Paizo Publishing's 10th Anniversary Retrospective—Year 1 (2003)

Fine-Tuning the Magazine Business

Thursday, March 29, 2012

This blog entry is the second in a series of blogs commemorating Paizo's 10th anniversary.
Click here to read the first installment.

The paizo.com homepage in late 2003 showing off our ability to take subscriptions!

As January 2003 rolled in, the rose-colored glasses that accompany any new venture had faded, and it had become obvious to me that relying on the expertise of others wasn't working out—I needed to gain a full understanding of the complex magazine business myself. So I spent many a long hour in the offices of Paizo's resident magazine gurus, Publisher Johnny Wilson and Circulation Manager Pierce Watters, asking questions and challenging common practices. I also took the month of February to lock myself in my home office and pore over all the financial data we had, looking for better ways to make a profit in the magazine business.

One thing that made my analysis difficult is that we didn't yet have final sales figures on a single Paizo issue. While the publishing part of the magazine business happens at a breakneck pace, the distribution end of things operates at near-glacial speeds. Newsstands and bookstores have the ability to return unsold magazines for up to ten months after they're no longer available for sale, so the distributor holds back part of the publisher's revenue from sales as a reserve against these late returns. So, even though we had sent out first issues to the printer in July 2002, we wouldn't have final sales figures for those issues until late summer. And those were issues that had begun life under Wizards of the Coast; we wouldn't see final figures for the first magazines that Paizo was entirely responsible for until late 2003, nearly a year and a half after we started.

This also means that it took us ages to see the results of changes we made. If we came up with an idea for a particular issue, it would take a couple of months for that idea to reach the newsstand, and by the time we had final sales figures on that issue, a full year had passed. We liked to imagine that making running changes to a magazine must be a lot like trying to turn an oil tanker in the dark with no instruments.

One of the first things we figured out was that we were paying too much to have an outside firm handle our subscriptions. I did an in-depth analysis of where the money from a subscription goes, and determined that there was very little margin for error. If we needed to send out a single replacement for a lost issue, it pretty much destroyed any profit we might have had on that subscription. If we needed to send more than one renewal notice, same thing. And the fees that our subscription service charged made things even worse.

But bringing subscriptions in-house was a big task. Our staff was set up to create magazines; we didn't have the customer service or data management people we'd need to handle subscriptions ourselves. We figured out quickly that we needed to take advantage of the internet to cut down on the costs for data entry and sending renewal notices. If we could get subscribers to move away from sending in checks in response to mailed renewal notices, shifting them to renewing online with notices delivered by email, we could actually begin to make some profit on subscriptions. But that meant we'd need a website that could process credit cards and a robust database to keep track of customers and issues sent. At the time, nobody in the world provided e-commerce solutions for managing magazine subscriptions over the web.

Enter Rob Head, one of Vic's friends from high school who had been working at Amazon. We hired him to create our very own subscription fulfillment system from scratch—a system that has successfully evolved to support all of the business we do today. (Rob also provided Paizo with our first unofficial motto: "We suck less every day.")

We also needed to make changes to the magazines themselves. At the time, Dungeon magazine was bimonthly, but with each issue having a higher page count than the monthly Dragon. I quickly figured out that we would need to charge close to $12.99 per issue to bring in the same profit as the smaller Dragon issues, and that just wasn't feasible on the newsstand. So, in May, Dungeon/Polyhedron went monthly with a smaller page count and a lower cover price.

Wayne Reynolds' three-part Incursion cover artwork for Dragon #309, Dungeon #100, and Polyhedron #159.

But the most important development for Dungeon in 2003 was a bit more subtle: the debut of our first ever Adventure Path, The Shackled City, in the March/April issue. The idea for running a full-length campaign in Dungeon, one adventure at a time, predates the start of Paizo, but the process of turning that idea into reality took long enough that the concept only saw fruition in our hands. Dungeon #97 included Chris Perkins's "Life's Bazaar" adventure, set in the town of Cauldron. The reaction to The Shackled City was nothing short of fantastic, yet little did we realize that the Adventure Path would eventually become our flagship brand, and our salvation in our most difficult time.

Dungeon #97 also marked the debut of our first PDF product, a free web enhancement containing extra content that we couldn't fit into the issue. In the future, PDFs would become a huge part of Paizo's success, but at the time, it was just a way to keep Chris Perkins's overwriting from ending up on the cutting room floor!

