Six Dungeons & Dragons Business Lessons For Indie Writers

My brother recommended a book called GAME WIZARDS: THE EPIC BATTLE FOR DUNGEONS & DRAGONS by Jon Peterson, and I wanted to talk about the lessons it offers for indie authors and small creative businesspeople like writers and artists in general.

I haven’t played a tabletop RPG this century, but I’ve read a lot of the books and tie-in novels.  In fact, if you’ve read a fantasy book or played a computer game in the last thirty years, it’s probably been influenced by D&D because the game has had an outsized cultural impact.

How to explain this? When I was in college, I took a class on medieval history, and the professor said that what we think of as the European Middle Ages arose from the interaction of five major sources – the legacy of Rome/Greece, the rise of Christianity, the rise of Islam, the barbarian invasions, and the Eastern Roman/Byzantine Empire. Obviously there were other influences – the Vikings, the Jewish diaspora, the Magyars, the Irish, and others – but I think most people familiar with the era would say that those five influences were the major ones of the Middle Ages.

In the same way, I think it is fair to say that Dungeons & Dragons is one of the main influences on modern fantasy/science fiction literature and games. Obviously there are others – THE LORD OF THE RINGS chief among them – but D&D is definitely one of the major ones. D&D was also the way some lesser-known SF and fantasy authors became better-known, given that Jack Vance’s DYING EARTH and Poul Anderson’s THREE HEARTS & THREE LIONS both had a significant influence on the design of D&D. The game’s dynamic of “spell memorization” came from DYING EARTH, and Poul Anderson basically invented the Paladin class in THREE HEARTS & THREE LIONS.

But to return to the main point! The book focuses on the business side of Dungeons & Dragons, which was created by Gary Gygax and Dave Arneson in the 1970s. Neither man expected it to do well – Mr. Gygax thought they might sell about $300 worth – and the initial contract between them definitely reflected it and didn’t consider the possibility of runaway success. Mr. Gygax and Mr. Arneson fell out badly before D&D started to become a commercial success. That was probably inevitable given their contrasting personalities – Mr. Gygax was outgoing and a natural leader, but he had an unfortunate tendency towards pettiness and was unable to let a slight go, while Mr. Arneson had no wish for a leadership capacity, but was nonetheless perfectly happy criticizing how things were going. The commercial success of D&D led to a series of lawsuits that finally settled with Mr. Gygax’s company Tactical Studies Rules (TSR) paying Mr. Arneson a royalty on D&D products for the rest of his life.

Unfortunately, an occasional affliction in previously poor people who suddenly become wealthy is extravagance to the point of wastefulness – sadly there’s a different between thrift exercised through self-control and thrift imposed by outside circumstances. By the 80s, both Mr. Gygax and TSR itself had fallen prey to this malady, and for a while the company and Mr. Gygax personally were spending like D&D sales would always grow. When D&D sales dropped (as always happens in a business cycle), TSR found itself in financial trouble. Mr. Gygax by that point had managed to alienate many of his previous supporters on the board of TSR, so Lorraine Williams was able to seize control of the company and push Mr. Gygax out. I think it is fair to say that Ms. Williams was better at business than Mr. Gygax, but that isn’t to say she was good at it – she righted TSR’s ship for a while, but the company’s debt problems threated to overwhelm it. Then Wizards of the Coast bought TSR, and eventually Hasbro bought Wizards of the Coast, which is where we are today.

This entire saga – the creation of D&D, the lawsuits between Mr. Gygax and Mr. Arneson, and Mr. Gygax finally losing control of the company and the game system he helped create – all of it provides valuable lessons for indie authors and creative professionals in general. Specifically, I think we can take away six main lessons from this.

Before we examine these six lessons, I want to emphasize that I am not a lawyer, and you obtain legal advice by hiring a lawyer licensed to practice in your country, state/province, and other jurisdiction.

1.) Retain control of your intellectual property.

Whenever possible, create your own intellectual property, and retain as much control over it as possible. Mr. Gygax lost control of Dungeons & Dragons because the copyright belonged to TSR, and Mr. Arneson had to sue for royalties because the company controlled the copyright. If either man had been able to retain control of the copyright, they would have been in a much better position.

