Tim Schafer makes unpopular games.
At least, that was what he kept being told by the gatekeepers he needed to convince to be able to keep making the games that he loved. Luckily for the rest of us, Schafer is not someone who likes playing by the rules that others set. His big break into the industry came in 1989, when he was studying computer science at the University of Berkeley. He applied to Atari, then in its heyday of game-making cool. He was rejected. He applied to Hewlett-Packard. He was rejected. He built up a ‘pile of rejection letters, most of them from jobs I didn’t really want’.1
Then, on a bright summer day, he saw an advert in the campus career centre for an assistant designer/programmer at Lucasfilm’s Games Division. Lucasfilm was the games arm of George Lucas’s media empire and Schafer was a fan. The list of job requirements included, alongside the usual platitudes like ‘excellent verbal and written communication skills’ and ‘work as a member of a team’ an interest in computer games, a strong imagination and a great sense of humour. Schafer called right away and was put through to David Fox, who was handling the appointment. As Schafer tells it, ‘I told him how much I wanted to work at Lucasfilm, not because of Star Wars, but because I loved Ball Blaster.
‘“Ball Blaster, eh?” he said.
‘“Yeah! I love Ball Blaster!” I said. It was true. I had broken a joystick playing that game on my Atari 800.
‘“Well, the name of the game is Ball Blazer,” Mr Fox said curtly. “It was only called Ball Blaster in the pirated version.”’
Schafer figured that was the end of his hopes of working at Lucasfilm. Fox ended the call by suggesting that Schafer send in his résumé and a covering letter describing his ideal job. He did no such thing. Instead, he wrote and illustrated a two page ‘semi-graphic adventure’, printed it out on an Atari 800 dot-matrix printer and mailed it in.
Your quest for the ideal career begins, logically enough, at the Ideal Career Center. Upon entering, you see a helpful looking woman sitting behind the desk. She smiles and says
‘May I help you?’
>SAY YES I NEED A JOB
‘Ah,’ she replies, ‘and where would you like to work, Los Angeles, Silicon Valley or San Rafael?’
>SAY SAN RAFAEL
‘Good choice,’ she says. ‘Here are some jobs you might be interested in,’ and gives you three brochures.
>EXAMINE BROCHURES
The titles of the three brochures are as follows: ‘HAL Computers: We’ve got a number for you,’ ‘Yoyo-dine Defense Technologies: Help us reach our destructive potential,’ and ‘Lucasfilm, Ltd.: Games, Games, Games!’
>OPEN LUCASFILM BROCHURE
The brochure says that Lucasfilm is looking for an imaginative, good-humored team player who has excellent communication skills, programming experience, and loves games. Under that description, oddly enough, is a picture of you.
>SEND RESUME
You get the job. Congratulations! You start right away.
>GO TO WORK
You drive the short commute to the Lucasfilm building and find it full of friendly people who show you the way to your desk.
>EXAMINE DESK
Your desk has on it a powerful computer, a telephone, some personal nicknacks, and some work to do.
>EXAMINE WORK
It is challenging and personally fulfilling to perform.
>DO WORK
As you become personally fulfilled, your score reaches 100 and this quest comes to an end. The adventure, however, is just beginning and so are your days at Lucasfilm.
THE END
Schafer got the job, or rather the ‘full-time temporary project position’, on a salary of $27,000. Schafer’s first big project, to which he was assigned as writer and programmer, was The Secret of Monkey Island, one of the best-loved adventure games of all time. The game was the brainchild of LucasArts designer Ron Gilbert but Schafer and fellow writer-programmer Dave Grossman wrote about two-thirds of the dialogue and had a strong influence on the game’s comedy style.2 Schafer went on to work on the sequel, Monkey Island 2: LeChuck’s Revenge, and on other LucasArts titles Day of the Tentacle, Full Throttle and Grim Fandango before quitting to found his own business, Double Fine, where he created what some call his best game to date, Psychonauts, released in 2005.
