CoG/HG business model

[leiatalon]

@Havenstone

To dust off a thread almost a decade old

I’m glad you did. I enjoyed the read.

@hustlertwo

More importantly, and I cannot stress this enough, self-publishing is largely awful and involves doing a lot of distasteful stuff just to carve a space out, which you must scrabble constantly to maintain.

That bit made me crack up. Thanks for the laugh.

Self-publishing is an excellent route for many authors, but the work it requires is massive. Having self-published novels and non-fiction, I’ve learned that I’d really rather not see to the business side of things, and nothing burns me out faster than marketing. That said, I’m going to keep writing novels and if self-publishing turns out to be my best choice, I’ll do it again.

@hustlertwo

-The business model here is terrific, and there’s not really anything else like it in either traditional publishing or the digital marketplaces.

^ This. From what I’ve been reading on writing Twitter and in research on trad and indie publishing, these days a lot of book deals get little to no marketing from the publisher. Even traditionally published authors are finding most of the responsibility of their book’s success is up to them, when they’d really rather just write the next book. And their royalties are often far lower.

I think it’s worthwhile to take into account the support given by CoG as a publisher, not just in monetary terms but in the value of having a team behind your project. I understand this might not apply in the same way for HG, but I want to speak to my experience. As an HC author I have an editor I enjoy working with and an entire team aiming to make my game a success. I don’t have to do the thousand things it takes to publish and market, I can just focus on writing. It’s hard to put a price on that kind of support. I think it’s worth more than the monetary value of hourly wages if it lowers my stress level by a thousand percent.

[Samuel_H_Young]

that’s their decision and it’s admirable. All authors still shouldn’t have their royalties lowered to cover the costs of a choice that CoG knows will bring in extremely low earners.

[hustlertwo]

Increased quality control is not really requested or desired for HG. The freedom is the point. But because of the low overhead for a ‘failure’ title, there’s no reason to think those games cause the others to get low royalties. The simple truth is that the company’s cut from just one Wayhaven game probably paid for the actual release costs of 50-100 HG titles. Heck, that’s probably still lowballing.

[Samuel_H_Young]

Yeah, that too. People bemoan the cost of overhead as a catchall when, like in this case, the extremely successful stories and the large majority of games that way more than make up production costs, surely outweight production costs of low selling games.

[AletheiaKnights]

Maybe instead of offering higher royalties across the board for HG authors, they could allow successful authors to negotiate the details of their contracts? For all I know they could already be doing that, and most of us would have no way of knowing.

[Samuel_H_Young]

@hustlertwo

But because of the low overhead for a ‘failure’ title, there’s no reason to think those games cause the others to get low royalties. The simple truth is that the company’s cut from just one Wayhaven game probably paid for the actual release costs of 50-100 HG titles. Heck, that’s probably still lowballing.

He’s not kidding. To give you all in illustration, I’m average around here and I’ve made about $25k in royalties off my 6 games, which theoretically would cost $6k to publish. By that math, my six average games have paid for the production of 69 (nice) games that didn’t cover their costs. Overhead is not a serious reason to not raise royalties

[AletheiaKnights]

@hustlertwo

there’s no reason to think those games cause the others to get low royalties

I understand your point, but nobody is getting “low royalties.” Perhaps HG could afford to pay more, but what they’re paying now is on the high end of royalty rates for publishers in any industry. They’re low only in comparison to royalty rates for self-publishing. I think that’s fair to keep in mind.

[Samuel_H_Young]

A 25 to 75 split is objectively low, just not by industry standards.

[ChanceOfFire]

@AletheiaKnights

extremely low that they regularly publish games that don’t stand a snowball’s chance in hell of making back their publication expenses

Nobody, not even CoG, can predict 100% accurately which games “make money”. In another post from a couple years back, there were some games which CoG thought wouldn’t do well, but ended up being very successful financially (e.g. Zombien, Magikiras). Likewise, there were some games which I felt were good, but ended up on the underrated HG games list.

Regarding the low bar to entry - there is actually a financial benefit, it allows CoG to land some unexpected big winners (from a commercial standpoint). I don’t know whether this outweighs the cost of the ones which do lose money, but there is that.

