As the bloated dot.coms have been falling right and left I’ve been arguing that it is largely irrelevant because it is the smaller web sites, often run by a very small team or even a single individual, that are the sites that I find most compelling. Moreover, while it is going to be difficult for a sight like Salon or Slate to ever achieve the sort of profitablity that offline publishing industries expect (and realistically, that is what Salon and Slate are being measured against), small, niche web sites with low costs can and are make a profit. I certainly think the opportunity for small niche companies is far greater in the online world than it it was in the offline world.
Anyway, one of those niche markets that I have firsthand knowledge of is the role playing game publishing market. I’ve mentioned before that Steve Jackson Games (the folks who were raided by the Secret Service several years ago) took their print magazine, Pyramid, completely online. It costs me $15/month to subscribe. Along with there being a lot more content in the online version than there was in the print version, they also give subscribers the chance to playtest upcoming supplements, which is very cool.
Anyway, according to an article published by the editors at RPGNews.Com, Steve Jackson Games are not the only ones achieving success this way. There are a number of small companies selling PDF files of role playing games, supplements, cutout figures, etc. who are beginning to make a small profit (David Talbot should be so lucky).
For a lot of small companies its less a matter of being cutting edge as it is simple economics. Seth Ben-Ezra of Dark Omen Games told RPGNews that it can cost $3,000-$5,000 for a small 1500-3000 copy print run of a book. Then add advertising costs, distribution (and from my experience, distribution is the real weak point of the RPG hobby), and other assorted costs, and it is becoming increasingly difficult to make a profit over the long term in the role playing game business.
Dark Omen Games publishes paper books, but uses online sales of PDFs to supplement its paper offerings. A company that is completely online is MicroTactix. MicroTactix sells a role playing game and supplements, but they are best known for their card stock creations which are print and fold paper miniatures.
MicroTactix’s Guy McLimore told RPGNews that he was surprised that his company turned a profit in 2000 — much sooner than he expected. According to McLimore, “Sales are good and continue to incresae with each new release. Not surprisingly, the more products we offer, the more comfortable people feel with us as a solid firm.”
This, in my opinion, is how to succeed (and this is nothing really new, just straightforward common sense): find a niche market, work hard to become the premier supplier of a particular service or product for that market, and then charge a reasonable price.
The experience of MicroTactix, Steve Jackson Games and other is one reason why I think something like Arstechnica’s Premier Membership plan is doomed to failure. First, the market they are selling too is far too broad and poorly defined. Second, they don’t ultimately offer anything that isn’t available on dozens of other sites (although the ArsTechnica folks do it with a flair often lacking on other sites). Finally, $50 is way too much to charge for a year’s membership, and I doubt many people will want to buy a 3-month membership on impulse.
Now they may have enough dedicated users to raise enough money to make up for the deficit their running, but I’m skeptical if they can do that long term (an even bigger long-term problem they have is that the pricing structure of the discussion system they’re using is one where increased discussion traffic results in significant cost increases).