Lost Garden has a great article on what he calls ‘Village Games’, which is to say, small-scale MMOs in the vein of Puzzle Pirates and Achaea.

Retail games can make over a billion dollars with a single title. That is rather exciting. However, as a developer, you are going to see approximately none of it…A successful village game will produce a steady profit, but the money never becomes astronomical. Instead, you’ll be able to provide above average salaries and many years of job security. This is far better than most games can promise.

True enough. The days of companies existing to make their employees rich is far behind most game companies. The interesting bit compares these village games to ‘touring bands’ like the Grateful Dead.

A touring band cannot rely on selling millions of copies at $17.95 a pop to anonymous music fans across the nation. Instead, they make their money by selling a wider range of goods and services to a narrow group of fans. There are really only two ways of creating a reasonable revenue stream. You can get a little bit of money from a large number of people. Or you can get a lot of money from a relatively small number of people.

Touring bands aim for the later. They build a brand based off a powerful social experience and establish a strong relationship with their customers. They then leverage this brand to encourage the sale of merchandise, event tickets and more. The result is a strong lasting brand and high per customer revenue.

There is a classic business case taught in most MBA entrepreneur classes that examines the 30-year reign of Grateful Dead. Even though they allowed free taping of their concerts and capped their ticket prices, they remain to this day one of the top grossing bands of all time. They bucked the trend of selling records through the corporate food chain and instead provided music directly to their fans.

Worth a read for anyone tired of corporate suits.