PatreonMooseGate the pitfalls of 2.0 indie marketing.

Today's story is about what happens when a genY musician-cum-entrepreneur gets his wires a bit crossed whilst earnestly trying to do good work, and how marginally bad things can come from smart, generally nice people acting without (much) malice.

First, let me get that out of the way : I'm a bit of a fan of Pomplamoose as an art act. I randomly stumbled upon Nataly Dawn singing her take on Louise Labé's Baise m'encor sometime in 2009, which led me to her Pomplamoose duo act along Jack Conte.

I dig their music and stagecraft/videos, I also like what Conte's trying to do with Patreon, and the pair of them is generally representative of the reasons why I'll try to give the benefit of the doubt even to hipster-looking types, as long as they're working at getting shit done.

[In the interest of full disclosure, I'll state for the record I have zero stake in the economic success of Pomplamoose, Patreon or any of the individuals and companies mentioned here, beyond personal well-wishing.]

Louise Labé is in da house, or something.

 
Now, in case you're coming at this without prior knowledge, here's the backstory :

• Pomplamoose debuted in '08 and has seen growing popularity online since, thanks to their music and visual work, with their very active online presence in the form of vlogs and side projects not to be discounted.  6 years is a long time, you come to realize, when you find Pomplamoose has a friggin myspace page !
   
• Then Patreon was launched last year by Jack Conte and partner Sam Yam.
  In a nutshell, Patreon is a subscription-style crowdfunding platform, which enables fans to act as patrons of the arts for their favorite bands, comic-book artists, podcasters, yni. People can either commit to a monthly fixed donation of their choice, staggered grant style, or pledge an amount of money towards any new work created / released by the artist(s) on a recurring basis (with a monthly cap). Patreon takes a reasonable (by today's standards) 5% cut on that.
   
• This fall, Pomplamoose went on a month-long US tour of 24 shows across 23 cities, which by standard metrics for an indie band tour qualified as a success : they sold a lot of tickets and merch, filled their venues, and the audience seemed to generally be happy with the shows.
   
• On Nov 24, Jack Conte went out and released some of the financial details of the whole operation in the context of a postmortem / expose about the difficulties of running a "mom and pop corner store" music act.
  …and the shit hit the fan.

• Bob Lefsetz, a much-listened to (and rambunctious) voice in the music biz published a scalding commentary on the lacking economics of the Pomplamoose tour in his Nov 26 Leftsetz Letter on Encore, annexing to it some comments from the many readers who apparently pushed Conte's postmortem his way.
   
• This prompted a number of other people in and around the biz to chime in with their own take on how Pomplamoose could fail to end in the black after a successful tour, but perhaps most critically, some saw the whole financial disclosure stunt as a manipulative marketing ploy by Jack Conte to drive business to Patreon, accusing him of hiding his personal stake as CEO and co-founder of Patreon when he explains how hard it is for a band to make a living by touring.
   
• Conte was not happy about that last part, and op-ed'ed his rebuttal to accusations of dishonesty the next day on the same platform he used to release his original post-mortem.

Here, you're all caught up. Follow the links above for the full material, I intentionally left out some that would have been repetitive.

Not just covers, either.

I find myself largely agreeing with Bob Lefsetz and others to question Jack Conte's conclusions about Pomplamoose's tour ending in the red, namely that it's proof it's too hard to make it as a middle-tier artist on the road : in a nutshell, this tour could, and presumably should have turned a healthy profit without the need for the band and crew to sleep in vans and survive on ramen, and the fact it reportedly lost 12 grand out of 136K income is simply evidence of poor business management, not impossibly challenging economics.

Having watched a number of their videos, and knowing how much care and work they put in their visuals, I would nitpick on some of the criticisms made about the unnecessary expenses on lighting equipment, but some videos are out that make clear the stagecraft on their tour wasn't anything your average live music club couldn't handle with in-house gear or would demand a special lighting setup.

True fact : some Pomplamoose songs are not in French !