Honestly, being a HG writer and wearing multiple hats is tough, and I do wish the royalties could be higher (not for me personally, I’m financially secure). I admit I’m not sure what goes on behind the scenes at HG though… maybe they really can’t afford it. I’ve only just started publishing and there’s plenty I don’t know.

[Samuel_H_Young]

@ChanceOfFire

I’m not sure what goes on behind the scenes at HG though… maybe they really can’t afford it. I’ve only just started publishing and there’s plenty I don’t know.

I’ll bet the Wayhaven games alone could cover all the production costs of every Hosted Game and then some.

[AletheiaKnights]

I really don’t want to have to name names, because even the worst game is somebody’s passion project, but I’m not talking about games that don’t look like obvious winners, I’m talking about games that barely meet the “written in comprehensible English” requirement and have massive coding errors that make it almost impossible to follow what’s going on - games that have people who aren’t familiar with the Hosted Games mission statement asking how the heck they ever got published. If you don’t know what I’m talking about, DM me and I’ll “recommend” you a few titles that I think you’ll agree have as much chance of recouping production costs as a bunch of twelve-year-olds with a camcorder have of winning an Oscar.

[ChanceOfFire]

Ok, fair. I get it.

@AletheiaKnights

If you don’t know what I’m talking about, DM me and I’ll “recommend” you a few titles that I think you’ll agree have as much chance of recouping production costs as a bunch of twelve-year-olds with a camcorder have of winning an Oscar.

I’ll probably pass… but I get it… stepping away now…

[adrao]

I’ve said much of what I am about to say before, and I think my points of view may be well known for so, but let me add my own thoughts again, in bullet point format.

-I’ve published books (printed) with four of the top academic publishers (writing here is a hobby for me, in my main job as an academic I have now 6 books published). Obviously different to fiction publishers…but let me state that, in my experience, CoG outclasses them in every parameter that one could measure. They are, so far, the best publisher that I have ever worked with. PERIOD**.** (doesn’t mean they are perfect, but they are the best that I know, again, by FAR.)

-Since this thread is about royalties…publishers generally pay 8%… 10% if you are lucky. In this thread there are complaints about… 25%?? (sure, I mean, there is freedom in this world to complain about anything, but please consider that they are playing 2.5 to 3 times what can be expected).

-It is NOT true that they don’t take any financial risks. Their risks are HUGE. I think this is a complete and total lack of understanding of their business model. They have to pay the salaries of all their staff! Sure, they started as a little indie company, but now many staff members work solely for them. They have to ensure they pay all these salaries not only this month, but for months to come.

-Of course, somebody can say (and maybe this is the “American mindset”) that they can just fire people…but, these people have families, and mortgages to pay. Sure, if they were the kind of people that are completely oblivious to all such things, then they could do that at a whim. But, consistently they show that they care about social issues and community. For those who run such a company, firing all their staff would be very difficult emotionally. Let me call this the emotional risk. And, this is a huge risk that is often undervalued by people…

-I would not say that the idea of doing what they do hasn’t crossed my mind… going independent. I mean, it appears simple at first glance. Then you start to think about all the things that Dan wrote about, having to hire people to look after authors, engage constantly with authors and people in a forum, file taxes at that level, deal with Steam, Apple, etc, etc… uffff… no, I’ll just write my books for fun and get 25%. Thanks for taking care of all the rest, CoG! I mean, these guys started small and have built a business over the years, and this takes tons of time and dedication…

-Which brings me to my next point. Staff in CoG works many hours! I mean, any author can say “I put in 650 hours into my game -that is my estimation for my own first game, Tokyo Wizard”, but these guys only put in 20 hours. Why should I only get 25%???". Well, for the sake of argument lets say I was only doing 40 hours a week working on that game (not correct as I was mostly doing in evenings and weekends, but lets say)… but, they were also working 40 hours (if they were only doing that… I get emails from CoG members during weekends at times, so my guess is 40 would be a big underestimate). Just, they work on some games that do very well, and some that don’t, and on “charity” games (wrong term probably, and my apologies for it, but it is difficult to see it in other terms as I am sure in many cases it practically becomes this, as highlighted by many others in this thread, they still have to work on many games that make very little).

