Step 1. Make an utterly fantastic game. Step 3. Profit!

October 20, 2009 9:24 AM

2D BOY made around $100,000 in a week. That’s $50,000 each for writing a blog post about a game they finished a year ago. By letting people pay whatever they wanted. 2D Boy stirred up a lot of discussion (previously) about game piracy when they used online scoreboard data to estimate an 82% piracy rate for their fantastic indie game World of Goo (previously). For World of Goo's first birthday, they decided to try the Radiohead model and let people buy the game for any price they choose. Now they've released extensive data about the results. Short version? "A huge success," even though the most commonly chosen price was only a penny.

Don't miss the excellent analysis in the Rock Paper Shotgun article (that first link), including the comments where one reader has created a chart showing that the bottom 40% of the downloads account for 1.5% of the profit and the top 30% of the downloads account for 83% of the profit.

posted by straight (64 comments total)

I like how it's called the 'Radiohead' model. I can almost hear ECON profs muttering that part when the topic is finally interred into the curriculum.

'Today, class, we will be discussing the Radio-head mdoel of internet business.'
posted by LD Feral at 9:33 AM on October 20 [1 favorite has favorites]

Only $100,000/wk, huh? But what are they gonna eat? You can't eat $100,000/wk!

&lt/typical "software pirates WILL DOOM US ALL" apologist>
posted by DU at 9:39 AM on October 20 [1 favorite has favorites]

even though the most commonly chosen price was only a penny

nice guilt trip, but no one is going to get my two cents on this issue.
posted by the aloha at 9:41 AM on October 20 [2 favorites has favorites]

There's some crazy pricing curves at work here. Valve reported the same thing with their massive discounts on weekend sales of The Orange Box - they slashed the price (less than half) and total revenue more than doubled. Considering that there's a zero incremental cost there's a lot of incentive to do this kind of thing.

What's funny is that I don't think that there would be a permanent revenue increase if you made a permanent price cut - the "regular" price is a quality signal but at the same time there's a huge demand for discounts. It's weird and I'd love to hear a real economist explain it.
posted by GuyZero at 10:01 AM on October 20 [4 favorites has favorites]

Who cares that they only paid a penny? The people who pay almost nothing wouldn't have bought it in the first place, so you actually come out ahead. As intellectual property is cheap to copy and distribute, just about any sale makes a profit. The issue is convincing people to buy it, period.

The Radiohead model is good, because it effectively guilts people into paying it, since they can pay very small amounts of money for something that's worth downloading but not worth paying full price for. Before, if you pirated a $50 game, you couldn't pay the developers the $20 you thought it was really worth.
posted by mccarty.tim at 10:06 AM on October 20 [5 favorites has favorites]

I think calling it a blanket huge success is a bit misleading. It may have been a huge success for these guys, attempting to squeeze the last little bit of blood from that stone. And it may well be worth doing near the end of a product's life cycle. Hey, free money. But the economics of a game like "World of Goo" are nothing like the economics of a big budget game from a major publisher.

I suspect that if Bioware tried the same thing with the upcoming release of Dragon Age Origins the results would be rather underwhelming.
posted by Justinian at 10:08 AM on October 20

This shouldn't be that surprising. The marginal cost of reproducing software is apparently damn low; low enough that they can charge a penny and still cover costs.

Engineering economics involves two kinds of costs, fixed costs and incremental costs. Within our current system, you cannot match a price to the most an individual is willing to pay. So the goal is to choose a single price such that (price - incremental cost) * (quantity of sales) is maximized. If that calculation doesn't exceed the fixed costs, you don't do it at all. The implication here is that the quality of the design doesn't directly impact the price of the good, because it's a fixed cost, not incremental.

The problem game makers face in business is predicting quantity of sales at a given price. You can survey people, but they lie. So there's a risk that you've priced it way too high. When the stakes are higher, cars for example, there's room in transaction costs for negotiation tactics; you can price it high and let customers haggle you down. Retail software doesn't have that kind of luxury, so this sort of experiment runs as proof that game pricing is too damn high.
posted by pwnguin at 10:11 AM on October 20

GuyZero: I think you're right: if they made the price cut permanent they'd probably end up with lower overall profits.

