Kontakt->IDT conversions

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esselfortium
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27 Nov 2015

avasopht wrote:
JiggeryPokery wrote:
avasopht wrote:For me it's a simple numbers exercise.

You can take 70% of my sales if it results in more money than not entering the market. Imagine if Apple took 70% of Angry Bird's sales? Rovio would still be laughing all the way to the bank knowing they'd never have made that much without the platform. In the music industry for example, signed artists get something like 12% of revenue from a physical purchase, but 12% of several million dollars each year ain't too bad compared to 100% of independent sales at amateur gigs that reach at the most a couple thousand faces each year.
When you have an actual product in the PropShop, do feel free to come back and edit the above comment to reflect reality.
Not sure what you mean. To reiterate, "if it results in more money than not entering the market, ..."

If 50% is not viable then as per my logic I would not engage, it's as simple as that. So I'm failing to see how having an actual product in the PropShop would change any of that :? I'm not saying that a different percentage wouldn't be nicer, more profitable or make life easier but, and maybe I think this way because I'm not stuck in one single industry, I go to where the cheese is. Right now I've just completed writing a book to support one of our products (non music related) and we place our Google ads not on whether we want to pay more than £1 per click, but based on the profit* of buying ads at a given bid price.

That's just how I make decisions :puf_wink: and unless I am mistaken is the classical way of making marketing decisions.

*: pre sales it would be an estimate, post sales a projection
It costs money to develop or port an instrument, and a 50% sales cut makes it harder to break even. Keep in mind also that Kontakt libraries can be developed without any licensing fees, just like a ReFill can be -- a license is only required for standalone libraries that use the free Kontakt Player, so that end-users can buy and use the library without owning Kontakt. On other libraries, NI makes money by selling Kontakt itself (which is an easy sell based on the availability of so many great instrument libraries for it), much like Propellerhead makes money by selling Reason itself.
Sarah Mancuso
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avasopht
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27 Nov 2015

adfielding wrote:Actually... I think that raises another interesting point - artificial curation.

If you're charging $5k just for the Kontakt license, then there's a pretty good chance that the only people who are going to pay for the license are people who are going to put out professional grade, really solid sample banks that they KNOW they're going to sell a lot of... and, of course, price it accordingly. Naturally, NI can afford to do that because they're already operating from a strong market position. I sort of feel like maybe PH are trying to operate with a similar mind-set, but they need to sweeten the deal a bit to bring some big names on board first. Of course, 50% of something is better than 75% of nothing, but I don't feel like the Props are operating from a strong enough position to do that. Again, pure speculation on my part!

As an aside - I'm sad to hear Rev won't be making it's way to Reason any time soon, I must admit I had my eye on Output's stuff today as well... though I figured one big purchase was enough for me, haha :)
Agreed. The pot could definitely be sweetened as a better value proposition means more hot products in the store, probably slightly lower prices (based on how some devs price) producing more sales from the more attractive price point resulting in a win/win/win.

And ditto on the $5k (plus I believe you also must purchase per user licenses in advance in intervals of thousands or maybe hundreds).

And based on what some devs have shared, the income from Rack Extensions is quite negligible when compared to VST income. It would be interesting to compare it with the sales of equally demanded products that are only Rack Extensions as the income disparity might just be down to the fact they the VST is preferred over the RE or are already purchased.

avasopht
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27 Nov 2015

esselfortium wrote:It costs money to develop or port an instrument, and a 50% sales cut makes it harder to break even.
Of course, and I'm not disagreeing with any of that. All I was getting at was the differences between the two decision making processes, which are:

1. I don't like the look of 50%
2. Porting / developing an RE is not commercially viable based on expected sales

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mcatalao
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27 Nov 2015

I understand Jiggery Pockery.

But while some more reasonhead developers have a "heart" component so the will to develop Re's is there, more "corporative" guys will only look at figures, and won't risk loosing money untill they see it's worth the risk at least on the long run. I wonder if guys like Kuassa and Develoop would get into Re's if they didn't use reason before (as some of them have come to say on some occasions). Even Rob Papen i think told in an interview they were really fans of Reason (or was it McDsp??).