Later in the year, Chris once again wrote too much, leading to our first for-sale PDF, the Tu'narath City Guide supplement for Dungeon #100. This PDF provided an entire githyanki city to go with our Incursion super-event, a huge crossover that ran in Dragon #309, Dungeon #100, and Polyhedron #159, each cover featuring one part of a three-piece mega-cover by Wayne Reynolds. (Wayne's original triptych hangs in my office today.)

The following issue of Dragon, #310, had the first-ever 3.5 DM Screen polybagged with it. The screen was a huge success, driving record sell-through in stores and increasing our subscription numbers quite a bit.

I had also realized that Paizo had a bunch of resources that weren't being used to their fullest. While the editorial staffs of Dragon and Dungeon rarely had a spare moment, the editors of Star Wars Insider (which Lucasfilm limited to eight issues per year) and the people who handled advertising, circulation and print brokering could easily shoulder the burden of adding a new magazine to the fold. So Johnny came up with Undefeated, a magazine about competitive games such as card games, board games, and miniatures games. When Johnny was at Wizards of the Coast, he had helmed a magazine called Top Deck, which had pretty good sales. Top Deck was linked to Magic: The Gathering, an advantage we didn't have, but we figured that if we could capture even a small amount of the Top Deck crowd with Undefeated, that would be good enough for Paizo. We did the math, and worked out that if we could just get each hobby store in the country to order two copies of each issue, we'd be set. We also knew that companies that published CCGs, board games and miniatures games had more money to spend on advertising than RPG companies, and since there were no magazines dedicated to covering them, we figured we'd be able to bring in decent advertising revenue. In addition, the fact that Paizo was built entirely on licensed magazines we didn't own—and that could someday go away—wasn't lost on me. Undefeated was our first shot at building equity in something we owned.

We announced the magazine on April 9 with the tagline "Covering Games You Can Win... Because Nobody Likes a Loser!" A stealth mission of Undefeated was to serve as a test bed for taking subscriptions in-house. On June 6, we announced that you could subscribe to Undefeated on paizo.com. We used the next few months to tweak our system, hire a full-time customer service staff, and figure out how to port all of the legacy data from our third-party fulfillment service before we moved the other three magazines' subscriptions to our website later in the year.

Undefeated was a huge part of our Gen Con push that year, as the first issue was released at the con, introducing thousands of gamers to our new baby.

Lisa Stevens and Mary Franklin address the crowd at the Brown Derby during the first Official Star Wars Fan Club breakfast.

On the Star Wars front, our primary efforts revolved around making Star Wars Insider more than just a magazine—we wanted it to be the voice of a revived Star Wars Fan Club, which had been reduced to little more than a magazine subscription over the years. The original Star Wars Fan Club offered exclusive merchandise to its members, so in that vein, we worked out a deal with Hasbro to be the exclusive seller of a special silver Boba Fett action figure. Again, there was a stealth objective here—we wanted to test our ability to take orders for and ship a product through paizo.com. The silver Fett was a huge sales success, with the barrage of people making a run on paizo.com bringing the site down for a short while and lines of folks stretching out of the Paizo booth at Origins, San Diego Comic-Con, and Gen Con.

The summer of Fett also saw us launch a series of Star Wars Fan Club Breakfasts. The first was held at the Brown Derby restaurant at Disney/MGM Studios in Orlando, coinciding with their annual Star Wars Weekends event. Hundreds of ardent Star Wars fans got up very early to get one of the coveted silver Fetts, and to meet Jeremy Bulloch and Peter Mayhew, who played Boba Fett and Chewbacca respectively. We then took the whole group into the park for an early morning Star Tours ride before the day's regular festivities kicked in.

At our other three conventions that year, we had Jeremy Bulloch and Daniel Logan (young Boba Fett in Episode II) at our booth signing silver Fetts. They were also guests at our Fan Club breakfasts at Gen Con and Comic-Con, with Star Wars author Mike Stackpole filling that role at Origins.

We also adjusted the content of Star Wars Insider to appeal more to the ranks of Star Wars collectors. In addition to including more articles on collectibles, we arranged to reveal upcoming Hasbro toys for the very first time in each installment of a new regular column called "Toybox."

Vic Wertz shows off the Holiday Yoda action figure at San Diego Comic-Con 2003.

Later in the year, Paizo spearheaded a partnership with Hasbro, Del Rey, and Scholastic to offer an exclusive Clone Wars short story collection (get the free 1 MB PDF here!) that bundled original Star Wars fiction with select Hasbro toys for the first time. And at the end of the year, we celebrated the holidays with our second exclusive Star Wars action figure, the lovable Holiday Yoda, inspired by the Christmas card artwork of Ralph McQuarrie.