You maximise profits by selling the same stuff to different markets at the best price you possibly can (statement of the obvious here!). How you do that without the people you could sell to at a higher price simply buying at the lower price (or feeling that they've been fleeced and refusing to buy from you next time) is the tricky bit!

One example that springs to mind is the way that Dell segments their customer base by using rolling discounts: there's the regular price, but there are also discounts which cover different parts of their inventory at different times. Need a computer right now? Well, you're probably going to have to pay the 'normal price'. Willing to wait? A discount will come your way eventually. As a result, Dell has segmented their customer base (by time preference) and given them different prices for the same stuff.

I'm sure there's lots of marketing theory on this stuff out there.
posted by pharm at 10:16 AM on October 20 [1 favorite has favorites]

Yes, exactly. It's a form of market segmentation where you really are getting every single possible customer (in theory) since the price goes all the way to almost-zero. What's surprising is how much gross money it brings in.

I suspect that if Bioware tried the same thing with the upcoming release of Dragon Age Origins the results would be rather underwhelming.

Discounting new products is obviously not a good idea since early adopters have proven themselves time and again to be largely price-insensitive. However it's hardly getting blood from a stone - it's a counter-intuitive way to get a lot more money out of a product in the middle-to-end of its lifecycle.
posted by GuyZero at 10:32 AM on October 20 [2 favorites has favorites]

Interesting that they said they ended up paying a much higher commission to Paypal (13%) than normal due to the large number of small transactions. What's more, due to the Paypal fees they made no money on anyone who paid a penny for the game - but they also believe Paypal lost money on those transactions. Where'd all those pennies go?
posted by backseatpilot at 10:34 AM on October 20

it's a counter-intuitive way to get a lot more money out of a product in the middle-to-end of its lifecycle.

It's not at all clear to me that this effect will hold steady over time. The novelty is likely part of the appeal. Sure, a bunch of people paid $20. Maybe they'd do the same for the next game. And the one after that. But what about the 10th game? Eventually they'll likely feel like they've done their part and it's somebody else's turn to pay the $20 while they pay a cent. Except the dudes paying one cent for the very first game are not likely to suddenly get religion at pay $20.

This sort of thing works much better when not many people are doing it than when everyone is.
posted by Justinian at 10:46 AM on October 20 [2 favorites has favorites]

A) Richard Pryor
b) realistically, credit card companies
posted by GuyZero at 10:46 AM on October 20

I'm a big fan of 2d Boy. Outside of their talent, and the quality of World Of Goo, they've repeatedly shown a dedication to exploring market reactions to various business models and sharing their data and process. Really, there's nothing not to like about how they've handled themselves.
posted by shmegegge at 10:51 AM on October 20 [3 favorites has favorites]

ventually they'll likely feel like they've done their part and it's somebody else's turn to pay the $20 while they pay a cent. Except the dudes paying one cent for the very first game are not likely to suddenly get religion at pay $20.

I would argue this is wrong. I would say the majority of people who would pay a cent are the ones who don't have as much disposable income as the people who can pay the $20. It's not a matter of doing the right thing, it's a matter of doing a thing at all.

And I when I was a teenager I was precisely the person who COULD only pay one cent and now that I am old and decrepit I pay full price for software all the time even though I have the ability to pirate--because I have disposable income.
posted by danny the boy at 11:04 AM on October 20 [4 favorites has favorites]

Who cares that they only paid a penny?

I have to admit the mentality of this sort of irritates me, justifiably or not, like you couldn't go for a dollar to at least make it worth the bits and transaction fees, even though you probably would spring 3 or 4 dollars for a cup of coffee any day of the week without the slightest thought. Nobody (or very close to nobody) paid a penny because that was all they could afford or even because a larger amount would be a meaningful sacrifice to them in any sense, they're paying the least possible amount on principle. What that principle might be besides being a cheapskate I don't know. Don't get me wrong though, I think you are probably right about the general unworthwhile-ness of harping on this.

