Perhaps this is my misunderstanding, but...
Let's say a company goes public. It releases - for easy math's sake - 80 shares at $100 each. The original owner keeps 20 shares for himself.
With the $8000 raised from that initial sale, the company invests in itself and expands. Assuming this expansion is successful, profits go up, presumably by enough that the original owner's 20% of those profits plus any salary he gets as CEO or whatnot are greater than what he was getting as his profits from the sole proprietorship it was before.
Yeah, that's the basic idea that they're crowd funding the company's growth.
Investors take 1% per share of the net profits that get distributed as dividends, each. We'll assume that "reinvestment" from profits is not counted as "profit," so basically, each share is worth 1% of the net profits the company makes to the shareholders.
Now, in the stock market as we know it today, most big players are "playing" the market. Rather than relying on dividends from their stocks, they're "buying low and selling high." The reason stock prices change is because, however, there is a perception that owning those stocks will yield dividends. The paper itself has no value except in its ability to a) allow votes to control the company and b) return some money to the investor.
While that's true that's a bit like saying that money itself has no value other than the fact it's on linen paper, or that your electronic bank account has no value other than being a few trapped electrons.
That perception matters a lot. Perception is basically all the economy is and ever has been. Greece entered is free fall not because its economy couldn't recover, because in many ways it was in better shape than America was in the 1940's before its biggest growth ever, but because investor perception that Greece wasn't going to do well destroyed confidence in trading with it, which made its debts more expensive which made it have to take more debt, round and round.
Divorcing perception from the economy would require us all to be some sort of economic Vulcans or something, and then purposefully divorce it. I can't even say that we have to be robots because most of our trading is done by robots now and the robots still run on the perceptions because that's what we taught them to do.
That's the crux of my point. I'm not arguing any of this sort of thing is sane or logical or even good.
People who live on their investment income usually play the stock market less to "sell stocks for a profit" and more to live off of dividends. Sure, some will still play the market, buying low, selling high, but the people who long-term invest are counting on their stocks mostly not LOSING value and paying out dividends sufficient to make holding the stocks worthwhile.
This is true for some breeds of customer. This is true for the breed with just enough to buy enough stocks all at once that their trickle of income from a flat lined stock can pay dividends enough to matter within their fragile lifetime.
But even then, to them, they're not looking in the Loooooong term, they're looking in the relative long term, because they're not Methuselahs. To pay dividends in the relatively short term that matters and in a way they're not effectively losing money (like yes if you pay 100 dollars and get 200 dollars over 300 years you're making money but you've still lost 100 dollars for the first 100 years or so), they need either serious foresight, and I mean like crystal ball lottery luck, or they need a growing company.
And moreover to that, again, if the company isn't growing and these sorts of middle of the road guys pull out for greener pastures, it will cause more people to pull out, etc., basically draining a company of money they've already sort of spent in the growth of their company (because let's be honest, if a company sells stock it's not to make itself into a bank, it's to purchase goods to grow or maintain the company). Then the company has to start selling pieces of itself to recover the losses from the loss of sales of stock, even if those pieces were healthy kidneys like City of Heroes.
If a company reaches a plateau and isn't "growing" anymore, but is steadily profiting, its stocks are not worthless to new investors. Its stocks are only "worthless" to those playing the market to buy low and sell high. The so-called "high risk" investors, really. To investors who are looking for a solid long-term investment, they're ideal; they pay out dividends reliably and they hold their value. In an inflationary economy, the stocks still grow in market value apace with inflation because they are tied in value to how well the company is doing (and thus how much dividends they pay).
I agree it's not worthless, but the perception is that it is (worthless) because most of us are not buying stock with plans to have it pay out in the year 2150. That perception becomes a self fulfilling prophecy.
If people could or rather would be inclined to loan as confidently to a flat line as they will loan to a line pointing sunward, then it wouldn't be a problem.
Eventually, I think this problem is going to creep into the Kickstarter movement. Kickstarters aren't really that new an idea, they're basically stock options that you get jack nothing for, except the perception that your favorite goodies might come back. Eventually for whatever reason a high enough bank roll Kickstarter is going to fail (it's inevitable, even the best intentions can fail), and it's going to cause an epic crap-storm that is going to put regulations on the business that is going to transform it effectively into a specialized stock broker.
