There is allure for a young software company to use a software publisher to springboard in to retail. They’ve got connections, a distribution network, and deep pockets.

All you have to do is give them a gold master, some content and you can sit back and collect royalties every month. Publishers generally negotiate a 15% – 20% royalty to you. Their costs are artwork, boxes, marketing, travel, advertising, etc.

The idea is that you’ll negotiate a decent cut to collect enough royalties, build cash and then take over and enter retail across the board on your own. The stakes are larger, but it takes more money to play and the competition is fierce.

Without a strong online presence what makes you think you can handle retail on your own? It is important to do customer development and build a base of success if you chose this route. Unless you have a popular product, software publishing hardly ever works out in your favor.

Giving a publisher non-exclusive rights to your brand is dangerous. They can hurt previous relationships, take over your social media presence and you never know what is going on with revenue and box counts without an audit.

A better use of your money is to focus on how your customer finds and buys your product. Maybe it is only through organic search? Maybe your customer only shops at a Fry’s or MicroCenter? Maybe your customer is an iPod owner and you do biz dev with an iPod accessory company?

Where I DO think software publishing makes sense is in International markets. Using a publisher from another country is a great way to get access to new customers without having to have the relationships (especially Japan), the localization experience and you probably don’t have the means to do the constant traveling needed to set up the operation.

This entry was posted on Tuesday, March 30th, 2010 at 9:23 amand is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.