There are two main aims of the Artemis Project CDROM, both being pretty disparate in the scheme of things:
In terms of ROI, I can only think in terms of the first production run being aimed to cover costs and produce a small profit to allow additional production.
In terms of Return on Investment (ROI), the 1000+ figure will always be better. From my knowledge of (amateur) music CD production, the main cost is actually in the printing of the inserts, not the setup charges. People tend to print far more than they need, so they have a stock of them. They order plain CD re-presses, and I think send the inserts with the order. The product comes back all assembled and ready to go.
The first production run will probably be aimed to cover costs and produce a small profit to allow additional production
There could be two marketing stages:
Retail price is on the order of $12 (i.e., comparatively very low). On 1000+, unit price will be on the order of $5 each or less, including all the setup charges and some software manipulation required.
50-100 units are given away to potential sponsors. My contact has offered very good advice to ensure that units are targeted very well indeed. This means that all free copies will be played by people who are interested in the material. This is not blind-mailshot stuff.
Say 300 units are sold to Artemis-friendly customers. Namely members of ASI, their friends and at conventions, etc.
Say 150 copies via small-scale distributors. They would take a small stock, say 5-10 each, and pay up front.
The figures usually work out that if you can sell about half the stock, then that will cover the entire production run. This leaves the other half as pure profit.
Guesstimate (at this moment in time) that we can clear about $5000 clear profit from this remaining stock, which will be sold via repeat orders from small stockists, or from small venture-stock bought by selling to as many other small stockists as required. (ANY stockist will buy at least two to see if there is a market for the product, so you just have to get a list of them together and ship the stuff).
No account made here for dealer markups, but the $15 price can move as required, we are still at the very attractive end of the market.
On the other hand, my friends in the music business learned the hard way. They tried selling their product at a cheaper price than other recordings and people thought that the product was therefore inferior because of the price. There is a pretty solid argument for selling the product at the same price as other CD's. In our case, this would take the retail price to around $40+.
With whatever cash surplus we have, I'll assume we up the price now. We burn about $10k on pressing about 5000 more units.
This is re-invested capital, with a potential payback of around $100k.
In concert with this, we approach the magazine publishers, and see if we can do a deal. This would either be a massive front-cover giveaway offer, or a special price to their readers. We would take this route if it stands to earn us in excess of $100k. This route is attractive, since we offload all the work and get the money back within a couple of months, as oppossed to trying to move product piecemeal.
Caveat - The latter route decimates the retail price of the product for future sales. We would have to bet on the special-offer route, off the back of a short demo version stuck onto the front-cover of the magazines.
End Goal: We can probably raise around $100k from this exercise, but no more.
If the product is good enough, then we would be able to sustain the full retail price instead of dumping, and get the product into the major retailers.
I have no idea what the sales volumes are for mainline CD-ROMs, other than for the really good ones (like Encarta), which will be on the order of hundreds of thousands.
Here, we may be able to clear $1M or more. That would be some serious working capital, enough to fund some staff for Artemis.
If the product is a go-er, then we need to work out how to follow-up the product with updates. Our best asset is that the project will take on a different shape with time, producing more material.
We may be able to manage a new issue every year, and thereby generate a sustaining working capital for the project. Enough to keep an office going, get people walking and talking full-time, etc.This is all speculation.
Maybe 200 new titles produced each year. At least 30% get enough money back to cover costs. The supply industry is very well tooled up to enable low-cost production.
All the production costs are covered by home recording (for us read DIY multimedia production)
The end-product quality can be identical to or better than that from professional sources. CD reproduction quality varies with the skill of the raw material producer. You can exceed professional standards at home simply because you have more time.
The physical quality of the product will be identical to that from professional sources. So long as you do not try to go it cheap on the platter production. The cheap fabs are just that.
For multimedia, the costs of hiring professional help to produce stuff like sequences from stills and drawings is unknown, but may be a lot less than you think. The tools in use cost far less and are far more powerful by the month.
Music CD's from amateurs are generally sold in specialist (friendly) shops, concerts, conventions and by mail-order. Increasingly, they are advertised via the WWW, with samples being downloadable.
These outlets alone (even without WWW and stores) are good enough to be able to ship enough product to break even. Even if the product is utter garbage!
It is not a question of whether we would lose money on the venture, it is a question of how much can we hope to make. It is low risk so long as we test the market with a damn good product, and maintain the "standard" retail price