But there is an interesting question of whether the relative freeloaders, being the largest demographic of participants overall, are paying their way in a sense by increasing the buzz around the effort. I could imagine a person who has a moderate online presence figuring something like, I'm only going to pay a penny for this, but I'll blog about it, and they actually might be on to something. It's a shame something like this is impossible to reproduce exactly, because it would be really interesting to gauge performance in the case, for instance, that you set a one dollar bottom limit on the pricing, or on the other side if you offered a totally free option - one presumes the penny downloaders would opt to pay nothing but where would the cutoff occur? Would a lot of one dollar downloaders opt for nothing? Five dollar? Would there be an even bigger buzz factor to compensate for the lost revenues? There is some fascinating study in consumer psychology in this business.
posted by nanojath at 11:10 AM on October 20 [2 favorites has favorites]

2D Boy stirred up a lot of discussion (previously) about game piracy when they used online scoreboard data to estimate an 82% piracy rate for their fantastic indie game World of Goo

The part that everyone seemed to miss on that:

oh, and yes, these numbers are exclusive of the demo… those scores are submitted to a different server entirely.
posted by P.o.B. at 11:12 AM on October 20

The statistics are certainly interesting, but for me - a lifelong retailer - the responses are where the real meat is. I just couldn't stop reading them.

Once you filter out the blather, you are left with a substantial set of people who feel membership in a shared community, and who are willing to do what they can to support that community. They love gaming, they love these developers, and they understand the important part they play in keeping that community alive. The consumers are willing participants in the economics.

The other thing that really struck me was the willingness to partition their scarce resources voluntarily - all agreed the game was worth something, and most did their best to match their own needs against their perceived value of the product. A real attempt was made at fairness.

There are some real sparkling dynamics going on here which retailers have never considered before. 2D Boy would certainly scoff at the notion no doubt, but they could end up being pioneers in a new commercial science.
posted by Aetius Romulous at 11:17 AM on October 20 [3 favorites has favorites]

Didn't preview to catch danny the boy's comment - it would be fascinating to know how the unable versus the unwilling to pay more contingencies really panned out in the numbers.

I think Justinian's question about whether the wearing of the novelty factor will ultimately knock the bottom out of this model of late-product-cycle revenue is interesting and relevant. I think there is probably some persistent value for any game that generated a sufficient amount of attention that its cheap release will garner a flurry of media. On the other hand, it's a valid concern that if this became too much the pattern, more people would start eschewing the full price version on the assumption that they could get it for near free later.

I think it's sort of funny that really this could be seen as just the virtual remainder rack - like I haven't been picking up media on the cheap after it's primary product cycle is played out my whole life. To an extent the retail cycle, though, is driven by physical goods paradigms - a warehouse full of DVDs that will never move at full price is a cost, better to sell them even at a loss than to carry them forever - but then again, given the seemingly endless supply of some $5 DVDs Target has to offer I have to assume some of this stuff is being produced specifically for the lowest tier market.
posted by nanojath at 11:19 AM on October 20

I give all of my stuff away for free online and I'm a millionaire! How did I do it?

Sheer volume of transactions.
posted by Astro Zombie at 11:25 AM on October 20 [1 favorite has favorites]

One last - after reading the survey results I'm forced to admit that my cheapskates assessment of the penny crowd are too simplistic. Quite a few "I'll pay more later if I think it's worth it" responses, among many others. The comments in the Other category for the why you paid what you did question are really interesting.
posted by nanojath at 11:27 AM on October 20

2D Boy would certainly scoff at the notion no doubt, but they could end up being pioneers in a new commercial science.

Ironically, that's sort of what the story in World of Goo is all about, too
posted by dng at 11:33 AM on October 20

Wait, I probably meant "coincidentally"
posted by dng at 11:35 AM on October 20

No, no, no. This is a horrible idea. They need scary lawyers and user-hostile copy-protection because pirates will destroy their business! This can't possibly wor--

What? Oh, all righty then.
posted by rokusan at 12:02 PM on October 20 [2 favorites has favorites]

it's worth mentioning, by the way, that 2d boy have cited Ricochet Infinity developer Reflexive, saying only 1 actual sale for every 1000 people the DRM prevented from pirating the game.

further, they have spoken at GDC, telling developers that DRM is a waste of time.
posted by shmegegge at 12:11 PM on October 20 [1 favorite has favorites]

I think DRM has a particular limited value: it's good for about a week, and that week is what it is good for.