 

I don't think Jack Conte tanked the finances of his Pomplamoose tour on purpose to make a point, or that he cooked the numbers to prove the only path to monetary salvation for struggling indie bands was to enroll in Patreon.

Nonetheless, accusations of Conte's dishonesty and supposed attempts to hide his personal take in Patreon are worth taking a minute to discuss.

Conte's argument (in his rebuttal) that he didn't do anything to hide his involvement as not-just-a-user of Patreon kinda works for me : it's there for everyone to see on his personal public profiles, he's done promotion for Patreon and given plenty of interviews about it – Andy Cush was either lazy or disingenuous in his failure to do the homework for his Gawker piece (he since sorta acknowledged the fact in an article update) and that's plain bad journalism.

I also don't see malice in Conte not adding a full disclosure about his co-founder role in Patreon in the post-mortem : the financials tour breakdown was written from the perspective of Pomplamoose-the-band, not Jack Conte the Patreon co-founder, who had no investment in the tour's profitability (or lack thereof).

Either he overlooked pointing his interest in Patreon as self-evident (the intended readership of his postmortem presumably being reasonably educated about who Conte is), or he considered it, then figured bringing it up may muddy the waters when he's been going out of his way to keep the two separate – as pointed in his rebuttal, when he indicates taking zero salary from Patreon and instead being intent on making a living on his artist income alone (at this stage).

With that said, I don't think Conte is beyond criticism, here. My guess is he tried to make the best of a bad situation and it went somewhat poorly.

Do that on stage, nobody will gripe about the extra lights…

 

Finding his operation down 12 grand after a month of successful touring, with the main financial salvation for his band coming from his other venture (Patreon) may simply have reinforced Conte's  belief that Patreon is a great idea (which it is) and is the only credible way for an indie band to make a buck besides iTunes sales and YouTube ads, since touring is doomed to be done at a net loss (which it doesn't have to be).

Coming to a wrong conclusion because it saves oneself self-criticism (Jack sucks at finance) and reinforces established prejudices (Patreon is the way to go) is not exactly unheard of, especially when you throw in the cookie of making a case for something you strongly hope to see succeed (people should see that Patreon is the way to go).

On a personal note, his rebuttal rubbed me the wrong way by not linking to the source of the Bob Lefsetz piece he was responding to (on Encore), and phrasing it in such a way as to imply Lefsetz endorsed the accusations of cooking the numbers in the service of a marketing ploy (which he didn't). It's hard to read that as anything but a kneejerk attempt at damning-by-association the valid criticisms made by Leftsetz (among others).

So yeah, possibly, Conte spun his yarn in a way that portrayed touring as financially more grim than he would have if he didn't have an alternative on hand, and certainly he does a disservice to aspiring live artists by failing to take away the proper lesson from his experience : a band can't make a buck from shows without being a bit careful with budget.

He also should have put a full disclosure about Patreon in his piece, and it would not even have been out of place to plug it in there if he had.

If anything, his biggest mistake may have been to post this way too early after the tour, as that's the sort of stuff one should take notes on while it's hot, then let cool down before the actual writeup.

That he failed to address any of the substantial critique about money management in his rebuttal is telling of Conte's state of mind at the time : while he clearly took offense at the attacks on his moral integrity, he didn't seem to take issue with the challenges raised against his tour management acumen, which were much more damning to the substance of his original thesis.

It may be a hint that the truth about this is dawning on him.

~

The Fair Game - Part 2 : what ?

In part 1, and all through this series, my working hypothesis is that mid-to-biggish budget videogames will increasingly be funded, marketed, distributed and retailed without the involvement of classic publishers, and mostly through channels that exist already, only a bit more refined and mature than they are now. 

The distribution and sales end of the circuit is pretty much sorted out by now : indie studios can already release and retail their titles through established online app stores or run their own webstore for little to no upfront costs, and get to bite a significantly larger share of the moneypie from gross sales (currently averaging at 70% of gross in appstores, roughly the reverse of the best case scenario 30% a studio can hope from a big name publisher if they don't get screwed out over 'hidden costs').

