Producing Content, Part Two – Revenue Streams & The Cost of Content

July 19, 2022 Dungeon Master 259 No Comments

I alluded to compromise in my last post. I also mentioned revenue streams. The two go hand in hand. Producing content is not free. Somewhere along the line you’ll need to pay for something – tech upgrades, a cast/crew, the games themselves. And you’ll need to find the money for those things. Depending on where you live that may necessitate paying taxes, which then requires more money and…well, you see where I’m going. Producing content is never as simple as it looks.

It can be simplified, certainly. If you’re a one-person operation, handling everything yourself and you don’t accept income in any way, then you’re likely solid for as long as you can keep that up. But not many have that luxury or want it. As I said in the previous post there are a lot of ancillary tasks when creating content. You may be great with dispensing rules knowledge or can talk esoteric character backgrounds for ages, but you also need to market yourself, edit those videos or podcasts, post everything, etc. Plus Twitch, YouTube, and other platforms incentivize you into becoming a Partner and thus earning income through ad revenue, subscriptions, etc. All of which you must pay taxes on.

Revenue streams:
YouTube – Once you achieve a certain number of subscribers, YouTube will invite you to their partner program. There are a number of benefits to this which YouTube continually shrinks and limits access to, but chief among them is the ability to get a percentage of the ad revenue on your videos. This works out to a fraction of a penny in most cases. Saving Throw nets less than $80/month on ad revenue across thousands of videos. If you are lucky enough to have viral hits that net thousands of views in the first week, and can do that regularly, you might see some modest income. But honestly most YouTubers get the bulk of their revenue not from YouTube.

Twitch
Similar to YouTube, but with a more defined path towards partnership. There is an affiliate status before becoming a full partner, but you can begin earning revenue as an affiliate. Subs are the big numbers here, as ad revenue is comparable to YouTube. Twitch’s platform also encourages engagement with the audience and there are many tools built-in that allow you to monetize that engagement effectively. However there are always compromises with this sort of monetization. You can risk audience burn-out, but perhaps more perniciously you risk cast burn-out.

Allowing the audience to effectively run your game via donations can seem fun and profitable at first, but it strips your cast of any agency. If everyone is on the same page, great, but it gets old fast. Trust me on this!

Direct Payment Platforms
You can use tools like Ko-fi, Streamlabs or Stream Elements to offer incentives for your audience to unlock during your game. Most all of these play well with Twitch and YouTube, but there’s definitely a steep learning curve to get bots set up correctly, commands working, and fine-tuning everything to work holistically with your channel.

Merch
There’s a wide variety of platforms to create and sell merch. Decide what you are capable of doing. A site like TeePublic, for instance, allows you to upload designs, choose products, and then open up a shop. They handle all printing and shipping. This is called Print on Demand. There’s no cost to set up, but they take a large percentage of each sale. Still, you can make more with good marketing during a sales event than you can via YouTube over a month! Not a lot more, but still decent!

If you want more control, you can look into a vendor like Custom Ink. With them you submit artwork then pay for the product upfront at wholesale cost and with wholesale numbers. So we’re talking 100+ shirts at $10/shirt. Then you store them and ship them out yourself. But you keep 100% of the profits AND you can pick and choose from a near limitless number of manufacturers so you’re sure to get what you like. Plus the print quality is generally much higher than from a place like TeePublic. It’s relatively negligible for most people, but if you’re looking for a high volume and you have the cash (and space!) to support it, it might be worthwhile.

Subscriber Platforms
I’ve spoken often about subscriber platforms like Ko-fi and Patreon. Like a longterm Kickstarter, these allow your audience to support you regularly, often in exchange for exclusives the casual viewer or listener wouldn’t have access to. 

I love Ko-fi – they’re growing, they’re committed to supporting platforms like YouTube and Twitch via overlays and bots, and they do not take a cent from your earnings. Patreon on the other hand is the old dog – but they nickel and dime you into oblivion. From percentages taken out for platform fees to VAT charges and more, Patreon is constantly adding and manipulating the fee structure. And almost never at an end-user’s benefit. Still, they are widely known and carry name recognition with an audience who may be wary of such platforms.

Fundraising Platforms
This is like Kickstarter, IndieGoGo, and the like. Not really designed for ongoing series, these platforms do well when you have a clear vision and want to handle the production independently. 

Sponsorships
This is the holy grail for many content makers. Having a beloved company decide you’re worth spending marketing bucks on you in order to hopefully sell their own merch. Many companies will sponsor you non-monetarily – meaning they’ll send you free swag for giveaways or for you to give your cast/crew. I encourage you to think about what value you hold your production. Again if you have very few expenses because you’re a solo operation, this may make sense. But if you need to support your cast, pay for rent and taxes, etc. then you need to plan on your VALUE.

This is tricky. There is little to no money in the TTRPG business. Believe me. The gross sales for ALL TTRPG products as of 2020 was $105M – if you remove WOTC from that equation it’s significantly less. That may still seem like a lot, but compared to video games which, in 2020, had sales of $56.9B (BILLION, with a B), the revenue is insignificant. Add in normal operating expenses and RPG makers just do not have the marketing budgets to sustain the hundreds of content creators out there. I say all this because budgeting out a show at $100,000 without knowing how many sales you can potentially and logically generate is gonna be met with a big guffaw from whomever you’re pitching to.