1) Most stuff gets cracked inside of a week, but while that week is up ...
2) You get money from the people who absolutely cannot wait for the software

On one hand, with this particular data I can see that developers could easily end up losing money, by net, from preventing piracy. They could be cutting off their metaphorical noses to spite their equally metaphorical faces.

On the other hand, if you write the software, you ought to be able to release it how you like, without other people saying "NO REALLY I AM GOING TO BE DOING YOU SUCH A FAVOR BY PIRATING THIS FOR YOU!" Freedom means freedom to make even "bad" decisions.

And on the gripping hand, if the culture of free takes over, the shape of that particular curve might alter such that, in the future, you get a very few people contributing money at all.

I would love, love to see a study done comparing this to the tipping behavior at restaurants by these same participants.
posted by adipocere at 12:28 PM on October 20

One last - after reading the survey results I'm forced to admit that my cheapskates assessment of the penny crowd are too simplistic.

That's very generous of you, nanojath (pun intended). I was just about to respond.

I don't think you can draw any sort of conclusion about a single customer from a distribution of paid amounts at all. Will you find people among them who are generally cheapskates in life? Very probably. Will some of the penny-payers have been willing to pay more if they had to? Sure.

But my point is, when I want to buy something and it uses the Radiohead model, it shouldn't matter whether I pay one cent or fifty million squillion space dollars, for the simple reason that by making a purchase I effectively enter into a contract with the seller, and in this case the seller has determined that I can pay whatever amount I choose.

And if I can pay any amount I wish, I feel it logically follows that according to the seller, $0.01 is a fair price. If they felt it isn't, they could have stipulated a minimum price, after all, as has been suggested above.

FWIW, I actually bought In Rainbows for a penny, or one euro or some such negligible amount, I can't remember exactly. Why? Well, it was the first time I (like most of us) saw anything like this model, so in part it at least was because I could, even just to see if it worked. Simple curiosity.

Because to be honest, I wasn't going to buy the album otherwise anyway. Really, I wasn't: I have OK Computer and I think Radiohead are great, but I'm not really a huge fan, plus I feel maybe they don't really need my money, at least not nearly as much as the smaller independent artists I like to support. Not a bad word about Radiohead, to be sure, I'm just saying I don't usually buy their new albums.

So, am I a cheapskate? Quite possibly, although that is beyond the scope of this comment. But am I a cheapskate for not paying more for In Rainbows? No, I really don't think so, if only because I wouldn't have paid much more anyway. But in this case the product (the music) did reach someone it probably wouldn't have otherwise (at least not to the same extent, as in listening to all the songs). Plus, I'd gladly pay much more for something under pay-what-you-want if I really wanted it.

Extrapolating from that, I would actually probably buy more albums if they were all variably priced: it's not that I think In Rainbows isn't worth more than only the one euro, it's that everyone can buy only a non-infinite amount of albums, so you have to make choices. My favourite band I'd gladly pay the ten bucks for on iTunes, or €20 for the CD in the shop, or more for vinyl or just because I want to support them.

But those let's say 'B-tier' albums (ranked by personal priority, not necessarily quality of course) I wouldn't buy otherwise I probably would if I could pay, say, half of the "standard" amount.
posted by goodnewsfortheinsane at 12:54 PM on October 20 [1 favorite has favorites]

I was on the fence about whether I should have posted the World of Goo deal to the Blue, or failing that the Gray. Ultimately I didn't decide in time, and the post would have been kind of light anyway.

I already bought the Wii version beforehand for full price, and so felt justified in buying the computer version for one dollar. The result was I got versions for Windows, Mac and Linux. The Linux port is super-slick; distributed via DEB, and with just as much audio-visual panache as the other ports. I think 2D Boy could make a good pile of extra money selling a "How We Did It" book.

