$300

This week, I wrestled with what to write about.   The same beastly thought kept popping back into my head, regardless of how many times I tried to feed it a nice medium rare t-bone and ignore it until it went away.   I have a short list of topics that I keep in a separate folder that I very much wanted to cut into instead of this topic.   This time I thought I'd get to one of them.   Unfortunately, I simply couldn't kick this idea to the curb.

I'm like many writers in that I wrestle with an idea quite a bit before I commit to it.   I look at a topic from as many angles as possible, trying to shine a light into the darkest corners until I feel I understand something well enough to show it to everyone else.   This weeks topic I feel is a little bit controversial.   I don't want to always write something that pokes at the establishment, but sometimes I have to exorcise a demon or a kitchen fink.   Sorry to disappoint anyone who wanted something shiny and pretty - this is going to be one of those days.

Background
Before we delve into today's version of, "Things that bother Magic Dad," I must offer a small qualification or three.   I very nearly hold a bachelors degree in Business Administration.   I work in a field that is customer service oriented and have done so for twenty years.   I have a very small amount of common sense.

My point, is that for the purposes of this article I have some both learning and experience in the area I'm about to talk about.  I am not a WotC employee, nor do I have any time as an employee in a supportive role for the industry.   I am wholly independent as a writer of a blog about Magic: The Gathering, even though I do seek the advice of a few people who own stores, websites or otherwise are involved in the game.   I'm establishing these points so that if you want to, you can tell me in the comments why I'm wrong and just scroll up to cite something I've said in these two paragraphs as to why I don't know anything.   Go ahead, it won't hurt my feelings.   With over fourteen years in Boy Scouts and dealing with sometimes irrational people while I don't get paid a dime means one thing - I'm a big boy and I can take your criticisms.

This is my opinion.   And it's just that, an opinion.   I believe it is an informed one that I hope you'll share when I'm done.

Economics 101
There are a thousand things one learns in business.   But business is no different than the George Carlin bit about the 10 Commandments.   If you haven't seen it yet, search for it on YouTube (this is on you, I'm assuming you're an adult or at least allowed to view it by your parental units).   To summarize, George takes on the Church and about 1700 years worth of doctrine in a spiel that eviscerates the commonly held belief that man needs 10 laws to live by to be saved.   In just about 6 minutes, he distills the 10 Commandments down to two simple rules.   And there isn't a person who watches him do it that doesn't at least for a few seconds think, "Wow, that is so true."   Business, like Carlin's take on the 10 Commandments can be distilled to a very simple phrase of 3 words.   Supply and Demand.   So simple, even a parrot can learn it.   Maybe that's the real reason why a Business MBA is practically valueless.

I really did want to write about something else this week or post my Magic Lexicon that I've been working on recently.   Sometimes though, my fingers do things I don't anticipate.   If you've been anywhere near a computer recently you should watch out folks, most of you know what is coming and Magic Dad is about to step in it.

Actually, I'm not.   But we're not there yet, so bear with me.   I assure you, the ending may be interesting but the real reason we're all here is for the ride.

Bull//Horns
Here it is.  I'm going to say it.   Are you ready?

I strongly feel mistakes were made with Commander's Arsenal.   But the real travesty is what is happening right now with Modern Masters.   There is an online MTG store that started the weekend pre-selling Modern Masters for $225.   It wasn't long before it jumped to $250.   Then it really moved in price.   Their current asking price, per box, is $300.   That is on a product that has an MSRP (if I'm not mistaken) of $167.76 (24 packs at $6.99 MSRP per pack).   That is a mark-up of nearly 80%.   Before the product has been released, before any real preview has been conducted, a retailer has speculated that the value of this product is completely misrepresented.   That's not the punchline.   The punchline is on Sunday alone I watched them sell 9 boxes at this highly inflated price point.

That store a proverbial 800 lb. gorilla that other online and brick and mortar stores tend to follow when it comes to pricing guidelines on Magic product.   That statement isn't disparaging, it's fact.   The amount of volume this store pushes of Magic product is the highest of any retailer, likely by large margin but I can't confirm that.   They are E.F. Hutton, and when they set a price, people listen.

Casting Blame
You think this article is about casting blame and calling this store a bad egg who profits off of a broken system.   Well, you'd be partially right.   This article is about casting blame.   Some of it anyway.   And it is about a broken system.   What it's not about is calling the store a bad egg, as they are a cog in a very big machine.

The current system is rather interesting.   Wizards of the Coast creates product.   They sell it to retailers (making WotC the Manufacturer) and everyone else is a retailer or consumer.   Wizards, using market data and a divining rod (actually, they have Fblthp chained to a desk with a Ouija board) comes up with a formula for how many units of any one product type they produce.   The manufacturer sells to retailers at a set percentage value of the MSRP and likely uses some type of volume discount formula for larger retailers.   Ultimately Wizards knows based on how many units they produce as to how much profit they will make for a given product.   That value is a hard number for something that they determine will have a limited release (ie, a set number of units produced).   At this point, WotC washes their hands of any future profits or transactions of said product for the purposes of this illustration.

The store in question, as a representative of the retailer community, pays for the product at this set price.   They then have a decision to make.   Do we sell the units at the MSRP, or do they charge more or less?   In this case, given the limited print run of the product and the increased consumer interest, they realize they have a situation where Demand far outstrips Supply.   This is when economics see systems break down.