During those fifteen years, the games industry changed dramatically. Expectations rose and budgets soared faster. When Schafer was playing games as a student, those games could be made cheaply by one person working for a year costing, according to Gilbert, ‘thirty or forty thousand dollars’.3 The Secret of Monkey Island had a budget of approximately $200,000 and, while sales figures are unclear, Schafer is on record as saying, ‘In the early nineties, we were really excited if we sold 100,000 copies of a PC adventure game.’4 Full Throttle took a year and a half to make and cost over a million dollars. Psychonauts took five years and, by early 2007, had sold half a million copies.
That’s where the gatekeepers came in. Schafer cut his teeth on old-school computers, particularly the PC. But the mid-2000s were the era of the console. Shooters such as Halo 3 or Call of Duty 4: Modern Warfare sold more than 3 million units in the US alone. Against that, a title that took three years to make and only sold half a million units globally was a tough sell. It looked as if the era of the types of adventure games that had made Ron Gilbert and Tim Schafer famous was over.
Schafer and Gilbert had been successful when the video games market was young and populated with people who would puzzle out solutions to challenges over time. They created a fan base who loved what they did because of the challenge, not despite it. They had even joined that pantheon of maybe a dozen game designers who are known to the gaming public by name. They had a fan base.
Schafer believed that the point-and-click adventure was not dead. Publishers didn’t agree with him. ‘If I were to go to a publisher right now and pitch an adventure game, they would laugh in my face,’ he said.5 The gatekeepers were doing their job of managing risk by making variants on the games that sold large volumes, mainly first-person shooters involving ever more realistic graphics of space marines or modern-day soldiers. But, as Schafer says, ‘What if there are a lot of adventure game fans out there who want an adventure game? I wonder if there is some way I could talk to them directly. Cut out publishers altogether.’ In February 2012 Schafer launched a Kickstarter campaign to create a new adventure game, a game for adventure game fans that would be funded by adventure game fans.
Kickstarter is the best known of the crowdfunding platforms that emerged in the early 2010s as a new way for creators to fund their works. Instead of relying on gatekeepers, a creator can turn directly to the fans. A Kickstarter page typically consists of a video describing the project, some text and a variety of ‘pledge’ tiers. Rewards for pledges range from getting a copy of the product up to exclusive tiers like having dinner with the creator or appearing in the work directly. The tiers are only limited by the imagination of the creator (and some practical considerations like cost and logistics). Importantly, these tiers do not give backers a financial stake in the success of the project. They are perhaps best thought of as pre-orders of projects that a backer would like to see come to fruition, and they come with the risk that the project, like any creative project, may fail.
Tim Schafer set out to raise $400,000 with his Kickstarter campaign, of which $300,000 would go towards the game and $100,000 would go towards the television crew who would film the process of making the game for a documentary programme. His tiers, like many Kickstarters, ranged from the cheap to the very expensive.
For $15, backers would get the finished game, exclusive early access to the beta test on Steam, and access to the video series and the private discussion forums. For $30, you could add an HD download of the documentary series and the soundtrack of the game. For $60, backers would get a PDF version of the Double Fine Adventure book ‘filled with 100+ full colour pages of concept art, original photos, developer bios, excerpts from the game’s script, deep dark secrets, and more!’ For $100, backers would get the Special Edition box set. This contained the game disc and the DVD of the documentary, an exclusive T-shirt and poster and thanks in the game credits.
Schafer didn’t stop at $100. For $250, Schafer offered 900 limited edition Double Fine Adventure posters signed by Schafer, Gilbert and the rest of the design team. For $500, you would get a physical copy of the Double Fine Adventure book signed by Schafer. For $1,000, you could be one of a hundred people to have a mini-portrait drawn of you in the style of the game. For $5,000, you could get one of ten original paintings of art used in the final game and for $10,000 you could get all of the previous reward tiers as well as lunch with Tim Schafer and Ron Gilbert and a tour of the Double Fine offices.