The end of the year also saw a big change in the management of Paizo with the departure of Johnny Wilson. As I mentioned earlier in this blog, I spent a lot of 2003 analyzing the magazine business and coming up with ideas about how to make it work better for Paizo. This led me to clash quite a bit with Johnny as I questioned decades of common industry practices that he considered sacrosanct. Eventually, it became apparent that our differences were too vast to reconcile, so on December 8th, we announced his departure from Paizo. While this move relieved some of the pressure in the office, it also put me in a position I didn't intend to be in when we started Paizo: I was now fully in charge of a business that I had all of 18 months experience with. It was daunting, but I had a great staff. Nevertheless, I needed some additional help running the company, so I brought in Keith Strohm, whom I had worked with as part of the Dungeons & Dragons Third Edition team at Wizards of the Coast.

The final big event of 2003 happened at the very end. As Vic and I were about to leave the office to join the rest of the staff for a holiday screening of Return of the King, I received a phone call from Lucasfilm. They were invoking a clause in our contract that would allow them to end our license should Johnny Wilson ever leave Paizo. They had put this clause in at the beginning of our relationship because of my lack of experience with magazines—they wanted to be protected if Johnny, the guy who knew the business, left. I had also spent a lot of the year convincing Lucasfilm of the potential I thought the Fan Club held, and it turns out I'd done that perhaps too well—they now wanted to manage it themselves. They gave us a few months to tie things up before Star Wars Insider went away, which takes us into 2004, so I'll talk more about the implications to Paizo in the next anniversary blog. (Needless to say, after receiving that news, Vic and I weren't much in the mood for watching Return of the King, so we went home and only shared the news with the company the next work day.)

As 2003 ended, there were a lot of big questions for Paizo. Could I run the company without the years of magazine experience that Johnny had brought to the table? Could Paizo survive the loss of its biggest magazine, Star Wars Insider? Could we continue to make the hard decisions we needed to become more profitable?

Employees who started in 2003 (in order of hiring date and with the title we originally hired them for):
Sean Glenn, Art Director
Rob Head, Webmaster
James Jacobs, Associate Editor
Rob Stewart, Advertising Director
Greg Hanson, Customer Service Representative
Jeff Alvarez, Customer Service Representative
Wade McNutt, Customer Service Representative
Jeremy Walker, Customer Service Representative
Kelly O'Brien, Prepress Supervisor
Patrick Velotta, Graphic Designer
Jenny Scott, Editor
Amanda Titus, Customer Service Representative
Dave Neri, Warehouse Manager
Mike McArtor, Assistant Editor
Keith Strohm, Vice President
Wes Schneider, Assistant Editor

Employees who left in 2003 (in order of their end date):
Dawnelle Miesner
John Dunn
Scott Ricker (now Okumura)
Stacie Fiorito (now Magelssen)
Jesse Decker
Greg Hanson
Chris Thomasson (now Youngs)
Johnny Wilson
Wailam Wilson

A Star Wars Fan's Dream Comes True

One of the benefits of being the president of the Official Star Wars Fan Club and publishing Star Wars Insider was being invited to Australia to see the filming of the final Star Wars movie. Vic Wertz, Dave Gross, Mary Franklin, and I got to spend three glorious days on the set of Episode III: Revenge of the Sith watching the filming, including much of the final lightsaber duel between Anakin Skywalker and Obi-Wan Kenobi. We also interviewed many of Lucasfilm's department heads, including props, stunts, wardrobe, makeup, special effects, set design, production, and editing. This culminated in a lunch with the maker himself, George Lucas. Here I was, watching the last days of filming of the last Star Wars movie—an event that I will cherish for the rest of my life!

Maximum Play

One little-known 2003 project was, like Undefeated, an attempt to leverage our expertise—and extra bandwidth—in prepress and printing. From the beginning, Paizo did our own prepress work, something many companies outsourced at the time due to its specific expertise and relatively high equipment costs. But Wizards of the Coast had been doing all of its prepress in-house, so we inherited the necessary skills and equipment. Our Production Manager, John Dunn, felt that we could make some money selling our prepress services to other companies, and he spent much of 2003 pitching our services to no avail before he left to do print management for Microsoft.

