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"A man does not plant a tree for himself, he plants it for posterity" - Alexander Smith
I was reading Simon Roth's (@SimoRoth) recent blog post about "Games that no longer support their Creators". This got me to thinking about how the future our our industy might evolve.
My first reaction to Simon's post jarred an interesting memory from the dark recesses about royalties and publishing from the Music Industry. When the brilliant Don McLean was asked in the 80's about what his biggest song "American Pie" meant to him, his response was:
"It means never having to work again for the rest of my life."
My mind then flashed to a recent Kotaku post that listed all the Game Studios who have closed since 2006.
Add to all of this the growing, ready access to classic evergreen titles whether they be Donkey Kong or the infinite resurrections of Tetris. These franchises continue to make money while many of the developers responsible no longer have any financial connection or benefit from them.
This must stop.
What we need is an employment contract structure that normalizes the business dealings between publishers, studios and talent. If you're a talent, you will be entitled to a specific percentage (however small or divisible) of the profits that a game product generates. This percentage must be a permanent benefit to you as a talent. This benefit goes with you if you move on to another studio or if you go on to form your own company.
This structure will be contractual and understood right from the beginning of your employment with a studio. If the game dies on the vine, you get nothing but your earnings for the effort. If the game comes back 20 years later, even after you have died, your heirs are allowed to claim your due residuals.
Sound crazy? That's exactly what happens in the Screen Actors Guild.
Here's one of my favorite sections of the SAG FAQ:
Will my heirs receive residuals?
Yes. All residuals will continue to flow to designated heirs as long as the TV or movie product continues to generate revenue for the producer. Remember, it’s an heir’s responsibility to keep his/her mailing address up to date with SAG. Heirs can also visit the unclaimed residuals section of the website at www.sag.org.
Developers can't expect this change to just happen on its own. Furthermore, I think that we need an organization to manage this new relationship in our Industry. We need our own equivalent to the Screen Actors Guild!
When SAG was formed, there was an argument that it would ruin the Film Industry. Many refused to join SAG and of course there were the Blacklist Years as well...
But look at today. SAG is just part of the backdrop and the Film and Television Industries have done just fine, while still managing to pay scale as well as decades of residuals for syndication.
We've already built an industry on the crushed backs of the developers who came before us. As it sits, they get nothing going forward. When will we begin to show the self respect that publishers will never give us? What will it take for us to make this next step?
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Sharing profits won't necessarily make things better for most people, and might even end up making them worse if the promise of shared profits can be leveraged by companies to offer lower base salaries.
For example, enforcing residuals would likely drive down up-front compensation for developers. Dustin said, "If the game dies on the vine, you get nothing but your earnings for the effort." Let's acknowledge first that *most* games never make a profit. This means that those that do are funding those that don't. So if some of those profits are now going to residuals, it will drive down the compensation available up front. This is why actors making "scale" also wait tables.
Second, there's the question of who gets residuals. Unlike Hollywood, we don't have on-screen "talent" who can contractually claim residuals. Do only designers get residuals? Or also programmers and artists? What about QA? Community and tech support? Administration? Where and how would we draw the line between those whose contributions merit residuals and those who don't?
Finally, the most thorny issue: how long do residuals last? There are very few game properties that last for more than a few years. Of the few that make a profit, still fewer make a franchise with multiple releases over time. And it is rare indeed for a game to be re-released for "decades" (keep in mind that residuals are necessarily gathered on release of a game, not per-play as with movies and TV). Do residuals follow the IP or the version? If I work on version 1 of a product, should I get residuals for a game by the same name with different gameplay on a different platform a few years later? And if so, who bears the additional cost of maintaining the IP ownership and residual stream?
Overall, I'm in favor of those who contribute to a game's success participating in its upside -- but risk and reward have to be commensurate, which is why start-ups are so valuable when they work, and so crushing when they don't. Rewarding people for work on a profitable game is definitely a good thing to do, but not to the point of adding new layers of costs for many for the benefit of a few.
Jonathon, that type of cheating already happens every day. All I'm asking for is the limited amount that trickles through goes to people individually and not as a function of the survival of the company or continued employment.
Mike, you make the point that the cost of those residuals and the systems associated with tracking, managing and paying them may result in less money available for future projects. I really don't think that argument holds water with me. Publishers are already paying royalties for many projects after they recoup. What my argument supports is the idea of some amount of said royalties and residuals belonging to (and continuing to belong to) the individuals that produced a successful interactive product. These are not new costs, but rather new ways to distribute the hard earned benefits that come from a successful game.
I may only get one of these games in my entire career. I'd rather not just have those monies kept by the publishers.