One thing I unexpectedly liked a lot about the game is the fonts used. How many Flash or budget computer games are there where the UI amounts to a cartoon font used for the menus? A little piece of my soul dies whenever I see a "wacky" font in a game.
posted by JHarris at 12:59 PM on October 20

adipocere: "1) Most stuff gets cracked inside of a week, but while that week is up ..."

depending on what we're talking about, there's quite a lot of material that gets cracked earlier than that. often, cracking crews get the software in advance, because they have members who are staffed at retailers and steal a copy as soon as the shipment comes in, which is often before the actual street date. they then bust their asses to crack it as soon as possible, and the more often developers use 3rd party DRM, the easier that is for the crew. this isn't a universal constant, though, so I'm not really trying to dispute what you've said. more like I'm just adding another data point.
posted by shmegegge at 1:00 PM on October 20

JHarris: "The Linux port is super-slick; distributed via DEB, and with just as much audio-visual panache as the other ports."

no shit? man, good for those guys. linux needs love. I bought it for the wii, too, so I didn't even get involved in this promotion, but I'm glad to hear that.
posted by shmegegge at 1:01 PM on October 20

Ah! The end date now reads October 25, they must have extended it!
posted by JHarris at 1:10 PM on October 20

Yep shmegegge. In fact on my dual-boot XP/Ubuntu machine the two versions are indistinguishable, and the Linux port loads much faster to boot.
posted by JHarris at 1:12 PM on October 20

I am excited to see that some folks here are reporting that they extended the sale. I just heard about this today and was sad that I missed the chance to get the game. World of Goo has been on my radar for awhile, but I had a hard time parting with $20 dollars for a game I wasn't to sure about.

I really like this model of distribution a lot, and hope that the trend continues to evolve. Obviously, the amount of available cash I have on hand vs. the games I want to give a whirl very rarely add up, so any chance I can take to get a game I've wanted at a reduced cost is great to me. (I refuse to pirate games anymore. It's the reason I have a grown up job.)
posted by theButterFly at 1:44 PM on October 20

I suspect that if Bioware tried the same thing with the upcoming release of Dragon Age Origins the results would be rather underwhelming.

One thing to keep in mind is that World of Goo is one of the most highly, universally praised games out there. And 2D Boy are pretty universally liked, both for the incredible amount of love they put into the game and the way they've conducted themselves (publishing cool data like this, giving away the soundtrack, supporting Linux, etc.) That has to make a huge difference in the number of people willing to pay for the game when they don't have to.

Will Dragon Age Origins be a similar work of love and genius? (Will the quests feel like they wrote 3x as many quests as needed and only kept the very best, the way 2D Boy did with World of Goo levels?) Has Bioware earned equivalent amounts of goodwill from gamers? Maybe. But I doubt it.

For me, the real take-home message from this is that game developers can people to willingly pay for their games even when they don't have to (thanks to the internet, they never have to), if and only if they make a fantastic game and treat gamers well. Or at least that's the message I really really want game developers to hear.
posted by straight at 1:49 PM on October 20 [1 favorite has favorites]

Will Dragon Age Origins be a similar work of love and genius?

Possibly. The developers can make a genius game. It's just a question of whether they will. I have heard things like "RPG of the decade" from people who have seen it, though, which gives me some hope.

Has Bioware earned equivalent amounts of goodwill from gamers? Maybe. But I doubt it.


I'm guessing you're not a hardcore gamer. Bioware did the Baldur's Gate series, Neverwinter Nights, SW: KOTOR, Mass Effect, and so on.

I love this business model. Really, I'm not criticizing it. I just don't think it scales well, I don't think it will age well if it becomes widespread, and I think it mostly applies to certain types of games.
posted by Justinian at 1:57 PM on October 20

I hadn't realized that they were doing this until this MF post, and I've considered buying World of Goo for awhile now. I paid $5 and am now a happy camper.
posted by milnak at 2:02 PM on October 20

I think it mostly applies to certain types of games.

I suppose so. I think the real issue is that you HAVE to charge a lot for something like Dragon Age because the audience is a lot smaller. The World of Goo guys found an innovative way to take advantage of the fact that their more casual game has a much larger potential customer base except they're all spread in terms of how much they're willing to spend.