The Double Fine Adventure project was launched on 8 February 2012 with a target of $400,000. They achieved their target on the first day. A month later, the funding process came to an end on Kickstarter and Double Fine Adventure was declared funded having raised $3,336,371 from 87,142 backers.6
The mathematically minded amongst you will already have worked out that the average pledge level was about $40, which is roughly in line with the cost of a new PC game bought in a box from Amazon or on Steam.* If you’ve been paying attention to the Curve, though, you’ll know that averages are often misleading, as indeed they are in this case.
Figure 3 shows the breakdown of the tiers, with the number of people who pledged against each tier.7
Figure 3: Double Fine Adventure funding chart: number of pledges per tier
Unsurprisingly, the vast majority of pledges were at the cheapest price point of $15. There was a spike at $100 because that tier was great value to serious fans, but even so, only about a quarter of the number of people who pledged at $15 pledged at $100. The remaining pledges at the high price tiers seem unimportant in this chart, particularly to anyone used to focusing on volume, not price, as the metric of success. That perception changes if we consider the amount of revenue generated by each tier, as Figure 4 shows.
When you look at the tiers this way, the picture changes radically. The vast majority of the backers – the 55 per cent who pledged $15 - represent just 22 per cent of the revenue. That small spike at $100 becomes the largest bucket of revenue and those higher tiers, with hardly any backers in them, are responsible for a significant proportion of the revenue.
We can take the analysis further. Backers pledging $1,000 or more represented 0.1 per cent of the backers but 6 per cent of the revenue. Backers pledging $250 or more represent 1.3 per cent of the backers but 15 per cent of the revenue. Backers pledging $100 or more represent 15 per cent of the backers and 52 per cent of the revenue.
One way to look at it is this: if Double Fine had gone down a traditional funding route, they would have sold their games for $15. Assuming everyone who pledged $15 or more would have bought the game, they would have made roughly $1.3 million, or just 40 per cent of the revenue that they made by having tiers that enable fans to spend lots of money on things they truly value. Instead, by unleashing the Curve and allowing fans to spend a variable amount, they were able to create one of the most successful crowdfunding campaigns of recent times.
Figure 4: Double Fine Adventure funding chart: revenue generated per tier
*
Kickstarter describes itself as a ‘funding platform for creative projects. These projects include everything from films, games, and music to art, design, and technology. Kickstarter is full of ambitious, innovative, and imaginative projects that are brought to life through the direct support of others.’ Since its launch on 28 April 2009, over $450 million has been pledged by 3 million people funding more than 35,000 creative projects.
To many, Kickstarter is seen as an alternative to publishers with their gatekeepers, risk management and difficulty in taking innovative leaps. Yet its real, unnoticed success is that it has allowed creators to let their biggest fans spend variable amounts of money on things that they truly value. For Double Fine Adventure, we saw that backers who pledged over $100 were 15 per cent of the pledgers but more than half the revenue. We see this sort of distribution again and again.
It’s hard to talk about new business models and the internet without talking about Amanda Palmer. Palmer started her career as a street performer in Cambridge, Massachusetts, was one half of the band the Dresden Dolls and released albums with Roadrunner Records, a label she was eventually to split from in acrimonious circumstances. In April 2012 Palmer launched a Kickstarter campaign to raise funds for her next album, which was to become Theatre Is Evil. She offered a range of pledge tiers from $1 all the way up to $10,000. For $1, fans would get a digital download of the album. For $5, the download and a lot of extra material: ‘the lyrics, band photos, handwritten stuff, extra artwork, drafts, anecdotes, and of course…naked pictures. We love naked.’ At $50, a limited vinyl edition ‘on two 180 gram black records in a gatefold package. Includes a set of heavy-stock inserts with artwork, lyrics, and photographs.’ It would cost $300 to attend one of the launch parties in Berlin, London, New York, San Francisco, Los Angeles and Boston and $500 for Palmer to be sent a black and white photo of anything and ‘I’ll re-render it via the magic of sharpie on hardboard & mail it to you with heaps of love. I’m a pretty good artist when I try.’ For $1,000, fans would get the complete package: a turntable painted by Palmer, the album on CD and vinyl, the collection of 7″ singles and the signed copy of the artbook.
