22 April, 2008
Every once in a while I read an article from someone who gets all excited about "the Long Tail" as it applies to people who I call "indies". The theory is that there are a lot of unserved people out there, so the indie should find customers on the long tail and serve a niche.
It was refreshing, therefore, to read an article taking a serious look at the Long Tail. Unfortunately, the article then goes on to discuss an equally unlikely scenario.
The truth is: Business is hard for the indie, no matter how you slice it.
One thing that people talking about the Long Tail seem to forget is that the Long Tail works in the favor of aggregators. The classic example of a company taking advantage of this is Amazon: there are hundreds of books out there that sell only a few copies every year. No book store is going to stock these titles, but a book company that only has a warehouse and takes orders online can capitalize on all those orders.
Note that this doesn't mean that the author selling one of those "three per year" books is going to be making any more money. Rather, Amazon is going to profit from that, and the thousands of other people in that author's situation. You can argue that there might be a few more book sales because of this, but it takes more than a single-digit bump in book sales before the author sees any return. Trust me on this one. :P
The author of the article then goes on to explain that if you can just get 1000 "True Fans" to pay you $100/year, that's a good living! Well, not so much.
Let's look at this in terms of Casual games. To make $100/year, you have to sell 5 games priced at $20 to those 1000 true fans. Cranking out a game every 2.5 months isn't exactly a reasonable pace. Now consider that many of the smaller casual games are going for only $9-10, so you're talking about cranking out a game about once a month. To get to the point where you can do that, you have to develop a lot of infrastructure. Now consider that one person can rarely do stable programming, eye-catching art, and interesting sounds and music by him/herself, so you're going to have some significant expenses.
In the realm of online games, it gets even more depressing. With the subscription model, at $10/month you're going to get about $120/year out of people, but again a single person isn't going to be able to do everything. Customer Service takes a significant amount of time on top of development and maintenance. So, again, you're going to have to split the costs with someone else.
The other major problem is business. I edited a book on business not because I like writing about business, but because I see so many game developers do a terrible job at running businesses. This is one of the benefits of the l larger publishers: they know how to do things like distribute and promote a product. Most of the recent "indie successes" for music, Radiohead and Nine Inch Nails, have had a better start than most because they landed a deal in the "traditional" record industry back when that was still possible; they have benefited from the large industry side of things in a way that a new musician just starting out today couldn't.
Now, one possible solution for these larger projects is to build a team and multiply your expectations. Can five people developing an online game attract 5000 people to their game and keep expenses low enough so that most people can earn almost $100k per year? I'd hesitate to base my livelihood on that assumption, seeing as I have trouble finding 3 people willing to commit to a project.
Most of these problems were visited in a follow-up article that looked at the income of an indie musician. Robert Rich explained that he had about those 1000 "True Fans", but he has a hard time extracting even that $100/year out of them. One of the major problems is that people just don't value music as much these days, so even if people enjoy the music, they often don't actually buy something that gives income to the musician. This is most prominent in Russia, where he has 4 or 5 "True Fans" who explain that the 500 or so serious fans in Russia feel no need to pay for his music.
Another problem brought up by the follow-up article is one game developers are familiar with, even on a larger scale: overspecialization. The problem with focusing on your 1000 "True Fans" is that you tend to lose sight of people beyond that. The game industry has done the same thing; the last generation of consoles tried to focus on the same audiences as before, the hard-core that upgrade for pretty graphics, but the Wii came along and scored a massive success by looking beyond the (admittedly greater than 1000) "True Fans". A creative person could focus too much on the small group and never bring his or her unique work to others. The larger companies that have the reach usually shun "risky" ventures that could bring a new style to a wider audience, despite the fact that these newer styles tend to be the biggest successes.
The big questions on most peoples' minds are, "Why does this matter? Why does anyone have to make money instead of doing it for the pleasure of doing it?" This works great for a garage band that wants to do a couple covers at the bars on the weekend, but it falls apart for anything more complicated. Why should a kid learn a classical musical instrument when they're expected to play for free? On a personal level, why should I work to make a casual game every month when I can do consulting that takes less time and pays more than $100k/year?
Plus, I don't think attracting even 1000 "True Fans" is as easy as it might first seem. I doubt that I personally have that many. There are a few thousand people aware of my work; a fair number of them hate me just like they hate everything in the industry. The number of "True Fans" I have is probably limited to a few dozen despite the fact that this blog has been running for years and I'm a regular speaker at conferences, etc. At any rate, I'm not going to survive on $100/year from that limited number of people.
Some interesting issues to consider. How can a small-scale indie creative type survive? Is there a magic number of "True Fans" that it would take to allow one to survive? Is it even possible to get up to 1000?