The $50 or $100 or whatever you spend on Dragon Age is the least of your worries considering you're going to sink 1000+ hours into it.
posted by GuyZero at 2:04 PM on October 20

"Pay what you think it's worth" gets people being surprisingly honest.

On and off, I do art commissions. I'll announce "Hey, folks, I have this many slots available, and this vague theme!" and people will take the slots.

Usually, I set the price beforehand, with some room for negotiation if they want something complicated. But once, inspired by a story about a coffee shop that was making more money after instituting a "pay what you think it's worth" policy, I set that as my price. Normally I want money up front; this time I let people pay up front or on receipt.

One person, who is very broke but has very interesting ideas, paid me half of my usual price. I suspected going in that he wouldn't be able to meet my usual rates, and I was fine with this - I gave his piece exactly as much love as I did the other pieces of that set.

The other two commissioners more than made up for this; I made more money off that set than I did off of ones where I set the price. I haven't tried it again since, going back to set prices, but I will probably do it again every so often.
posted by egypturnash at 2:08 PM on October 20 [3 favorites has favorites]

This model works for things that are quick to download, install, plug and play. Pay a couple bucks and you're playing inside of 5 minutes. It'd work great for anything by Popcap Games, any game on XBLA or WiiWare. I bet if Popcap instituted this today, their revenues would double.

If you're really terrified, you can make the minimum $1 instead of $0.01.

Pay-what-you-want Dragon Age would probably annihilate Steam servers in minutes as a million people pay a penny and try to download a 30GB game. And then obliterate their customer support lines as they whined about it.
posted by mek at 2:18 PM on October 20 [2 favorites has favorites]

Dude, they released a linux port of World of Goo? I am absolutely going to pay $20 for that.
posted by kaibutsu at 2:57 PM on October 20

I'd love to know what it's like to be uncynical enough to view this as a utopian new business model and not just a faddish publicity stunt that will stop working the moment people get bored of it.
posted by cillit bang at 3:44 PM on October 20

I strongly suspect at a minimum price of $1, more than 1% of those 1-penny-payers would have

I strongly suspect that, had the minimum price been $1 rather than $0.01, a lot more than 1% of those $16,852 people would have gone for it. 80%, maybe?
posted by Foosnark at 4:02 PM on October 20 [1 favorite has favorites]

fiddlesticks.
posted by Foosnark at 4:02 PM on October 20

There is a cafe in Denver that uses this strategy. I thought they were doomed and would go out of business soon but they proved me wrong. You can even exchange an hour of volunteer service for a full meal. The food and coffee are excellent, btw. PS - World of Goo is a terrific game!
posted by Eclipsante at 4:10 PM on October 20 [1 favorite has favorites]

I'd love to know what it's like to be uncynical enough to view this as a utopian new business model and not just a faddish publicity stunt that will stop working the moment people get bored of it.

Someone better tell all the museums, local music venues, art galleries, physical and behavioral therapists, churches, publishers, PBS, etc. that their sliding scale system is going to stop working as soon as we all get bored of it!
posted by danny the boy at 4:13 PM on October 20 [1 favorite has favorites]

Has Bioware earned equivalent amounts of goodwill from gamers? Maybe. But I doubt it.

For the RPG market? Absolutely. If Bioware came out tomorrow with a game titled A New Bioware Game: Shopping at the Grocery Store and Shit it would sell a million copies by Friday.
posted by kmz at 4:19 PM on October 20 [2 favorites has favorites]

Someone better tell all the museums, local music venues, art galleries, physical and behavioral therapists, churches, publishers, PBS, etc. that their sliding scale system is going to stop working as soon as we all get bored of it!

