I get this question a lot, and recently Nicole from Green Ronin talked a little about this so I thought maybe it was time to talk more about this.
We were doing well, that was the toughest part to swallow when we stepped away from publishing.
Within the first year of publishing during the d20 craze we were being noted as one of the breakaway companies, it was a great feeling to be honest. I loved this job, loved the community and even with the issues listed below it was one of the most enjoyable times in my life.
I truly believe publishing saved me from being depressed, I was going through a divorce with two infants (I can breed, amazing isn't it), had a very stressful job and my getaway was to write, order art for Mystic Eye Games.
We were rolling along doing well when distributor number one suddenly stopped paying, we saw sales records but no money, we finally got word that they shut down and went out of business, we did get our remaining stock from them but we lost around $50, 000.
It hurt, bad I will not lie, we had good product and good reviews so we charged everything we could charge. Gen Con, GAMA, printing and so on. We found another distributor quite quickly, thanks to Green Ronin and Bastion Press.
We started slowly climbing out of the hole, we could never pay us, but we could pay everyone else...oh that reminds me, here is how getting paid in publishing works...
Publisher gets writers, layout, art, editing etc.... pays for art and writing on a delayed schedule to offset what is about to happen. Printing, you pay for printing up front, then you send it to a distributor, then they send it to retailers, distributors pay you around 40% MSRP and usually up to 90 days from when they "buy" if from you. So a $20 retail book brings in the publisher around $8 to pay for all the expenses AND you do not see that money for 90 days.
OK, back to the death of MEG...
So we are basically not paying any of the lost money back but not losing money when we produce The Deep, The Deep is an underwater sourcebook for d20 that honestly was brilliant. It was so big we did it in hardcover, our first hardcover. This was the break out book along with our new post apocalyptic setting Fall of Man. We were about to change the world.
Well, that was until distributor number two played fuzzy math, and the "order a lot and return it after our commission is guaranteed game" so we print a lot, sell a lot and get a lot of returns, but only after the agreed upon time where the distributor did not have to return his percentage. So for a few months we OWED them money, and then money just stopped...again.
We were out around $30k from this distributor, had around $30k of debt on our credit cards and realized we could not afford to be in the business, so we stopped producing books, shut down the shop and got away from publishing.
Besides taking years and years to pay off the debt, it put a bad taste in my mouth for gaming, forums and all of that, that is what probably made it so painful, it took what I loved and made me turn away from it.
I started gaming again and playing MMO's but never went back to publishing or writing.
So years later, I am still friends with publishers, and fellow designers and I decide it is time to crawl back out and try some more, I can say that MEG is now Samurai Sheepdog and Doug and I got the band back together again. We are freelancing and we are doing some projects on Kickstarter.
We are writing again and branching out to fiction, boardgames and children's books.