On the funding side of things, I'm reasonably confident crowdfunding (or something very much alike) and committed investment will become the dominant channels to secure development and production funds over the next five to ten years, as traditional publishing loses relevance in all but mega-budget projects, leading to a very fertile ecosystem of specialist fundraising and financing platforms, and spawning a middlemen industry of fundraising campaign managers, transparency certificators and patrons of the arts agents.

In this section I try to outline what species of gaming studio are most likely to thrive in this new environment, and it comes as no small surprise to me (spoiler alert) that it's mostly good news for gamers and gamedevs alike.

Whether I banged my head and am hallucinating is for you to tell, because obviously, I can't. So let me paint you a picture.

No, I can't draw…

The first good news, although we'll see it's a mixed blessing, is more games will be produced.
Well, maybe just as many as today, for the recent explosion of the browser and mobile games platforms has more than compensated for the draught of offer during the mid-naughties, but the cornucopia theme is here to stay, as more studios and gamedevs try their luck, thanks to a generally dev-friendly context.

It may not all be good or interesting games necessarily, and I expect Sturgeon's Law to hit in full force, possibly cubed, during the early euphoria. Much like youtube, blogs and podcasts reduced the barrier to entry to publishing in other media, and cheap prosumer electronics have enabled anyone to start filming, recording and editing on a budget, I expect to see prosumer-grade middleware and game-building toolboxes to flourish and lead to a mudslide of terribad fan-made games to flood the various app stores in the next couple years.

The positive aspect being, from this smelly soup shall emerge actual talent, who may end up creating great games, at some point. But it will be a storm of (e)sc(h)atologic proportions in the meantime.

During that feisty period and beyond, the gamedevs and studios that are most likely to thrive will be those that properly account for three critical notions: 

• The newly opened gates of publisherless funding, promotion, distribution and retail means indies can now compete with big name companies on fairly even footing, and should go for it without fear, provided they pick their battles.
   
• Riding on the coattails of big hits is no longer a valid survival strategy : it's all about differentiating oneself and growing a loyal community of fans, customers and employees.
   
• The endgame for an indie studio should not be about hitting the jackpot, so much as to endure and keep going, slow and steady, long after competitors crash'n'burn.

Because the main challenge for indie studios in this world of plenty will be to rise above the noise in order to find and secure founding, talent and customers, that aspect of the business will become an integral, and quite large, part of a studio's operations.

That last bit was true already under the previous publisher-centric model, but once publishers are largely removed from the picture, it behooves the customer/players/fans themselves to decide the fate of games and studios from a much earlier stage than used to be customary.

Such a shift in the balance of power may very well be the best thing ever to happen to commercial videogames, because it holds the potential to benefit equally well players and gamedevs, which is only (if belatedly) fair.

Friends, seen here groped by the invisible hand of the market.

The Fair Game doctrine can be summed thusly : do right by your players and your crew, and they'll do right by you. It takes more skill and committment, and is trickier at first than the old rape and pillage trick, but it's better business in the long run, because golden goose.

Most if not all gamedevs are passionate gamers themselves, and the way they prefer to go about their business is not dissimilar to the way avid gamers go about their patronage : they're both willing to put all the time and resources they can afford to satisfy their desire for good game(s), and share the belief games ought to be judged (and succeed or fail) on their own merits.

Conversely, publishers have little incentive to care for good games, as they're not in the business of making games and keeping studios going, but in that of selling game boxes. It's common wisdom for publishing execs that there is no more proportionality between development/production costs and quality of the product than there is correlation between gameplay value and revenue generated : once bare minimal requirements are met to avoid scaring away customers, the theory goes it's all up to marketing and good luck.