In addition, the companies who picked up the rights to them (for those that aren't bankruptcy orphans) presumably paid the initial rights-holders to free them of any later upside claims. In effect, the original IP holders cashed in their annuity on any future earnings from that game. Whether the IP holder turned around and paid the developers is a different question, but separate from the residuals question.
Dustin, if it's the case that royalties are already being paid but aren't flowing to the original team, I'd say that's something worth looking at for future contracts -- remembering though that publishers tend to hold most of the monetary cards in such negotiations (they are, after all, the ones putting money at risk to make more money). OTOH, I'm not aware of many royalties being paid in any form.
And then there's the remaining issue of who gets the royalties and who doesn't. That can be worked out early in the project of course, but it's going to raise game compensation to a whole new level of contentiousness.
Put simply, there are two ways you can create IP:
1) You can create it with your own money and retain the copyright
2) You can create it as a "work for hire" and the copyright will go to the people who paid for the work to be done.
To take the example given in the article, Don Mclean is essentially the sole creator and has (presumably) retained copyright for American Pie. He's therefore able to continue earning money on it.
Conversely, the majority of game developers work on an element of the game (coding, graphics, audio, level design, etc) and do so as a "work for hire". The royalties therefore go to whoever paid for the work - normally a publisher[1].
If you want to earn royalties on past productions, then it's easy: don't sign away the copyright. Admittedly, that may make it difficult to get funding, but there's plenty of indie developers (Croteam, Introversion, Rovio, 2D Boy, Jonathan Blow, etc) who have managed to retain copyright and who continue to make money on their older IP.
As regards SAG: it may be part of the backdrop now, but are residuals actually a good thing for the industry and society/culture as a whole? Personally, I'd argue that these sort of schemes are parastical: they cost a lot of money[2], deliver very little to the people they're meant to be supporting and cause serious long-term damage to the industry/society/culture as a whole; not only do they increase the cost of reusing old IP and creating new IP, but they also have a vested interest in increasing copyright "protection" (e.g. DRM, copyright durations), which in turn further increases costs and impedes the reuse of old IP.
[1] In fact, most non-indie game developers can be compared to "session musicians", who are generally paid a flat fee and don't earn royalties!
[2] I couldn't find any figures for SAG, but in the UK, the "not for profit" charity PRS performs a similar role for musicians and their adminstrative fees range between 15-20%. In 2009, they "earned" £640 million in royalties, which means the organisation itself costs somewhere over £100 million (£160 million) per year to run. Worse, their own figures show that less than 1% of their members earn what could be considered a living wage (i.e. over £25,000); around 95% of the remaining money goes to just a few dozen artists - http://eprints.bournemouth.ac.uk/3704/1/Birkbeck_06_04_final.pdf
So arguably, the PRS offers no benefit to the vast majority of UK musicians and costs *everyone* a great deal to run; their recent attempt to hike up live-music fees could potentially result in thousands of live-music venues shutting down - http://www.morningadvertiser.co.uk/General-News/Publican-calls-for-PPL-boycott
Modern games require huge amounts of cash outlay to pay dev's well to work on them and many of those titles don't recoup. There has to be reward for this risk.
And going off topic: "your heirs are allowed to claim your due residuals." - starting some folks off ahead of others leads to a bigger and bigger class divide over time and often doesn't do those born with a head start a lot of good either.
Also regarding net points in the motion picture industry, it's my understand that no film in the history of Hollywood has officially made a profit. The unwritten rule is: if the studio makes big box office $ announcements, you get a one time ask for an advance against future profits. But after that, the standard industry protocol is to drop the issue.
Things are confounded even more when it is made evident that the probability of success depends on the knowledge used to calculate said probability and not solely on the system itself. For example, if I asked you the odds of a coin I am about to flip ending up heads, you would rationally said 50%. But then I would correct you and say that it is 100%, because it is a two headed coin. Really, we were both "right" from the reference frame of our own knowledge about the system.
Anyway... somewhere along the way, America (can't speak for other countries) turned from a country that rewarded hard work to a country that claims to reward hard work but really rewards gambling above all else. It is really sad to see, I hope this trend changes before I die.
The founders or studio publishers of that bad game lose all the money in those instances. This is a classic risk-reward issue. The developers/artists/talent are trading a steady paycheck for possible upside. But they are also not exposed to any downside at all.
If you want the upside, create your own IP as an indie.
Maybe there is something there to negotiate, I have thought about this before and I would give money back to a company if I am able to (after paying utilities and student loans and such) and the company is something I believe in, if a dire circumstance arises. Of course, details are needed -- am I giving up money to prevent layoffs or just so the CEO doesn't have to cancel his cruise? Really I believe the work for hire model is toxic - sure, it provides more jobs to those who want guaranteed returns on the games they work on, but this fills our industry with a bunch of half-devs that aren't really burning with passion to create the best games for gamers but merely timidly trying to appease publishers. I guess to answer your question, with no work for hire model, the problem of who should lose money if the game fails is answered as everyone on the team will; the capital has to come from them.