For the serious fans, or those who could gather a bunch of friends to join in, $5,000 bought a house party at which Amanda Palmer would play a gig. And for $10,000: an art-sitting and meal with Palmer, when a fan could spend an afternoon or evening with their idol. ‘We’ll get together in a space that makes sense & I’ll draw you from life, naked or clothed.’
There were other tiers. Some tiers sold out, some didn’t. Palmer became the first musician to raise over $1 million from pledges on Kickstarter: $1,192,793 from 24,883 backers. Her average pledge was $47.93, significantly higher than Tim Schafer achieved for Double Fine Adventure, and much more than a music fan would expect to pay for an album.
Again, the secret was in the upper end of the tiers. Palmer generated nearly half her income (48 per cent) from the 3.8 per cent of backers who pledged $250 or more. Two-thirds (66 per cent) came from backers pledging $125 or more. That means that those backers who were prepared to spend on the signed art book and a copy of the album, or on higher tiers, represented just over a tenth of the total audience (10.3 per cent) but provided the majority of Palmer’s income. The thirty-four backers who paid for Palmer to come to their house for a party, paying at least $5,000 a pop, were just 0.15 per cent of the audience but represented 15 per cent of the income.
Across successful crowdfunding projects, we see a recurring pattern: around half the revenue comes from around a fifth of the audience. We’ve seen it for David Braben’s remake of Elite, the 1980s video game that made him famous (to Europeans – particularly Britons – of a certain age, at least). We saw it with Charles Cecil’s sequel to his Broken Sword games. Indiegogo, another crowdfunding site, says that the $100 reward tier makes more money for artists using its platform than any other tier and makes up nearly 30 per cent of total funds raised. Rewards (Indiegogo calls them perks) priced at $50, $100, $500 and $1,000 make, combined, 70 per cent of the total income of campaigns on the site. Rewards priced at $500 and $1,000 generate more than 25 per cent of income.8
Crowdfunding is important for understanding the future of publishing. Not because it will replace publishers, although it might, but because it shows how when you have a one-to-one relationship with your fans, unmediated by retailers and trade buyers and a sales force and so on, you can experiment with offering a range of products at a range of different prices that have different levels of emotional resonance with your fans. Kickstarter is simply showing us, in a very public, visible way, how variable the demand curve really is. It is new not because it democratizes fundraising, although it does do that too, but because it uses the power of the web to enable creators to let their biggest fans spend lots of money on things they truly value.
For some people, that is spending $10,000 to be painted in the nude by a musical heroine. Each to their own. Which is the very beauty at the heart of Kickstarter.
*
A common criticism of Kickstarter and similar crowdfunding initiatives is that many of the most visible successful campaigns are undertaken by companies or individuals who were previously encouraged, nurtured and enabled by the traditional media structures. Tim Schafer had games published by LucasArts, Majesco and Electronic Arts, all traditional video game publishers. Amanda Palmer was signed to Roadrunner Records, a label that was partially acquired by Warner Music Group in 2007.9 Trent Reznor was signed to TVT Records and then to Interscope, a subsidiary of Universal Music. ‘Of course these people can make crowdfunding work,’ cry the critics. ‘They are simply taking advantage of the publicity and early career enhancing activity that a publisher can offer and then milking it for all they’re worth, while the original publisher – who invested to create them – gets nothing.’