*

In a context of instant global grapevinery, of plethoric quantity and variety in offerings, advertising dollars will only get you so far : beyond raising awareness about the existence of your product, promotion firepower no longer has the juice to make things happen and close sales but with the least discriminative of buyers.
As the market segments into well-catered to niches, and the old blob that happily swallows anything coated in enough eyecandy shrinks accordingly, it may become increasingly difficult to justify ad-spending, except in those market segments where competition remains constrained to a few players and the Matthew effect works well enough that an initial overwhelming show of marketing force might still pay off.

My hypothesis then, is the key to financial health for self-publisher studios in the near future will be frugality in all expenses that aren't directly contributing to increased product value or to stronger customer and employee loyalty.

Profit shall no longer be expected to come from artificially pumping volume up, but from reducing overhead and the cost of closing sales, leveraging customer loyalty and word-of-mouth to supersede advertising dollars, and from cutting on the hidden costs of high turnover and burnout rates, to instead capitalize and cultivate in-house talent and assets.

*

All of the above may seem self-evident, as it's nothing but conservative, common sense practical advice for small businesses, and yet, that's not the way most studios have operated to date, which is why it's worth pointing out they now can, and should, adjust their SOP to their changing circumstances.

What's happening to alter the deal so fundamentally is, once again, the end of the publishers' hegemony on mid-to-biggish budget productions. 

Unless they were lucky enough to be sitting on a fairly fat war chest, or to be savvy enough to secure funding from committed investors, studios who wanted to venture into productions that cost more than a decent car had to submit to the conditions of a publisher. This meant pretty much losing control over both treasury and calendar (and often original IP, too) to an entity whose primary goal is to ship fast'n'cheap, take the money and run, as it itself must answer to shareholders concerned only with the bottom line and quarterly profits — possibly brand and reputation of the publisher's, yet only insofar as it could impact stock value.

In any case, what publishers cared little about, and arguably couldn't much afford to, was the health and growth of the individual studios providing their wares, unless they incorporated them, and then had a vested interest in their not tanking days after release, and keep on churnin' titles out.

With their priorities at odds, publishers see studios as disposable resources, while the studios more often than not don't plan to disband the day after the wrap party, and instead hope to push onwards to the next game or ten, which in truth is not for them to decide, as they're unlikely to make enough royalties to ever fund a title on their own, or afford to concern themselves with the career development of their staff with what crumbs the publishers toss their way.

Thus studios tend to operate with the overhead and immobilization of small factories, yet the bubble'n'burst economics of movie production gigs, which goes a long way towards explaining why this industry has got into the bad habits of eating its young and burning through talent like it's crack cocaine.

*

In part 3 of this series, we'll look further at talent and players as assets and partners, and how to make the most of them to run a successful silent killer of a Fair Game shop.

The Fair Game - Part 1 : why ?

Or why a Fair Game doctrine of game making is the sensible thing to embrace now.

With the seemingly irreversible onward march of online distribution, cloud gaming and DLC, and the probable end of brick and mortar retail, along with traditional console gaming business models, the incentives for small studios to throw themselves into soul'n'blood-sucking publishing deals are vanishingly reduced.

Those among the present set of big publishers that are swift enough to make the transition certainly won't die anytime soon, if ever, as they have plenty of wiggle room to cultivate walled gardens that should prove profitable for years to come, yet they are liable to lose huge segments of the market to the self-publishing studios pushing titles on comparatively 'open' platforms (Android, cloudgaming, possibly some desktop OSes), funded through crowdfunding and 'committed investors', and which manage their growth mom'n'pop style (profits reinvestment) as opposed to bubble'n'burst.

Although the shiny exposed bit of the crowdfunding iceberg right now is mostly outlier cases that raise millions in minutes, rather than slow and steady boutique studios doing solid work, and while some bubble economy useful idiots want to believe in neverending riches through yet-another gold rush, I believe the core model is here to persist after the dust has settled, as it is the most fertile environment for game production in the internet age.

In this context, the key factors for this new generation of self-publishing studios (SPS from now on) are to be differentiation and brand recognition, and customer acquisition and loyalty.