Know your worth. Decide what you need from the items below. How much do those things cost? How much is your time worth? And what’s reasonable for the market, i.e. how much can you logically ask from a gaming company?

Many producers team up with video game publishers, snack makers, dice manufacturers, etc. in order to diversify their sponsorships. So there’s not as much of a burden on a single RPG publisher. A little bit here and there is much more palatable than hoping WOTC will swoop in and give you boatloads of cash (plot twist: the won’t and never will). 

So those are the most common ways of making money. Now, let’s talk a bit about things to account for, aka THINGS YOU MUST SPEND THIS REVENUE MONEY ON:

1) Cast/Crew
Again, if you’re a one-person operation doing all the content creation yourself then you only need to be concerned with your own time which is none-the-less precious. But if you are producing with a team, even just one other person, you need to take their requirements into account as well. That means clarifying your stance on payment, whether they’re employees or independent contractors (your state laws should be referenced), and their safety both at the table and beyond.

People are the most important aspect of producing content, whether it’s just you or a team of people. Everyone is donating time at the start, but ultimately you’ll likely find people will start to wander or lose focus if there’s not a clear end goal in mind. Brush up on your employment law. Some states in the US have clear stipulations about who can be classified as an independent contractor (meaning you pay them and they handle the taxes) and who is an employee (meaning you need to take out taxes from their gross pay). If the latter, this could necessitate bringing on a Payroll company to help facilitate taxes and paying a percentage of payroll in fees to the company. This also means supplying things like Worker’s Comp and Liability insurance. 

If you think you can slide under the radar of the tax system, be warned. It will catch up with you. You’ll have employees wondering if you submitted tax forms, you’ll have the IRS wondering why you had certain expenses on your tax return, etc. Be VERY careful. I’m not even going to perpetuate the whole “if you’re making less than $600” nonsense. Don’t be that person. Yes, some get away with it. Yes taxes are silly. But it makes life super hard for the rest of us when people dodge them.

Let’s say you decide you’re not going to even begin with this and so you’re going to not pay anyone. Assuming you have no income, that’s probably pretty easy. Just be extremely clear with your people that you will not be paying them. You could provide snacks, maybe give them a free PDF or rulebook. But if you think giving them a gift-card instead of a payroll check gets you out – it doesn’t. When it comes to gifts, there a lot of things employers can give employees as “de minimis” fringe benefits that are not considered taxable. Unfortunately, a gift card or any cash-related gift is not considered de minimis, even if it’s less than $25.

Bottom line – do your own due diligence. Determine what the guidelines are for your location and adapt as necessary. You will, with lucky, have a revenue stream coming in. If you decide to pay people at all know the rules.

2) Tech
As I said before you can start a stream or podcast with very little in the way of tech. Basic functions on a cell phone can handle a lot of this. Heck, a sub-$100 Kindle can do it. But you certainly get what you pay for. This is where a lot of people tend to focus their revenue streams. My recommendation? Start with audio improvements, then look into cameras. Good sound goes a LONG way. Especially if you’re working on a podcast. Make sure you can isolate your voice, your mic is free from vibrations and other sounds (like laundry, your dice clacking, your roommates, etc.). Once this is A+ solid, then you can look into cameras. 

I always recommend people to start with what you’ve got – don’t let lack of the latest and greatest gear prevent you from beginning. But realize that bad audio will limit your growth potential, so work on that first.

Tech really deserves its own article. Hell, I could talk about each aspect of tech for ages. But tech is not the most important part of your show. What is? See #1 above.

3) Rent/life expenses
You may think to yourself, “duh!” But this goes with those compromises I discussed. There’s a huge time component to producing content. Not just the game itself, but marketing, building, designing, posting, editing, and beyond. You need to take into account your own livelihood. If you’re hosting people at your house (why?!? There’s a freakin’ pandemic people!) you’re probably dressing up the area and making it uninhabitable by normies. Consider that. If you have a separate space you’ll need to pay rent on that. And that gets pricey quick, depending on your area of the country. In LA when I was there our rent was $1100/mo for one room. 

But you still need to consider your work/life balance. Be careful you don’t drop into a spending whirlpool on this. Especially if you’re not paying anyone. Is the money actually improving anything, or are you just playing with tech? This plagued me at the beginning, I will freely admit. It’s super easy to throw money at tech – that’s how Amazon stays in business, folks. But really consider if you’re putting money in the right things and you’re taking care of yourself first.

4) Insurance/payroll/business expenses
This is so important I’m mentioning it again. :) Read #1 again.

5) Taxes
Taxes are a HUGE component of production expenses. Saving Throw pays between $8-10k in taxes each year! That’s nearly 50% of our revenue. Taxes suck, ain’t no lie. And yeah, many, many people operate on the “I’m so small, the government will ignore me.” And they get away with it. But that doesn’t mean you would! Have a tax system game-plan in place. “Not reporting” isn’t an option. Twitch, YouTube (via Google), PayPal and other platforms controlling your revenue streams will submit your income to the IRS. Sponsors that hire you out will submit 1099s. Yeah. You can’t hide from it. Might as well accept and plan for it.

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Whew! This was a big one. And I could sure as heck talk more about each and every one of these items. But I’m interested to hear from you! Are you enjoying this series? Are you getting good info? Are there areas you’d like me to explore more? Let me know: https://twitter.com/GadZook and thanks for reading!

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