Bank rolls on Kickstarters are inevitably going to go up until something turns into a massive scale failure, as long as people start to become more and more confident that a Kickstarter is effectively pre-ordering your wishes and fantasies.
So I think saying the public ownership model is flawed is a mistake. Some people's understanding of it is flawed, but remember, stocks represent shared ownership in a company. And the owners of a company are the ones who get to keep the profits. Stocks have value because a company makes a profit and pays dividends.
Again, I don't believe you can really divorce 'some people's understanding' of it and what it actually is. Stocks represent more than shared ownership of a company, they represent the perception that they have value beyond a vote. And when that perception is shattered, people are going to invest elsewhere.
This is, admittedly, a rather simplistic view. I know there are "non-voting shares" and there are "non-dividends-receiving shares" and all sorts of categories and kinds of stock, with "options" and other weird constructions that make it all very complicated, but I think this core thesis is still true: stocks aren't worthless if a company stays stable and profitable.
Again, I'm not debating that.
Also, it's worth noting, once a company has gone public, the company gains no money from investors who buy its stocks after the initial release. The hypothetical company in our example got $8000 from its initial release. Even if its stocks rise to be worth $10,000/share, the company is not getting any more money when the shares are sold. Not unless it issues another stock-release. It's shareholders make a lot of money by selling off those suddenly-more-valuable shares, and the company is likely making MASSIVE profits if its stocks have risen in value like that, but the barring the company releasing more shares or trying to buy back its own shares (to reduce the number in existence), the company made exactly $8000 from any direct action of the stock market.
This is semantics, mostly. I understand that, and I don't think anybody is really contesting that. When we say those shares add value to the company it's with the assumption that the company is going to look for more investors. And it sort of has to, because they don't want to have to pay out suddenly 10,000 dollars to all the people it owes money to.
It's like alcoholism mixed with gambling addiction in a way.
So even if CoH were publicly held, and for some reason nobody wanted to buy the shares, it wouldn't matter as long as CoH made money. It would keep running.
Presuming those people felt it was making enough and didn't sell their shares. This is probably where CoH, a small enough property can use the oversight in Kickstarters to basically sell 'stock' in the company that gives the customer nothing other than the perception they're basically pre-ordering more City of Heroes.
Now, where a flaw might enter in is when a stockholder - particularly on the Board or as a major executive - wants to not make money off his dividends but by playing the market with the company's stocks. He isn't happy with the way things are set up if it's "merely" making steady profits and the stock price is staying stable. So he might try to manipulate things, either nefariously depressing values so he can buy more at a low price to sell higher when it re-stabilizes, or by deciding to take needlessly risky actions to "grow the company" and hope to spur investment activity that will drive up the stock prices..even if there's no real chance of success. This can cause serious damage to a company, and is one of the dangers of having a pure "financial class" of leader who is only concerned with stock prices and not with the actual real health of the company and its products.
Ah see, now you're getting it, though. This is the sort of thing I was talking about. While CEOs can do this with much greater damaging effect though, (mostly because while you might be wielding a spoon and a 'mere' millionaire might be wielding a sledgehammer they're wielding effectively a Caterpillar Bulldozer with an ejection seat if their construction efforts goes pear shaped on them), this effect isn't limited to them.
Like, oh, I agree that the rich and powerful have power and riches enough to do much more damage than say, Joe Owns One Share, if their goal isn't to stabilize the company or do what's best for the employees and customer but rather than to try to make enough money to embarrass God himself. But I'm also not necessarily a fan of a system that believes the lowest common denominator of motivation among most us (greed) should be extolled and worshiped as 'virtues' at the cost of all else.
-----------------------------------------------------------------------------------Interesting thought. Is there any way to "follow the money" and see who would actually benefit from NCSoft making bad business decisions?
No, not really. Once that money becomes somebody's private property you need legal muscle to see it again. And of course the more powerful the individual, the more legal muscle you need. Basically 'following the money' would require following their private lives around, which isn't legal in the United States, and I'm pretty sure isn't legal in most places.