*

As is obvious from the most casual tour of the — comparatively well-tended and variably walled — gardens of Apple, Google or Amazon app stores, sorting through the offerings isn't exactly straighforward. Even ignoring for a moment the toxic waste of mal/spy/adware ridden ripoffs of other games, repackaged with complimentary keyloggers, sifting through the chaff of cheap ports and gimmicky flash games is a daunting task.

A slightly deeper look at this market shows two things, though : companies that release consistently solid products gain recognition fast, and the need for triage is quickly filled by fan sites and "personal shopper" apps and services that feed from the player community to highlight the good bits.

Inevitably some-to-most of these helper services will go the way of the gaming press and quickly turn into for-hire mouthpieces for big name publishers, but the quickloop feedback provided by other channels like gamer forums and trusted fansites is already easing the metagame of telling which advisors customers should trust.

From the gamer perspective, the online distribution channels are thus fast becoming a much nicer and satisfying shopping space, and the only question is how good the actual videogame offerings might be in the mid-to-long run.

Except for a few occasional exclusives, owing to a walled garden owner also being their backer and publisher, it seems the cat is already out of the bag, and if the Android gaming dynamics are anything to go by, many titles may end up showing on more than one app store (at comparable pricepoints), with those acting essentially as retailer outlets.

Even Apple, although it likely won't open its gates anytime soon, might unwittingly be helping and soon find itself circumvented by cloud gaming service providers, wherever broadband wireless/cellular is becoming ubiquitous.

[ISPs and cellphone operators may actually have a strong card to play here, by bundling cloud gaming services with cellular data plans, cable TV style, but that's a topic in its own name, so I won't elaborate here.]

*

If you're a gamedev, this should speak to you in more than one way.

As the pressure from a very real competition which doesn't spend more on advertising than production increases, making money from the umpteenth rehash of a tired franchise will prove increasingly difficult for big publishing houses, as the costs to market and promote big-budget games done the usual way will increase geometrically to achieve no better than linear revenue growth (which is the only metric that matters to a publicly traded publisher). This could mean a serious downtrend in budget sizes by big name studios, or a suicidal arms' race between major publishers if they fail to realize it's not their share, it's the pie that's shrinking. In any case, expect a lot of suddenly 'freed' talent to hit the gamebiz job market soon.

On the plus side, as the crud filter of community fansites and shopper helper services gets better at keeping the good wares flowing, SPSes that manage to build a good reputation* will have an increasingly easier time funding projects, recruiting talent, and making a pretty penny from their games, thanks to much lower overhead in customer acquisition and loyalty cultivation costs, and lesser interference from short-term revenue demands by their shareholders.

In time, as more of the videogaming action moves to on-tap model, existing entities that are well-established both as distributors, service and infrastructure providers, which includes notably Google, Amazon, Akamai and Microsoft (and likely more than a couple cellular network operators) will all find themselves in a very favorable position to claim a large stake of 'real' cloud gaming, by ignoring or circumventing net-neutrality hindrances and saving prime morsels for their own offerings both in bandwidth and computational access.
This once again may put comparatively "indie" shops at a disadvantage, but unless the hardware consumer market for general purpose / gaming devices crashes horribly, leaving nothing behind but dumb terminals streaming pre-rendered HD from the cloud, SPS should still keep enough of an agility and creative edge that they don't have to sell themselves into slavery, for a while.

*

If I'm even half right in that bucketload of unsubstantiated prophesies, we're looking at a pretty good ten years for gamedevs interested in making high-quality genre games, and an equally unfriendly period for those who expect business to run as usual and still believe you can make big bucks by wrapping lowest common denominator turds in shiny eye candy.

Not to say braindead big splashy titles will stop hogging the limelight in gaming "press", on TV and walls of your cities, but odds are you'll see fewer of them, further apart, as — unless the aforementioned fratricide arms' race ensues — I expect the megapublishers to begin flirting with cartel-style practices anytime now, to protect their bottom line.