Yes and no. The big successes on crowdfunding sites are not all well-known creators going solo. Stuart Ashen is a comedian from Norwich in the east of England. In 2006, Ashen started a YouTube channel in which he showcased terrible electronic devices. In the last seven years he has made 240 videos which have been watched a total of 64 million times. Ashens, as he is known on YouTube, has 280,000 subscribers to his channel.
In 2013, Ashen decided he wanted to make a feature film. Commercially, his YouTube channel is part of Channelflip, a multichannel network that helps creators make money on YouTube, largely through advertising sales. Channelflip is part of Shine, the television production arm of News Corporation founded by Rupert Murdoch’s daughter Elisabeth and creator of shows such as Masterchef, Merlin and The Biggest Loser. Channelflip agreed to fund two-thirds of the production budget of Ashen’s movie. To fund the rest, Ashen turned to his fans.
Ashen used Indiegogo to ask for $50,000 to round out the production budget.10 (A crowdfunding campaign is also a useful test of market demand.) Rewards ranged from $10 for a thank you and $25 for a copy of the DVD of the movie up to $7,500 to have the unique chance – there was only one available – to appear as a cameo in the film. In thirty days, the project raised $73,690, nearly 50 per cent more than Ashen was seeking. Justin Gayner, creative director of Channelflip, told me:
We decided to test the crowdfunding waters with Stuart Ashen because we thought it would be one of the hardest ideas to get funded this way. You almost never see Stuart in his videos. You just see his hands, reviewing the tatty tech devices on a distressed brown sofa. We weren’t testing crowdfunding with a celebrity face like Alex Day or Carrie Fletcher. The question was whether a pair of hands and a funny voiceover had enough of a connection with fans to make them want to give us money. If we can make it work for this project, it’s got a great chance of working for all of our other creators.
Well-known names can certainly find it easier to raise money. Fans pledged $5.7 million to make a Veronica Mars movie that Warner Bros refused to finance. Zach Braff, one of the stars of Scrubs, raised over $3.1 million to make Wish I Was Here with no studio interference. Many successfully crowdfunded film and game projects have established creators attached to them, because they bring an existing fan base and, in the eyes of the fans, reduce the risk that the project won’t happen.
Amanda Hocking had never been promoted by the Establishment when she found self-publishing success at Amazon. Alex Day, the musician who reached number 4 in the UK charts without the support of a label, has never been promoted by the Establishment. Nor has Victoria Vox. Nor has the team behind Chronicles of Syntax, a UK-based production team making a TV-style thriller. Freddie Wong built a huge audience on YouTube and, in 2011, used Kickstarter to raise $275,000 to create a nine-episode web television series called Video Game High School.11 In 2013, he turned to Kickstarter again to fund a second series, raising over $800,000.12 Reaching an audience no longer needs the Establishment, as we’ve seen in previous chapters. Making money from your audience no longer needs the Establishment, either.
In fact, being an established artist does not guarantee crowdfunding success. On 28 January 2013, Björk launched a Kickstarter to raise £375,000 ($580,000) to port a successful iOS app called Biophilia to Android and Windows 8. The project was cancelled after ten days when the campaign had raised just £15,370 ($23,000).13
Biophilia was a hybrid app designed to help teach people, particularly kids, about music in an engaging way. Each song on the Biophilia album has its own interactive interpretation in the app and, for example, ‘Thunderbolt’ teaches how arpeggios work through manipulating lightning while ‘Moon’ uses the tidal pull to drive sequencers and ‘Solstice’ uses pendulums to explore counterpoint.
The campaign failed for many reasons. Fans were not being asked to be part of the journey of bringing a creative project into existence: Biophilia already existed and was released for iPhones eighteen months previously. Also, £375,000 is a lot to ask for a port of a mobile app and the estimate that it would take eight programmers five months seemed high to many observers. Many of Björk’s fans, probably the richer ones, already had Biophilia for the iPhone and had little incentive other than altruism to contribute to the Kickstarter campaign.