Now, where do they get this capital? It can either come from inheritance, side work, past work, crowdsourcing, or an angel investor. Really, with all the free/cheap tools and distribution channels available to devs nowadays, the only "capital" that is needed is that which covers rent, food, and utilities.
Ok, so this is what indie devs do, everyone has the option to do this, so what's the problem? The problem is that those that don't go this route poison the ecosystem for those that do. Every time you sign with a publisher, you are helping their conglomeration of power grow. They gain more power than your studio has because they _are_ more powerful than your studio, need you less than you need them, and will use their army of lawyers to make sure the deal they set up does not give you any more than is necessary to satiate you. And with this conglomeration of power, they can start funneling money into their advertising department -- and those who go the indie route now have to compete with this for consumer eyeballs! Or they can start cloning indie games like Zynga, using their lawyers to defend the process when they do it but sue smaller companies that try to do it to them. And while all this is going on, the publisher is finished with your studio and cuts funding to it, so your studio has to have layoffs. Now you are in the job market and will likely end up at an indie studio or at another publisher _competing_ with the goliath that you infused with power!
What this results in for gamers is stale cookie-cutter games because publishers by their very nature don't care about or have the talent for the artform to try and move it forward, and those that do (indies) have to compete with publishers for advertising space and to hire talent. It is evident that, while the publishing arm provides useful services, it has become corrupt in much the same way the rest of corporate America has. It has become a parasitical machine that drains profit and potential from the true creators and pioneers, making them into pathetic little serfs that are grateful just to have a job in the "almighty game industry", no matter what little creative say they have in it, no matter how much crunch is somehow "required" for _every_ _single_ _project_.
Ok, so let's stick with the current work-for-hire model we have now. I believe this can be done ethically; the person who puts capital at risk should get their capital back first. I can even understand them getting a little bonus for "risk taking"; just take it as my opinion that this "reward" for "risk taking" is too great in our current environment. Then from that the profits should be split based on how much work each individual put into it. This can be a point of contention but that is what being adults is about; honest assessment. No enormous CEO bonus, no large royalty check for a voice actor that put two weeks into the project but is a big hollywood name, no fat bonus for the creative director who sits in his chair telling others what to do to bring his Almighty Vision to life (unless the creative director really does end up working a lot more than others). I can go into why I think the pure capitalist approach is inherently unethical, but this comment is long enough; just consider this my opinion for now, if it helps clarify anything else I've said.
That being said I agree that a profit sharing scheme is a decent idea. Having employees earn a bit of the profit helps motivate them to work better since they have a personal stake in the outcome. It is something my partner and I have talked about for when we start to bring on employees. But there is some realism we're structuring into it. Employees must be on the project for so long to receive profit sharing, must remain with the company for so long (like 3 months after release), and profit sharing ends 6 months after release. The first 6 months after launch is where most of the money from any game is earned, so anything after that is just trickle money to help pay for the next game.
A lot of the problems here come from an industry that has become just that, an industry. The big companies care less about what goes into a game and more about what profits come out of it. The only way to change it is to take one self out of the equation. There are tons of great devs leaving the big companies either because of layoffs or of their own will, to start new companies that counter what the big boys do on almost every scale. Eventually the big boys will have to alter their modes of operation to entice those great devs back into the fold. Its still along way off for that to happen, but I think it eventually will. Those big boys wont be the first to institute something like this either. They'll wait for some other company to prove it works before they even attempt it.
The quote from Don McLean is misplaced here. Don wrote that song and earned the royalties of it. If you want the same kind of results go and make your own game. The tools are there and if you really want it, you can do it. Don wasn't a piece of a large company that contributed a small fraction of what it took to get the song on the air.
As far as Unions go I am kind of on the fence about it. I can see where it could be good to help tell some of these companies how they need to handle employees, but at the same time I see where a lot of unions become these corrupt or entitled entities that end up harming industries more than helping them. The reasons for starting a union are completely understandable, but when does it come time to dissolve a union? Then there comes the section of people who might not want to join that union for whatever reason. Are they blacklisted from those union positions? Are they treated as second class employees?
This was a lot longer of a comment then I intended. Sorry if it came out ranty.
That sounds like an interesting approach, I hope it works well for you.
"The reasons for starting a union are completely understandable, but when does it come time to dissolve a union?"