*

In part 2, I'll ramble about what makes a Fair Game self-publishing studio, and some more on why that's what you should go for if you want to make interesting games for a living.

*[Good reputation is to be understood as producing good games, but also as being a good company,  because crowdfunders and committed investors are more likely to put a premium on company values, not just value]

The great crowdfunding scam (?)

Psychochild is slightly pissed off (which only means he's not dead, granted), and he's not alone, today.

Go read this and come back after the break, please : I'll wait here.

*

Alright, I see where these guys are coming from, and respectfully, I think they're wrong on the parts that really matter, like does Molyneux acting like a bit of a greedy prick change anything for the worse, for you, and who is you ?

If you're a budding or career indie gamemaker, I don't reckon it seriously hurts your odds of getting crowdfunded, even if you happen to hunt on what could seem like Kickstarter "big name" reserved grounds. 

Molyneux' high profile and overpromising will, more likely than not, get a lot of people excited about the very possibility of more good god games, which some came to believe was something of a lost art, and thanks to the unrealistic expectations that come with overhype, this project is likely to disappoint people way before it hits beta and gets ready to under-deliver for realsies.

If you're in the same line of design, this could actually be good news for you, assuming a) your project doesn't suck, and b) you're aware of that dynamic being in play, and factor that in fundraising and project management.

There are good reasons why you have same-kind-wares-themed alleys in most commercial spaces : people who don't find the shoes they're looking for in a given shop are more likely to enter the shoe shop next door because, hey, they came here to buy some effin' shoes.

So think of the greedy big name opportunists on Kickstarter as your personal, pro bono, unwilling hecklers. There.

*

Moving on, and killing a strawman at one fell swoop : it won't hurt Kickstarter good name's, and indirectly your odds of crowdfunding there, if/when Molyneux next big thing turns out to be a dud. Kickstarter is big enough by now that it has its own momentum, and too many smart and endearing projects find their way through it for the occasional trainwreck to discourage pledgers. It's a rule that anything visible enough will draw criticism, if only because that's a way to differentiate when tackling an obligatory topic — and Kickstarter deserves criticism a-plenty for some reasons, but that's not one of them.

*

On the the really meaty part of the discussion : poor, deserving indies vs greedy fat cat exploiters of gamer naivete… yeah, that is bullshit, too.

The line is not drawn here, because many indie devs' life ambition is to make it big, while it is entirely conceivable for big name devs to make big games, with big teams, from the heart (it's just a freakishly daring endeavour and comes with a whole different problem set than that facing the budding indie dev).

If a line must be drawn to set apart what is ethically OK crowdfunding and what starts to look like a con job, or at least a tiny bit scammy, it should happen on the grounds of business ethics, and overall business model.

If your primary goal is to make games and incidentally a living out of it, because that's what you love and believe you can be good at, and certainly could commit more of your time and talent to it, didn't you have to keep a dayjob besides to pay the bills, then crowdfunding sounds fair : you're basically striving to make the sort of pro grade fan art kindred spirits might deem worth sponsoring and encouraging. This type of practice harks back to the time-honored subscription model, which has played a critical role in the development of many other art forms, and first among those, genre litterature (through magazines), and arguably some early pay-per-month MMORPGs.

If your main goal is to make a lot of dough by shearing a faceless herd of sheeples, the fact you happen to be a dishevelled nerd working from your three-jobs girlfriend's garage, or this week's flavour of rebellious trust fund hipster doesn't make you different from the most predatory corporate drones EA, Zinga or SONY has on staff.

* 

Banging the Gavel of Obviousness +5, once again : it's all about why you're in the game of making games, or art, or tablecloth, and how you go about it — it has nothing to do with how big or how small a dog you are, and everything to do with your personal politics, ethics, and aesthetic preferences.

Also I'm really not sure I like Kickstarter that much, as it is now, but I'll get back to that sometime.

*

On to some constructive thoughts, because it's sunday… tune in tomorrow to check episode 1 of my new The Fair Game series.