-In such a business model the key element to see is thus what is the royalty rate that ensures that the business can continue to operate with the company making modest profits that ensures it can pay for salaries while keeping some money away for a rainy day. I say modest profits… the day I see any CoG staff member arrive in a red Ferrari wearing armani suits and washing their plates with champagne I’ll let you all know. I’ve met a number of them in real life a few years back, and I didn’t see any of that. Far from it. My memories are of completely normal people, and I can’t remember anything in their demeanour or clothing that indicated any luxury. So, they make a decent working in this wonderful company that they have built. We should all applaud that, trust that they continue to make some small profits that can keep the company secure and ensure they continue to publish our games for years to come!

Apologies for the long post, but I really think CoG deserves a round of applause for what they do, rather than the contrary.

[Samuel_H_Young]

@adrao I understand you like CoG. All of us do here. But look at my, HustlerTwo’s, and MultipleChoices’ comments above that talk about overhead, which is too often seen as a cryptonite against the idea of raising wages/royalties/etc, even without examing overhead closer. But even if we’re looking at this emotionally instead of logically, I personally feel more emotionally connected to the authors who write the stories than the publishers who publish them

[adrao]

I have read the comments above before posting. I stand by what I wrote, and I don’t write emotionally (maybe that’s why I’m so bad at writing ROs). I’m an engineer and all my research is in engineering, so when I write I follow facts and logic (sure, in this case I don’t have all of them, but I have enough facts, based also on many other interactions with other publishers). If I were CoG, and taking into account we are living in the world we do, with the need to page wages for my staff -this is what I think many of you continue to miss… Their overheads are the salaries of their staff!-, I would do exactly like they are doing (tbh I’m just impressed they can pay 25% royalties and stay healthy as a company… I think they achieve that by paying comparatively meagre salaries to themselves. I hope they continue, and I applaud them for what they are doing. They remind me more of a typical Japanese company than a modern typical American one…)

[Samuel_H_Young]

CoG paid 25% years before they hired employees. A Hosted Games author should not be concerned with the cost of editing/making art/managing etc a CoG when a HG does not get those things.

[Brian_Rushton]

I thought you quit making hosted games years ago and went to work for another company. What is their royalty rate?

[Samuel_H_Young]

I’ve published multiple Hosted Games in the past few years as you can see. Tales theoretically pays 30% royalties but they have no fanbase thus far

[Brian_Rushton]

Thanks, that’s helpful.

[hustlertwo]

@AletheiaKnights

@hustlertwo

there’s no reason to think those games cause the others to get low royalties

I understand your point, but nobody is getting “low royalties.” Perhaps HG could afford to pay more, but what they’re paying now is on the high end of royalty rates for publishers in any industry. They’re low only in comparison to royalty rates for self-publishing. I think that’s fair to keep in mind.

A fair point, and let me amend that to say that these are not low royalties. Not at all. But I believe they could be higher, and that might stem the tide of people who come in, use the community here for their own ends, and then leave off for Patreon and itch without contributing anything back to this community in return. The business model here works best when a rising tide can float all boats. But if the company cannot provide sufficient value to make publishing with them superior to going off on your own, more boats might siphon off our passengers and go float in another lake. And that hurts both the company and the other authors. In order to prevent folks from wanting to go off on their own, the company ideally should either do enough to justify their cut, or reduce their cut. If that’s not a concern for them, perhaps they shouldn’t worry about it and should stay the course. But given some of the stories that could have published here over the last couple years and didn’t, I’d be surprised if they weren’t at least a little concerned about it. Some of those authors were no great loss, folks who probably will never have a finished story capable of being published in the first place. Others did well on their own and could have done even better with the company marketing machine behind them. Could have been a help to the community instead of a hindrance.

You could say some of those were motivated by factors other than money, and that’s certainly true. But a bit more money would still help with improving author loyalty to this place and these people. That’s a net gain that might be worth a couple percentage points. A 1/3 split of the net does not seem out of line given what is and isn’t being done for that money at present.