Most of those examples are heavily reliant on wealthy donors and/or government funding to stay afloat. "Charity" doesn't exactly count as a business model.
posted by Amanojaku at 4:43 PM on October 20 [1 favorite has favorites]

what if M$ decided to use this model to legitimize the gazillions in India and China? even at 1cent usd which is about 5 rupees...
posted by infini at 5:10 PM on October 20 [1 favorite has favorites]

You have to segment the market in a way that prevents people from paying the lower price when they might be willing to pay a higher price. That's why this sale only lasts so long. Geographical segmentation doesn't really handle the fact that there are still plenty of people in India willing to pay full price for Windows. Not to mention that people would simply export the Indian version to other countries. So MSFT segments by product functionality.
posted by GuyZero at 5:18 PM on October 20

nanojath: given the seemingly endless supply of some $5 DVDs Target has to offer I have to assume some of this stuff is being produced specifically for the lowest tier market

I remember hearing something about this on a radio show called The Age of Persuasion. To wit, Terry O'Reilly (the host) was talking about how Columbia House asked him the wrong question on a customer survey: that asked him about the quality of things like the sound, the cases and even the CDs themselves. O'Reilly got curious and pulled out some of his non C.H. CDs.

Sure enough (according to him), the Columbia House CDs were:

• in flimsier jewel cases
• were lower-quality physical products (poorer printing on CDs)
• sounded worse

So, yeah, they're probably being specifically printed for that market. Much the same way you can tell a DVD used to be a rental disc: unskippable trailers for movies that came out years ago, anyone?

goodnewsfortheinsane: I feel it logically follows that according to the seller, $0.01 is a fair price

I suppose, but I don't know if "fair" is the right word... technically acceptable, maybe, just as $200 dollars is technically acceptable and within the tems set. My (il?)logical reasoning tells me that by saying "Pay what you want" they were trying to avoid an explicit minimum and thus a race to the bottom. In a parallel universe 1/2D GIRL just had their "Pay as little as a dollar" sale, and I'm betting they got a f***ton of 1-dollar sales.
posted by Decimask at 5:52 PM on October 20

Man, I wish I could backtag with a rockpapershotgun tag. They've seen a lot of mentions on mefi.
posted by Decimask at 6:10 PM on October 20

Is it actually possible to charge 1¢ online at a profit now? Aren't transaction fees higher then that?
posted by delmoi at 7:28 PM on October 20

No. They mention that anything below $0.30 doesn't kick back money to them, or at least Paypal doesn't.
posted by P.o.B. at 7:33 PM on October 20

If Bioware came out tomorrow with a game titled A New Bioware Game: Shopping at the Grocery Store and Shit it would sell a million copies by Friday.

I guess I was under the impression Bioware had squandered a lot of goodwill on Dragon Age with the fratboy trailers, the uncanny-valley sex scenes, and the plans to charge extra for DLC content that's ready to go when the game is released. But maybe they are still in the category of "gamers would pay for their games even if they could get them for free."

I'm guessing you're not a hardcore gamer.

That seems kinda funny to me. For all you know I've ascended a dozen times in Nethack, 1cc'd Dangun Feveron, logged a 1000 hours in Flight Simulator X, finished Sorcerer without Invisiclues, aced "Bark at the Moon" on Expert, taken first place in a South Korean StarCraft tournament, fragged Thresh, become a Matar Colonel in EVE Online, won the Omegathon, and written the BFG FAQ. But because I maybe don't follow one particular type of CRPG, I'm "not a hardcore gamer."
posted by straight at 7:54 PM on October 20 [3 favorites has favorites]

Dude, they released a linux port of World of Goo?

Maybe I'm wrong, but I think World of Goo had a Linux version immediately out of the gate. I know that for a year, it's been the only game I ever see installed on Linux computers, anyway.

(Pity the poor Linux gamer, if that demographic exists.)
posted by rokusan at 9:06 PM on October 20

Market segmentation only works if you can seal off your segments. That has not occurred; some people willing to pay much more than a penny paid a penny. It's not optimal, but I guess it's working - for now. We'll see how long it lasts after the gimmick aspect wears off.
posted by jewzilla at 11:30 PM on October 20

Semi-related and not for nothing and other stuff, but Assassin's Creed is on Steam for $5 until Thursday. It has two asses in it, so it's probably worth $5.
posted by dirigibleman at 12:14 AM on October 21

cillit bang: "I'd love to know what it's like to be uncynical enough to view this as a utopian new business model and not just a faddish publicity stunt that will stop working the moment people get bored of it."

it's worth mentioning that the business model in question is not "pay what you want."

that is one end of the business model. the other end, way way out on the other side of the pipeline is "scale down production to the minimum required people: 2."

in between those two ends are a million individual well made decisions, including things like "engender good will through transparency," "eschew DRM," "do not be litigious," "focus on gameplay and design over 'epic' story," "appeal to the casual gamer and the core gamer equally," "build with the intention to publish on every platform if possible," "do not punch people in the mouth," etc...

