More Evidence That Legacy Gatekeepers Just Don't Understand Modern Business Models

Business Models

from the it's-not-that-hard dept

Fri, Sep 21st 2012 8:23am — Zachary Knight

For a while now, we have written about how legacy gatekeepers need to adapt to modern culture and business models if they want to survive. The primary point of contention that keeps many of these companies from adapting is one of control. Many of them don't want to lose what remnants of control they have left in order to become enablers. This mindset is what will be the death of many companies as the world moves on without them.

Some companies are making at least a half-hearted, if not completely misguided, attempt at trying to be hip. However, it seems to have been about as successful as a 60 year-old trying to use modern slang in order to connect with kids. Take for instance this recent comment by Obsidian CEO Feargus Urquhart in which he describes an exchange he had with a publisher about Kickstarter.

We were actually contacted by some publishers over the last few months that wanted to use us to do a Kickstarter.

I said to them ‘So, you want us to do a Kickstarter for, using our name, we then get the Kickstarter money to make the game, you then publish the game, but we then don't get to keep the brand we make and we only get a portion of the profits’ They said, ‘Yes’.

If you can't see the huge glaring flaw in the unnamed publisher's approach, let me elaborate. This publisher wanted to use Kickstarter as the funding source for an as yet unidentified project, while still keeping every other aspect of the traditional publisher/developer relationship intact. This means that the publisher would pay no money upfront, limiting almost all risk for the success of the project, while reaping all the rewards. Seriously.

While it is great that this publisher had become aware of Kickstarter and its potential for success, the fact remains that those in charge do not understand it in the slightest. The draw of Kickstarter and other crowdfunding services is to help creators fund their works and bring them to market. Few potential backers will be willing to support a project in which the creator loses all rights and control of the work after creation. These services are about empowering creators. A deal, such as the one above, in no way empowers the creator.

Hopefully, this is just a simple misstep as the publisher learns to walk the unfamiliar path of a new business model. We can hope that this publisher learns from this mistake and will take the time to better understand the culture behind crowdfunding and can find success by adapting itself to this culture rather than trying to shoehorn crowdfunding into its current business strategy. Because if it isn't willing to adapt, it might as well give up now.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: business models, middlemen, publishers
Companies: kickstarter, obsidian

22 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

silverscarcat (profile), 21 Sep 2012 @ 8:32am

Well...
I'll give them credit for TRYING at least.

After all, if they don't try, they'll never learn, right?
[ link to this | view in chronology ]
- Tunnen (profile), 21 Sep 2012 @ 9:50am
  
  Re: Well...
  I think even if they did try, they'd still never learn...
  [ link to this | view in chronology ]
  - Anonymous Coward, 21 Sep 2012 @ 6:34pm
    
    Re: Re: Well...
    They've been trying since the invention of the player piano, and they haven't learned yet.
    [ link to this | view in chronology ]
Lowestofthekeys (profile), 21 Sep 2012 @ 8:36am

I think it's bad that they not only don't understand their own bullshit in these situations, but that they expect others to understand or reflect that same bullshit.
[ link to this | view in chronology ]
- Anonymous Coward, 21 Sep 2012 @ 8:37am
  
  Re:
  Lol yeah. Its pretty sad when its basically you do all the work while we gain all the benefit for doing a whole lot of nothing.
  [ link to this | view in chronology ]
Tim K (profile), 21 Sep 2012 @ 8:41am

Trying to learn from SACEM?
Sounds like the publishers are trying to learn from SACEM. We'll take money people want to pay you directly, and then we'll give you back a portion of it. Just trust us, we're doing it to help you...
[ link to this | view in chronology ]
- Anonymous Coward, 21 Sep 2012 @ 8:53am
  
  Re: Trying to learn from SACEM?
  They probably have a point in that regard, but the solution is questionable at best:
  
  "We cannot compete against a government monopoly. The only way to solve this problem is to give us the same kind of monopoly tools!"
  [ link to this | view in chronology ]
weneedhelp (profile), 21 Sep 2012 @ 8:46am

Modern slavery
Record deals are the last remnants of legalized slavery.

Totally compares to what the Irish went through when immigrating to the US working in coal mines.

Also did you know they cant pay the royalties on some of the Star Wars movies because they didn't make money? Yeah... slavery indeed.
[ link to this | view in chronology ]
- Greevar (profile), 21 Sep 2012 @ 11:24am
  
  Re: Modern slavery
  The last remnants of slavery? Hardly. Slavery is all around us my good man. The capitalists control the means of production and if we want access to the means to live, we need access to that production and so we have to whore ourselves out to them. They own the factories, the farms, the hospitals and power plants. Because they own all that, they own us. Give the rich the power to control food and energy, and they will be able to control the people.
  