So whenever possible, if you retain control of your intellectual property, you’ll most likely be better off. Traditional publishers nowadays tend to offer contracts that are for the life of the copyright of the book, which is the lifetime of the author plus 70 years under current US law. Retaining those rights for yourself is a much wiser decision.

2.) Have contracts be very explicit.

If you enter into a contract with a business partner, it’s a very good idea to be highly explicit about what is covered. The most common reason a small business fails is due to lack of sales – the business just can’t turn a profit. However, another common reason small businesses fail is the founders fall out hard. Sadly, this is especially common if the founders are friends or family members. People assume because they’re going into business with friends or family members that will take care of any conflicts that arise, or that there won’t be any conflicts.

This is definitely not the case.

So any business contract, especially if you are starting a small business, should be as detailed and specific as possible. Mr. Arneson was able to make a lot of money off Dungeons & Dragons even after he was no longer actively involved because his contract specified that he would get a royalty off any D&D products. It’s best to be as explicit and non-ambigious in a contract as possible. Hiring a lawyer to help draft it may be expensive, but that expense can help you avoid far greater expenditure and possible heartache in the future.

3.) Retain as many rights as possible, and be aware of the difference.

When signing a contract, especially a publishing contract, be aware of what rights you are licensing to the publisher – paperback, hardback, collectible hardback, foreign language print book, ebook, foreign language ebook, audiobook, and others are all very different rights.

(You should probably never sign a contract that claims “all rights” to anything.)

J.K. Rowling made a lot of money from the Harry Potter ebooks because she kept the ebook rights when she signed her original contracts. Before his big Kickstarter this year, Brandon Sanderson was able to do a “smaller” Kickstarter $4 million for collectible hardcover editions of his books. Keeping as many of your rights as possible can lead to business opportunities like that.

4) Beware personality conflicts.

We already touched on the personality conflict between Gary Gygax and Dave Arneson. Unfortunately, this is a common problem. The most common reason a small business goes out of business is because it can’t turn a profit and runs out of money. However, it is also common for a small business to fail because the founders fall out hard at some point.

So if you are going to go into business with someone, or you are going to hire someone, it’s best to be as clear-eyed and honest with yourself as possible. Can you get along with this person? Can you work with this person? Especially with our friends and family members, we often look at each other with rose-colored glasses, overlooking personality incompatibilities that might cause serious problems in a business environment. So if you do work with someone, it’s best to do so on a trial basis at first to watch for any potential personality conflicts.

5.) Don’t hire employees unless you have no choice.

Employees are seriously expensive even before you factor in taxes, Social Security (in the US), unemployment insurance, benefits, and other related costs. (Governments often find themselves in the strange position of trying to encourage hiring while simultaneously making it punishingly difficult and expensive to hire people and fire unsuitable people.) Of course, layoffs are brutally difficult for everyone involved, which is why it’s best to only hire people when absolutely necessary.

One of TSR’s problems as described in the book was that when times were good, they hired way too many people, which seriously contributed to their debt problems.

So carefully consider whether or not you can afford to hire employees, or if you even need to do so. In the indie author space, you can do a lot of things through one-time contract work – cover design, audiobooks, etc, and that is wiser than hiring employees.

6.) Be aware of the business cycle.

Sales never, never always go up – if something goes up, it inevitably must go down again.  That’s simply the business cycle.

That was another self-inflicted problem TSR faced when D&D sales were good – the company’s officers made wildly optimistic and ultimately inaccurate decisions about how sales would grow. They didn’t – TSR’s sales leveled off at a very respectable level, but because they had over hired and spent too much money, the company was in a bad place and had to take on serious debt and eventually lay people off.

So if you have a good sales month or year, congratulations! But don’t assume it will last forever, and definitely don’t assume that sales will always go up.

One of the reasons that TSR got bought out and Gary Gygax lost control of D&D was because the company didn’t heed those lessons above. But one of the benefits of history is that we can learn from the mistakes our predecessors made. If you run a small creative business, hopefully you can look at the lessons of TSR from the 1980s and apply them to your own business!

-JM