This has become a big point of internal conflict for me. Of course I thought up until recently that a union was a no-brainer because it is designed to conglomerate the desires of many people when any one or two of them standing up to do so will simply get them fired, but I can see the dangers in such a structure too. Do you have any thoughts on an alternative to a union that would still give workers more leverage than they have now?
Its the worst right now because of how the industry is seemingly shrinking along with most other technical job markets, but there is always another job. Hell, work a crappy day job while working on an indie game and one day you could be the guy calling the shots. There are always options.
I've been in your shoes more times then I'd like to admit. It is one of the issues with starting an indie studio. People lose interest or life prevents some people from continuing work. The key thing is just to stick it out and keep pushing until something works. If you do eventually something will.
The only reasonable person to qualify for a royalty would be the original writer/designer of the game. So we are talking one or two people for game usually, so how does that help the industry? It doesn't. It helps a few people that had an original idea. But then that's what game sales are about. If it's a good idea, it will sell and the people who make it get paid. Done deal. Next.
If a writer isn't being compensated for the game design according to their liking, then cut a better deal. If there is a contract involved, it's their own fault if they sign it and don't like the outcome. They didn't have to sign. They just need to negotiate better!
Why is that?
Some publishers do have profit participation pools with various methods of calculating the rate of participation. Most publicly traded companies also offer stock and options as a means of incentive which is technically a percentage of all revenues from the IP owned by the company. I have even known some independent developers that included profit pools and royalty bonuses for employees. However if you want life-long royalties on any IP you create as an employee and the management of your company is not willing to grant it, then you and all your colleagues must be willing to leave the job. SAG and WGA have created residual systems through collective bargaining because everyone was willing to walk out to create leverage. Sure the ideals of these institutions appeals to game developers, but I doubt many devs are really willing to give up a regular paycheck for the far down the road possibility of receiving royalties.
The problem is thinking that the best way to achieve this is to force it. This leads to bad ideas like unionization and going from there. If the idea of better profit sharing really is a better way of doing business, people will seek to participate voluntarily.
Consider: suppose some developers got together to put personal support behind their beliefs and formed their own publishing group whose standard business process is to provide royalties to developers. Assuming the numbers could work so that the publisher could make a profit (allowing it to stay in business), what developer wouldn't want to make a deal with that publisher?
This seems like such a plausible scenario that developers would be wise to think about why it hasn't already become the norm.
One factor to consider comes from the book publishing business. Authors receive royalties in much the way that Dustin suggests for game developers... but note that part of this process is that authors are funded by publishers on an "advance on royalties" basis. If a book doesn't earn back enough to cover the publisher's many costs (the "sell-through"), the author is asked to return the portion of the advance that the book didn't earn. More books can be published because of this sharing of risk.
Is that something game developers would be prepared to embrace in order to gain access to royalties?
Consider the argument that publishers are doing developers a service by funding and marketing their game. I disagree wholeheartedly with this argument because it ignores the fact that developers need heavy marketing for their game _because_ they are competing with other publishers. Publishers sell us the medicine to the disease that they spread. The amount of money that the game industry (hell, that America) spends on marketing is insane, and it is money that could go toward improving products or minimizing layoffs. Of course, if one company decides not to advertise, that will only hurt their bottom line and make no dent in the trend. It is something we need to decide together. I consider this "force" because it forces the system to change.
Of course, I do agree with you that many kinds of force are bad. I don't think we should force employees into a union. No matter how effective a union could be in theory, it must exist to serve its members, not enslave them. It gets its strength from its members believing in it and contributing to it, and this will never happen when membership is forced.
I think that what the industry needs to do is to move toward blacklisting publishers so they will die out and the suits will go to other industries and the sincere members that love games and game development will join us. Then we set up replacement infrastructures (look at the indie fund http://indie-fund.com/, or kickstarter for some inspiration) to cover startup capital. Make agreements not to over-advertise (eight digit advertising campaigns are ridiculous), standardize profit sharing models, standardize job networking so failed projects that lead to lay offs are not as stressful. It's a slow and painful process, but it is for the better for true developers, and in the end for gamers as their games will be made with people in power who know how to make games. It's certainly not going to just happen; it requires volition, meaning it requires force. As long as there are interests in this industry not aligned with ours, we must fight daily to take back the power. And don't seek peace through inaction; publishers are fighting us every day. If you don't fight back, you will be annihilated. Publishers (and management at your dev studio, if it is big enough) are thinking constantly about how they can minimize their work force to maximize profit. They are trying to get rid of you. We should all band together and do the same. How can we get rid of publishers and replace them with something that is more beneficial to us? It is career suicide (and emotional suicide if, like me, you are deeply moved to create quality games) to ignore their overt actions against us and not fight back.
I've been meaning to, I'll try to find time. But what dark things are you thinking will happen?