  The idea that slavery is gone is a myth, it's just been integrated into our very culture so well that we don't see it.
  [ link to this | view in chronology ]
Anonymous Coward, 21 Sep 2012 @ 8:46am

Of course legacy gatekeepers understand business models.

The object is to maximize your profits as much possible while minimizing your risks as much as possible.

And as Wall Street bankers at places like WaMu would tell you, who cares about future revenue when you can make LOTS of money NOW! So you make $50 million in a few years and then your company goes bankrupt, you still made big money during those years, and can go work for some other 'sucker', erm, 'company', once the last one goes bust.
[ link to this | view in chronology ]
:Lobo Santo (profile), 21 Sep 2012 @ 8:58am

Tactfully yours...
I believe "in tact." should be " intact."
[ link to this | view in chronology ]
- Ninja (profile), 21 Sep 2012 @ 9:06am
  
  Re: Tactfully yours...
  Seems Zach is out of touch.
  [ link to this | view in chronology ]
  - Tunnen (profile), 21 Sep 2012 @ 9:51am
    
    Re: Re: Tactfully yours...
    Do you know where he could get more touch?
    
    =P
    [ link to this | view in chronology ]
- E. Zachary Knight (profile), 21 Sep 2012 @ 9:27am
  
  Re: Tactfully yours...
  Thanks. Fixed. Not sure how the typo makes me out of touch though.
  [ link to this | view in chronology ]
  - Anonymous Coward, 21 Sep 2012 @ 10:17am
    
    Re: Re: Tactfully yours...
    I assume it's a Latin pun from the root words, "in" and "tactus".
    [ link to this | view in chronology ]
E. Zachary Knight (profile), 21 Sep 2012 @ 9:45am

More From Obsidian
Here is a great interview with Obsidian's Chris Avellone about Kickstarter and dealing with publishers:

http://techland.time.com/2012/09/21/project-eternity-chris-avellone-interview/

Som e highlights about publishers:

A few months. And no, we didn�t run it by a publisher or even consider it. Why? Well, we�ve already run a number of fantasy worlds by publishers, and Project Eternity itself is less appealing to a publisher than the ones we�ve already pitched: �What, you want to do something like the old Infinity Engine games? On the PC (and Mac/Linux only)?� [Sound of door slamming.]

As mentioned later, I can�t blame publishers for the model they�re trapped in. What I like about Kickstarter is it helps games that people want to play still get made, even if you don�t pump $20 million dollars into it to try and meet all the stupid bells and whistles that publishers feel must be in games nowadays.

And this one:

I can�t even blame publishers that much. When you�re dealing with 20+ million dollar budgets, I would pause before taking risks, too. But that�s part of the issue with their business model � I prefer Kickstarter because you end up asking what the players want first, if they�re willing to donate, and you know within 30 days if your idea resonates with the public. If it doesn�t, tough, go back to the drawing board, but at least you didn�t waste two years of your life making something people never wanted in the first place.

[ link to this | view in chronology ]
BentFranklin (profile), 21 Sep 2012 @ 10:31am

The only thing publishers have to add to a project is the money, and that's fine, but now they don't even want to put up the money!
[ link to this | view in chronology ]
- Lord Binky, 21 Sep 2012 @ 12:41pm
  
  Re:
  They never wanted to put up the money, they just never had a way to pin that on someone else, until now....
  
  Which is funny because that was the only part that kept them from being chopped out of the process.
  [ link to this | view in chronology ]
Lord Binky, 21 Sep 2012 @ 12:45pm

Publishers are going to figure out that what they really own, and should only own, is a box full of copies of someone else's stuff. The fact that they own the IP of someone elses work has been something that's detrimental to the progress of their industry for a long time, although it has been great for their control of it.
[ link to this | view in chronology ]
- Anonymous Coward, 22 Sep 2012 @ 3:38pm
  
  Re:
  The fact that they own the IP of someone elses work has been something that's detrimental to the progress of their industry for a long time, although it has been great for their control of it.
  
  This is sort of hard to say. Most software teams consist of a few dozen to a few hundred individuals that come and go. By having the investor hold the IP, at least one developer can't just take the project and run off. Where it becomes detrimental is after the project is over, that publisher retains the IP and causes headaches if the developers want to bring the project back or do an off-shoot.
  [ link to this | view in chronology ]
Watchit (profile), 21 Sep 2012 @ 10:57pm

All of my rofl-copters... all of them
[ link to this | view in chronology ]
Anonymous Coward, 24 Sep 2012 @ 1:15pm

I see this everyday, square peg round hole.
[ link to this | view in chronology ]