Consumers for their part are sheep (I'm one too, so stop looking at me like that).   We all 'vote' with our dollars.   A difference of a few dollars on a low priced item can send us looking for alternate means of fulfillment.   Yet this is a special case.   Fans of Magic are willing to occasionally pay a premium when they see a product that has an increased reward attached to it.   Spoiling that players can open a pack with the revered Tarmogoyf is enough in this case to get them salivating.   This store is capitalizing on that desire.   Surprisingly enough, they have judged that the market will bear this practically ludicrous price point for a box of cardboard.   Many others have followed suit (not all, but enough to be disturbing).   And all they are selling is pretty cardboard.   We can argue they are speculating on a futures market, but when it comes down to it, it's cardboard.

Neither Wizards nor the retailer market is wholly to blame.   Consumers, with their credit cards certainly carry some of the burden as well.   The end result is a perfectly functioning example of capitalism.   But it is still broken.

Busted
Before we resolve to actually find a fix for this system, it is important we look at what part of it really is broken.   For that, I'm going to refer to a Twitter post on Sunday afternoon (May 12th) by a character affectionately known as, Dr. Jeebus.   The good doctor posted, "Am I the only who thinks Modern Masters is going to do exactly what it's intended to?"   I'm no mind reader, but my take on this question is that he is asking this simple question.   Is Modern Masters going to promote a new generation of players to be interested in playing the Modern format?

This is why the $300 is representative of a broken system.   Wizard's intent, when they created this product was to generate new interest in a format that could use a bolster of fresh blood.   Players who have been playing MTG for a while often observe that Modern is a great format, but cost prohibitive to enter.   Eureka, says someone in development at Wizards, "We shall create a product called Modern Master and bolster interest in the format at a reasonably accessible price point!"   Someone forget to send the retailers the memo though.

A $300 price point is not accessible for a box product that could or could not contain enough cards to create outright or through crafty trading allow a player to build a reasonably competitive Modern deck.   Wizards and by extension, retailers have missed the mark.

The Fix is In
That leaves us all with a heavy question to answer.   We need to find a way to encourage retailers and Wizards to find an equitable solution that benefits everyone - especially consumers.   The horse as they say, is out of the barn on this product release.   In this case, I wish all consumers of MTG luck in finding Modern Masters at a price point they (and possibly more importantly their SOs) can live with spending.   Not all retailers will go the route of the 800 lb. gorilla.   I think anyone who doesn't though will likely sell out incredibly fast of any stock they manage to obtain.

Looking to the future, it's not an unreasonable expectation that three policies should be considered.   I believe they are legal and should be of interest, particularly to WotC.   Retailers will eventually get on board as well for it will level the playing field for all parties.   If for no other reason than to seek an equilibrium that does not alienate fan base over perceived price gouging this should be considered.

1. Limited Print Run should be changed to Available for a Limited Time for all future productions of special MTG card sets.   Shorten the availability cycle of a product, but don't set the print run at a X number of product units produced.   This will lessen the impact of demand initially outstripping supply and will still place value on a product that isn't produced in mass for an entire production cycle.   Yes, if WotC really thinks a product should be a collectible item they can create something that befits the moniker - the legends series for instance.   But by and large, WotC is in business to produce a product that consumers want to play.

2. WotC should consider holding all authorized retailers to a reasonable mark-up of product for a set period of time.   This means, WotC should outright contractually obligate retailers to sign contracts that state, "CompanyName will not sell ProductName for more than 5% above MSRP during pre-orders and until the product reaches the end of its production cycle date."   Can they do this?   Yes they can.   It is a free market system.   But as an authorized retailer, WotC has a right as a manufacturer to expect certain behaviors from the retailer.   If J.K. Rowling can get retailers to sign contracts that opening boxes before the sell by date of her latest works that have been delivered in advance will result in censure and legal action, then WotC can surely do this or a reasonable variation.

3. As an immediate actionable step, WotC can make the effort to create some parity for the drafting of Modern Masters.   For a limited period of time (perhaps 4-6 months following the release of Modern Masters), WotC can demand that all TO's run drafts at a price point based on the MSRP.   The penalty for this violating this would be simple and transferable to the other two changes.   Violators of said rules will either see their future guaranteed orders of new product reduced or they would lose the distinction of being an authorized retailer.

WotC representatives are quick to point out, they make no money from the secondary card market.   Truth is though, they aren't getting their share of the primary card market right now.   Why shouldn't they profit 40-60% on the $300 being charged?   They've designed an intellectual property that has value and as a manufacturer they should be able to receive a commensurate return on their investment in development.   Retailers who have promoted this insane marketplace whereby they can sell product at highly inflated prices are literally walking along the street picking up $100 bills.   For them, in a market as broken as this one is, it's simply found money.

There is a small saving grace to be noted.   There are retailers, who for lack of a better term are honorable.   Perhaps they'll be forced to pick and choose who they sell their boxes of MM to, but they will sell them at the MSRP recommended by Wizards.   I don't know what the percentage will be of boxes sold at the MSRP versus boxes sold at inflated prices, but I would hope it's high enough that this product will do as intended.   Dr. Jeebus isn't wrong in what he interrupts as the reasoning behind releasing Modern Masters.   But his expectation that it will bring new players to the format is largely folly given the current price point.   Wizards needs to find a formula that allows entry-level players to enter into the Modern format without breaking the bank.   If you really want to be one of those consumers, I strongly suggest you contact your LGS, for I believe many online retailers will fold to the pressure of greed of the higher price point.

It's time to put some of that money back where it belongs.   Let's all as gamers and fans ask WotC and retailers to become better stewards of a tremendous franchise.   Let's tell our LGS and online retailers what we think of price gouging, then back it up by being smart consumers.   It's not a bad thing to ask.   In the end, we all can win.   WotC will receive a larger profit from printing more units, retailers will win through volume instead of pricing, and consumers will win when they go to check their bank statement and realize they can pay for gas this week.



[Edited: Here is a response article from Dr. Jeebus.   Enjoy!  MM: Separating Fact from Fiction]