Anyway, let me conclude with this, there are different things that i think must happen in the next couple of years, so that Re's lift as a de facto plugin standard:
- Evolution of the SDK, so that IDTs can load bigger sample packs trhough HDD streaming.
- Strong connection between Propellerheads and refill developers, getting them in the IDT Boat.
- Maybe a more fair value on the cut, maybe lowering it to the same as normal Re's.
- Bigger user adoption. I have the feeling that the new IDT stuff (the really bigger stuff like Project Sam) are not getting enough love. The day they include Solo Strings and Brass, i buy it. And i already have Miroslav and East West Synphonic Gold.
- The platform itself has to evolve, so that the number of reason Users also grows bigger.

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JiggeryPokery
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27 Nov 2015

avasopht wrote:
JiggeryPokery wrote:
avasopht wrote:For me it's a simple numbers exercise.

You can take 70% of my sales if it results in more money than not entering the market. Imagine if Apple took 70% of Angry Bird's sales? Rovio would still be laughing all the way to the bank knowing they'd never have made that much without the platform. In the music industry for example, signed artists get something like 12% of revenue from a physical purchase, but 12% of several million dollars each year ain't too bad compared to 100% of independent sales at amateur gigs that reach at the most a couple thousand faces each year.
When you have an actual product in the PropShop, do feel free to come back and edit the above comment to reflect reality.
Not sure what you mean. To reiterate, "if it results in more money than not entering the market, ..."
You're comparing Angry Birds, a cheap and easy-to-play commutering computer game, that operates in a market with a massive potential audience, to whit, on a mobile phone platform with around half a billion users, against high-end sample libraries in a desktop DAW with a total market size of a few thousand, and product-specific audience size therefore of just a few hundred?

Then you say that you'd enter the market if it results in more money than not entering the market? So, given it will always result in more money than not entering it at all, unless the product were so spectacularly bad it didn't even sell one unit, which even in the PropShop is an unlikely scenario, all you've actually said is "I'd enter the market".

kitekrazy
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27 Nov 2015

Wook wrote:Hello Adam,

I exchanged few emails with a certain developer and he said that he won't port any of his libraries because Propellerheads take 50% cut on every sale. Of course, I don't know if this is really the case since I don't have access to IDT kit, but I can't see a reason for him to lie.
I would take the developer's word on it. If they import a Kontakt library to Kontakt Player they have to pay a fee. Most of the third party libraries will only work in Kontakt.

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mcatalao
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27 Nov 2015

I'm sorry Mat but i really hope figures of Reason Users (and potencial Re Buyers) are not on the "few thousand". Propellerheads NEVER stated this but to say it is the most loved DAW, i guess at least we would be talking about a few hundreds of thousands? Nearing a Million maybe??

Anyway, it must still be a profiteable business, i hope. I want to still use Reason for lots and lots of years, seeing it grow in quality, and quantity!

avasopht
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27 Nov 2015

JP, ... not what I'm saying at all. Not what I meant when I brought up Angry Birds (I was actually making the exact same point as you). And no, that's not my reasoning at all :? I'll also add that there is a actually a cost (time and the associated opportunity costs) and there will always be a break even threshold. Some devs will be paying for the port / coding so NO! there will not always be a profit - better yet releasing is not ALWAYS viable (that's uber absurd). Again, that is not my logic in any way, shape or form and absolutely was not what I was saying.

What I was saying is EXACTLY what is taught at every business and marketing course. You will not find a business book that does not say what I said, nor will you find a well paid marketing consultant who does not stand by that line of reasoning so you've lost me completely. You may have misread what I said, which is understandable and happens from time to time.

All I was saying was, decide based on commercial viability not just distribution costs alone as you may still be hugely profitable. It might not be a viable market after you've analysed it, but just seeing 50% on its own will not tell you whether creating a Rack Extension will be worthwhile. I am failing to see the desire, need or valid reasoning to argue against that.

Perhaps I should have first explicitly stated the basic marketing and business principle so that people wouldn't mistakenly read what I wrote and derive some other wild interpretation that has nothing to do with what I'm talking about :?

Again to reiterate: all I was saying was, market entry decisions are best made based on how much profit you make, not just the share the distributor takes (which is a basic business and marketing principle) :? Angry Birds was just an example of that. I wasn't saying, "because it works there it will work here" :? I was just saying, "base decisions on actual viability, not something that gives you no indication of the actual profitability." :?

Aaaanyway, ...

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