We did have one bite, though: one of Johnny's friends was starting a company called Play Interactive in order to publish a videogame magazine to be sold through GameStop stores, so Johnny offered up our services as prepress and print coordinators. Paizo would receive the finished magazine files and Play Interactive would pay us to handle things from there. Vic and I had insisted that Play Interactive put money into an escrow account to cover their costs before we began work, but Johnny decided to proceed without waiting for payment. Of course, by the time Maximum Play #1 hit our warehouse, things had already started to break down. Play Interactive's deal with GameStop had gone south, and they couldn't pay us. Play Interactive quickly disbanded, leaving us holding the bill, and with no place to sell the already printed magazine to recover our costs. We eventually won a lawsuit against Play Interactive, but, as they say, you can't get blood from a stone, so we never recouped a dime, and the cost of the lawsuit just increased the amount of money we lost on this little venture. You can still buy a copy of the first—and only—issue of Maximum Play here on paizo.com: it's a lasting memory of a deal gone bad.

Lisa Stevens
CEO

"That's Not A Desk": The Wes Schneider Story

Today, I would think, "That's not a desk. Desks are about 2-1/2 feet tall. This is over 3 feet tall and attached to the wall—making it a mailing counter." At the time, though, still less than 96 hours off the plane from my former home in Maryland, all I could think was: "I'm here. I have a desk. I work on Dragon." Then I smirked, because my face was cracking trying to hold back another bout of maniacally delighted laughter.

Less than a week earlier, when Dragon magazine Editor-in-Chief Matt Sernett asked if I could start Monday, I told him of course! It's only a 3,000-mile move to a place I've never been—it's an adventure! I'd known since 10th grade that I wanted to be the editor-in-chief of Dragon magazine, so it's not like I was going to say no.

The Paizo offices were not glamorous in 2003, but it'd be years before I realized that. All I knew was that this was how the world of professional gaming and magazine publishing looked: four magazines' worth of staff in one room broken up by cube walls, stacks of Wizards of the Coast-branded boxes stacked in corners and squirreled away under desks, leaking black beanbag chairs, enough RPG manuals to fill three games stores, a galaxy worth of Star Wars tchotchkes, and desks crammed with incoming and outgoing manuscripts, sketches, letters, interviews, previews, and articles all created by the best-of-the-best in the gaming world, each aimed at its own sickeningly imminent deadline. It would take days to take it all in, but there wasn't any time for that—Dragon #314 had to get out the door. (Pro Tip: The first thing you do at your new magazine job should NOT be to criticize the cover of the issue hours away from shipping—even if that's not how Strahd looks, and even if you're still right a decade later.)

The next few months were professionally about learning the ropes the Paizo way, coming to live with deadlines, sitting and editing on top of my misproportioned desk, getting the inside story on the gaming industry, and undergoing the quintessential new guy rite of passage: shoveling through the mountain of unsolicited article proposals in the slush pile (sorry P. L., the crawling head has some dues to pay before it gets an ecology). My education in the history of Dungeons & Dragons beyond my second edition roots also started about this time. With freshly minted Dungeon Editor-in-Chief Erik Mona laying the foundations for elaborate schemes like Maure Castle (and eventually the Age of Worms Adventure Path), the Dragon and Dungeon editorial pit was awash in inspiration from gaming's oldest and fondest-remembered adventures. Only a few years later, many would start considering revitalized stories and characters from these early adventures among Paizo's and the magazines' signature talents—a knack we still indulge as often as possible today.

Unprofessionally, those first days were for figuring out what I'd gotten myself into. Mike McArtor and I had been hired as Dragon's new assistant editors at the same time, and as we both sported similar hairstyles and facial hair at the time, many staff members either couldn't initially tell us apart or didn't realized there were two of us—a matter that was urgently addressed and led to the destruction of all evidence of my goatee-wearing days. Happenstance and insane odds also had it that I'd moved all the way across the country and into the apartment directly next door to James Jacobs, which began a long (and still ongoing) tradition of movie marathons, commute-based collaborations, and thoroughly blurred professional/personal boundaries. Dave Gross, editor of Star Wars Insider at the time and man of a dozen congenial but often mysterious agendas, also made it a point to introduce the company's freshest fish to Seattle's vibrant art and film culture—ensuring that I'll live in this city for as long as it runs a film festival. In the office's cramped quarters, any moment without a headset blaring meant listening to coworkers, typically Sean Glenn, Kyle Hunter, and Erik Mona's mile-a-minute, in-joke riddled banter on the bleeding edge of nerdery (key pieces of which I started transcribing into a still-living document that gets printed out for every other Paizo Christmas party, and that—for reasons of legality and good taste—will never be publicly shared).

It's been a while since I was the newest and youngest guy at Paizo, and since I've done every editorial job there is at a company where "editor" means "guy who does everything." We've come a long way from being a bunch of distinct operations with a communal living space. There have been plenty of laughs and raised cups, but also a fair share of yelling and even a few tears—that's what you get when you have a group of the world's most passionate gamers devoted to putting out projects they're excited to use in their games. But after nearly a decade and almost a third of my life, one thing about Paizo has remained the same since my first day: it's definitely still an adventure.