-----------------------------------------------------------------------------------"NCSoft might had been able to grow this property. But with their focus in the East and CoH being marketed solely as a western style comic book they probably decided they didn't have the know how to move it and didn't care to learn...."
I believe that's the case. We here can see that an inexpensive one-page ad in a Marvel or DC comic book every few months would have kept customers coming in. CoH is, discounting the inept DCO and CO, the only game in town if you wanna make your own superhero. But the folks at NC-Soft bought CoH simply for revenue, and have no understanding of the genre or the culture. Now they want to "refocus" their efforts to the greater Asian market rather than learning how to capitalize on this terrific, if foreign, property.
The word for this is provincialism.
And what I was saying is that it's funny because 'our culture and genre' isn't much different than some of their own genres. There's a lot of overlap between Manga and Comic Books. I think they have more in common than they don't. City of Heroes, while steeped in spandex, wasn't all about just straight up X-Men/Fanatastic Four characters.
"...we'd maybe feel a little less against the wall and a lot less like we were being thrown out with the trash."
Well said. Due to NC-Soft's utter lack of empathy for our concerns, our feelings, our investment and our hopes, we have been treated like garbage.
If they had any empathy, they would not have sold us "Nature Mastery" three days before the announcement, in bad faith. They would not have left Issue 24 to wither on the beta server. They would not have shut off VIP status without notice, they'd not fire the Paragon staff without notice... oh, I could go on!
Yeah, the term I've been using for this has been 'clownish'.
Why no empathy? Because they see us as incoming won, not as people. And frankly, I consider that racism-in-action. (Yes Tony, feel free to edit that out if you feel it jeopardizes the fragile negotiations. Love ya, man!) In studying foreign languages and cultures (in my case Spanish and Japanese) the people come alive as people, whereas cultures I've not studied (let's say Arabic or Indian) feel more like an undifferentiated mass. Undifferentiated masses are easier to mistreat and exploit than people.
This isn't necessarily related to race. There are plenty of American companies who see other same race, same religion, same political party Americans in the same way.
I think their decision to focus on the East was, again a mixture of incompetence and arrogance and their inability to differ decisions handling money to the chain of command. If that makes their focus on the East, it's less because we have rounder eyes and more because that's where they are and what they understand and it's cheapest for them to develop.
Their non-CoH line up is embarrassingly all the same. If I threw the mascots of most their other games together and shook the bag up and emptied it out, only people who've played the game would be able to point out what game it was. It's just generic bikini armored woman fantasy as far as the eye can see.
So... my message to the developers of other MMOs is -- observe NC-Soft's behavior and do not emulate it. We can purchase a game like Civilization and it remains ours forever, or we can spend much more for a monthly subscription game only for it to expire. If every game company behaves as NC-Soft has, the MMO as a genre is finished!
Our message can't be to tell them not to emulate it, it has to be to reward those who don't emulate it by buying and to not buy from those who do emulate it. Telling them might inform them of you feelings and let them predict your money ahead of time, but let's be honest, as you said, we're dollars on a spreadsheet.
-----------------------------------------------------------------------------------This may not be the thread for this, but this passage got my wheels turning. This is merely speculation and a rhetorical question, but could this be one of the points in the current negotiations, possibly even one that is taking time to hammer out?
This being the internet, I fully expect someone to answer this, but it's not my intention. Just voicing a thought, not trying to derail the thread.
Carry on.
I'm sure that transition of the game HAS to be part of the negotiations. That'd be like buying a car and not figuring out whether or not it has wheels and can leave the sales lot or not. Somebody somewhere will absolutely have to figure the game transition out. Like if it's not part of the negotiations then we officially have two sets of amateur clowns at the table arguing.
"I would like to buy this large thing but I have no intention of finding a way to get it home!" is pretty silly, especially when 'this thing' is a million dollar product.
The point of the OP's letter was that, it would had been nice if NCSoft spelled out their demands for the sale of the game ahead of time. But NCSoft never intended to sell really, so that's why they didn't. They were just like "Nope, we're done!"
