’d like to have greater influence on the financial aspects of the site.
And it’s really because this thing’s kinda my baby. 🙂 I’m trying to create a e-product sales site that serves it’s member’s profit goals more than it serves the site owner’s profit goals and I just want to make sure that that vision has a strong voice as the site progresses. I expect it will as hopefully member selection will be careful and we’ll only have members who share the same vision, but I’m just trying to be careful.
You really are a Wonder Algae! 🙂 You’ve seen into the heart of the matter of the site pretty clearly. As to the trust issue, it’s not easily gained and it can be lost much more quickly, but as our members see me follow through with their wishes the trust will eventually become something that we’ll all look back on and go “Oh, wow man! Remember when we weren’t 100% this would work out?†and laugh about it. 🙂
Joseph Browning
Your Games Now, LLC.
Joseph Browning Says: …the more money one earns the greater amount of resources one uses since the fixed costs we’re looking at are bandwidth and maintenance issues which generally follow along with sales. If one’s making 1/3 of all the sales there’s a good chance one’s using a relatively proportional amount of resources as well. That’s obviously not a truism, and there are certain fixed costs not associated with resource use, but that is really a small amount when considered all together.
I was under the (incorrect) impression that your costs were fixed, when in reality they’re variable, which makes your heavier weighting towards members that make greater sales make a lot of sense.
Rick the Wonder Algae said: “… this is a really interesting position you’ve taken here. … That means you’re never more powerful than two member votes, but theoretically you’ll eventually be more powerful than dozens of fiscal votes.â€
Joseph Browning Says: “You’ve hit the nail on the head and here’s my reasoning behind setting things up that way. In the beginning of the site I’d like to have greater influence on member selection and as the site matures I’d like to have greater influence on the financial aspects of the site.”
I’m really impressed by both how well you’ve matched your tool to your long term goals here, which shows a lot of foresight and thought went into your plans, and by how openly you express your weighted voting and reasoning behind it, which displays a lot of goodwill and honest intent.
Joseph Browning Says: “You really are a Wonder Algae!”
Not bad for a one celled organism huh? But you’re not so bad yourself. Thanks for all the time you’ve spent responding to “some yahoo on the internets” (my phrasing, not putting words in your mouth) and your efforts to make your system clear. Good luck to you and all your members. I’ll definately remember http://www.yourgamesnow.com when I have RPG needs.
Ian said:… from your description it sounds like there would be significant barriers to entry in their store, since they’d probably only want to ensure that people who actually sell things that other people want to buy get in. …
Now that I (finally) understand the system better, I’d have to say that I’m not too worried about barriers to entry. As we discussed above, every time a company makes a sale they assume a slightly higher proportion of the costs of the site, which means that it’s in the best interests of companies to let in as many (potentially or historically) sale-generating companies as apply. Granted, you’ll have companies vetoed for things like material that the other publishers don’t want to be associated with, but as long as there’s a potential for the new company making sales, there’s a potential that they’ll assume some of the cost that the existing companies are currently carrying.