F. Wesley Schneider
Managing Editor

James Jacobs: Fifth Time's the Charm

It took me five tries to get hired to work on RPG stuff.

Attempt 1: I was told that I interviewed well, but that I hadn't done enough design work for D&D—as such, the magazine department at Wizards of the Coast (where I was working at the time in the Sales department processing mountains of Pokémon orders) didn't have a good idea of my skills and strengths as a designer/developer/editor (AKA "as a writer"). Owen K. C. Stephens ended up getting the job I was interviewing for.

Attempt 2: A few years later, with several more adventures and articles and even a few hardcover book credits under my belt, I interviewed again, this time for an assistant editor position on Dragon. They ended up hiring one of my closest friends, Eric Haddock, instead, because he had more experience editing.

Attempt 3: Not long after, I interviewed again... but they hired Matt Sernett instead because he came into the interview with actual "had worked on a magazine before" experience.

Attempt 4: By this point, the magazine business had been spun off and Paizo Publishing was up and running. A new design position opened in Wizards of the Coast's R&D department, and I interviewed for that position and felt VERY good about my chances. By that point I'd helped write quite a few D&D hardcovers and who knows how many adventures and articles for the magazines (including a few that had become relatively notorious—thanks, Book of Vile Darkness!) A few days later, on the day I knew that R&D would be making their decision, I was walking down the hall at lunch to go get a soda from the machine. I happened to look out the window and saw Chris Perkins shaking Jesse Decker's hand. Both were smiling.

Attempt 5: My phone rang at work a week or so later (it was still a few weeks before Jesse Decker would be leaving Paizo to come work at WotC)—it was Johnny Wilson. His words, more or less: "They took one of my guys, so I'm gonna take one of theirs—do you want to come work at Paizo as an Associate Editor on Dungeon?" Since that had more or less been my dream job since the mid '80s when I'd had my first published work appear in Dungeon #12... I said yes.

I started work in the middle of the year, and from the very beginning I knew that I'd indeed found the proverbial dream job. Here are a few memorable highlights from my first half-year working at Paizo that convinced me I'd finally landed the job I wanted to stay at as long as they'd let me keep hanging around...

• Playing in a D&D game where the CEO of the company was playing as well. Lisa played an ogre-mage, if I remember correctly. May have been a gold dragon, though. Being the boss lets you play the best monsters, apparently.
• Sitting across from Sean Glenn's desk, I got to see all the incredible art as it came in, and also got to watch how he built each issue of Dungeon into a work of art from nothing more than an art order and a big bucket of words.
• One of my first tasks that first week: Erik dropped a document on my desk and said, "Here's stats for Rary. He's 23rd level. Make sure he's a badass." No pressure!
• Kyle Hunter getting worked up enough to grab the plastic rim off the top of a cubicle and wield it like a katana. I still don't remember what I said to get him that freaked out. I should have written it down.
• Watching a snake fight a hawk in the Paizo parking lot.
• Finding out about Erik's fear of bears.
• Watching Wes adjust to the rinky-dink desk they had to build for him in the hall because we'd run out of desks. Ha.
• Reading adventures by new authors like Richard Pett, Greg A. Vaughan, and Nicolas Logue, and getting to decide that they'd be put into print. And getting a picture of Warduke on the cover of the magazine.
• The day Erik accidentally clicked on a particularly "festive" Christmas-themed link that, while he managed to close the browser before the picture loaded completely, still scarred many of us for years to come.
• Finding out that one of Wes's superpowers was an uncanny ability to bowl REALLY WELL.

All in all... good times! And I still had the one and only performance of Operation Banjo Thug, a (false, alas) pterodactyl sighting, the chance to work with Rob Kuntz on Maure Castle, the excitement of ordering my first magazine cover (Dungeon #119), seeing an adventure I wrote get turned into a stage production, and more to look forward to in the years to come!

James Jacobs
Creative Director

Sean Glenn gets settled into his new surroundings!	Vic Wertz, Lisa Stevens, Mary Franklin and Dave Gross along with Star Wars magazine editors from around the world on the set of Episode III: Revenge of the Sith!	Johnny Wilson and Vic Wertz challenge all comers at the Gladiator Arena at Gen Con and Origins.	Two Boba Fetts! Jeremy Bulloch and Daniel Logan show off their silver action figure incarnation.	The Paizo booth in 2003. In picture: Mary Franklin, Vic Wertz, Lisa Stevens and Mike Mikaelian.