The main reason, however, is that Björk doesn’t seem to have cultivated a direct relationship with her fans. She may have over 400,000 followers on Twitter but her feed is a litany of announcements and statements that read like the output of a public relations intern. Her feed shows around sixty tweets in 2012, every one of which read as if someone else wrote it. She mentioned the Kickstarter campaign once while it was live. Billboard said, ‘Most [of Björk’s tweets] were one-way messages (“presale begins now”, “pre-order a copy”, etc.) that show a lack of conversation with fans. It’s hard to imagine an artist forging a close relationship with her fans these days without being active on Twitter.’ Björk proved the point. She may have had 2.6 million Likes on Facebook, but she does not have the connection with fans that encourages them to respond when she asks for help.
This is one important element of the Curve. You need to have the base to talk to. Having 2.6 million people press a Like button on Facebook is not what matters. What matters is how many of them love what you do enough to rally round and support you when you ask. When Tim Schafer asked, 87,000 people supported him; 25,000 helped Amanda Palmer. When Alex Day asked his 600,000 YouTube subscribers how many would be willing to help him get ‘Forever Young’ into the charts, about 2,500 people emailed him to say they would help.
An artist who treats fans as a replacement for the record label is not going to succeed. The Curve requires creators and businesses to build relationships with customers and let those who want to spend money do so. The Curve is the glue that connects the two: the link between the power of free to turbocharge your message across the web and the potential to enable your biggest fans to spend lots and lots of money with you.
The secret of the coming of the crowd is not that it replaces publishers but that anyone who creates anything no longer has to treat every customer equally, regardless of their desire. They can, cost-effectively, allow different people to spend very different amounts on very different things. There is one significant downside. Gatekeepers used to control access to the market, but they bundled that access with a bunch of other services: sales, marketing, community management, PR, finance and so on. If anyone can get to market now, those roles are still important and need to be fulfilled.
I am a self-published author. I have four books on the business of games available in hard copy and on Kindle, as well as a website with three to four original articles every week. It is too much for me to manage alongside writing, consulting and designing games. I have a team of five freelancers who support me – two writers, a web designer and a coder, together with a virtual PA. None of them works with me full time, but I have a team and I couldn’t do what I do without them.
This is not true just for me. Amanda Palmer had a large team behind her successful Kickstarter campaign. Double Fine is a studio of sixty-five people. Alex Day doesn’t have a team but finds himself often distracted by email rather than creating content or connecting with his fans. The revolution of the Curve is not that the role of publishing goes away, but that creators can now choose who gets to do it. It is a choice.
Choice is the biggest change that the emergence of crowdfunding, the ending of the tyranny of the digital and the demise of the gatekeeper has had on the market. Choice doesn’t mean that businesses who are expert in bringing products, services or art to market no longer have a role. It just means that they no longer have monopoly control over distribution. Anyone who makes something now has an alternative to accepting whatever terms they are offered simply to see their creation available to consumers. The howls of protest from incumbents are not the howls of businesses fearing that they are obsolete: they are the howls of businesses realizing that the premiums they have been able to charge for scarce access to the market are eroding and they are going to have to change the way they do business.
We’ve seen how the web has enabled people who make things to connect with fans. We’ve seen how Kickstarter and other initiatives have exposed in detail how fans are prepared to spend wildly differing amounts of money on things they truly value, giving us an insight into how creators and businesses will need to think about what they create - and what their customers will demand – in the twenty-first century. We’ve focused on what for many of us are the industries which are likely to be disrupted by the internet: movies and books and games and music. What we haven’t considered yet is how this will affect the industries that just aren’t prepared for the threat of casual piracy. Where one of the biggest threats facing their financial future is that their biggest fans might choose to share what they do entirely for free not because they are mean but because they are excited. Because they want to share that excitement with their friends, and the friends of their friends.
That threat is coming to physical manufacture soon. Welcome to the world of 3D printing.