2d Boy are not just some guys who said, "fuck it. let's see what people will pay." they've carefully and intentionally built an entire, largely unconventional, development and marketing structure designed to avoid the pitfalls of the big publishers and physical distribution, while taking advantage of the benefits of digital distribution. all on a shoestring, hobbyist budget.

so yeah, this is a utopian new business model, not just a faddish publicity stunt, and it's working out pretty well for this particular 2 person company.
posted by shmegegge at 7:49 AM on October 21 [2 favorites has favorites]

Most of the cost that comes in to big-name video games at this point is trying to make them as much like a blockbuster movie as possible, right? It's putting in those huge set-pieces, and graphics, and voice acting to appeal to the 18-32 male demographic with the most disposable income, and the most inclination to buy a video game for 50 dollars. It's what leads to so many games being World War 2 shooters, or significantly dumbed down from their initial intent, or yet another trek through generic sci-fi/fantasy realm with beefy space marines/knights in armor. These are the games that are more likely to make money, and the ones with the least risk behind them.

When you have these increasingly generic games coming out then it's not surprising that piracy is so rampant - especially as studios begin to concentrate more on consoles and treat PCs as afterthoughts so they can make up for productions that are growing in size and cost. As studios get bought up by hated companies like EA, and there's no real emotional barrier between spending 15 minutes finding a torrent as opposed to 2 hours working for 50 dollars to pay for it.

I think that shmegegge gets it right. What makes World of Goo notable isn't just this pricing model, but their entire business model. I hope that this encourages more designers and developers to abandon big-name studios, and instead form small teams making better (if not as graphically impressive) games. Some of the most fun I've had with a game this year has been Spelunky, which was programmed by one guy and released for free. If Derek Yu opened up Spelunky to this model tomorrow I'd be more than happy to throw 15 dollars or so at him. More of that, less Gears of War, please.
posted by codacorolla at 10:12 AM on October 21 [1 favorite has favorites]

it's worth mentioning that the business model in question is not "pay what you want."

that is one end of the business model.

If it's part of their business model, may I assume they're going to stick with it permanently, and not go back to fixed pricing as it stops garnering them publicity?
posted by cillit bang at 11:03 AM on October 21

There is a cafe in Denver that uses this strategy. I thought they were doomed and would go out of business soon but they proved me wrong. You can even exchange an hour of volunteer service for a full meal.

I love love love this idea.

As much as I love the idea of getting games for cheap/free, and debating whether it's cheapskates or people with less disposable income who pay $0.01, I wish there were more "DRM-free", pay-what-you'd-like restaurants out there. This is an amazing idea and I hope it can catch on.
posted by This Guy at 11:03 AM on October 21

cillit bang: "If it's part of their business model, may I assume they're going to stick with it permanently, and not go back to fixed pricing as it stops garnering them publicity?"

2 things:

1. I won't stop you from assuming anything, so sure, knock yourself out.

2. your definition of "business model" is out of whack. not everything that's part of a business model is permanent, and more importantly - many things that are part of a business model are designed to garner publicity. consider the Macy's One Day Sale.
posted by shmegegge at 11:40 AM on October 21

not everything that's part of a business model is permanent

The "pay what you want" model (especially when Radiohead did it, and a little bit on this thread) has been touted as the actual, singular answer to how to sell content online. If we're both agreeing that it's a form of special offer sale, then I don't think we have a disagreement.
posted by cillit bang at 1:39 PM on October 21 [1 favorite has favorites]

high five!
posted by shmegegge at 2:24 PM on October 21

But because I maybe don't follow one particular type of CRPG, I'm "not a hardcore gamer."

Not at all. But I would generally expect any hardcore (computer) gamer to know Bioware, along with Blizzard and Valve. And some others.
posted by Justinian at 7:53 PM on October 21