How do you feel about royalties?

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Original post by Orymus As a developper, how do you feel when a project offers you royalties as compensation?

Same as a plumber. Ask them about royalties.

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I know there are legitimate organisations that may have achievable goals and true potential for income.

And those pay regular wages, royalties are in form of stock options, sales share, etc...

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The reason I'm asking is because I've set myself into a position where I have no upfront financial means to produce a project that is promising (acquired licensing, etc, but have only limited funds, already invested in hosting services, etc).

MBA response:
- make a business plan
- go to bank, apply for business loan (Angel Investor, VC, FFF, ...)
- hire people and pay them wages
- Big Success
- pay out royalties

What bother me about royalties is that it shifts the risk to workers. Business folk might see some opportunity and cash in big, but everyone besides them will inevitably end up with crumbs.

When it comes to business, if someone feels there is money to be made, let them risk. But people who will be doing the work will do it anyway - it's not their problem if it sells or not. If it were, they wouldn't need you.

This has become prevalent practice. Big ideas, big business, big people - but no risk. Just a bunch of people working for free.


Pro-tip: CS students. They'll pile up on offers like that, being naive and inexperienced and all that. They also don't know much about law, so they can be swindled out of royalties if they do happen. If that kind of business relation is your cup of tea. It seems to be fairly common practice these days.

As for me - I don't care about your grand vision, sales, business, billion bucks. That is your job. my job is in tech. Or, sell (convince me) the idea to me, make me excited, and I'll invest my money into it, for 50% ownership of the company.

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Original post by Antheus and I'll invest my money into it, for 50% ownership of the company.

51%.

Only suckers and incompetents work for royalties--at least, pure royalties. Anyone who's genuinely talented will have the option of A) Working for an actual salary, or B) Starting their own company and earning a 100% royalty.

The corollary is that you only get naive, incompetent workers if you offer royalties as the only compensation.

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Original post by Orymus As a developper, how do you feel when a project offers you royalties as compensation?

Honestly I cannot picture a real developer even being offered royalties as the only compensation. Only hobbyists with delusions of grandeur offer that, and pros dont look at those projects when theres so many serious studios hiring. I dont even think its legal in Quebec (and most privinces/states).

In a lot of good studios offer bonuses that work a lot like royalties, but thats on top of your regular salary.

Royalties is the expected form of payment when you are letting someone else use your product and profit from it, not when you are making a product for someone else.

So I have lets say a finnished flash web game and put it on a game portal, then royalties is the expected form of payment, the same is true if i have a finnished game and let someone else localize and sell it on other markets (Allthough a static upfront license fee could be used aswell, or a mix of the two).

If someone wants me to make or help make a product exclusivly for them though royalties would be unacceptable and a salary would be expected.

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Original post by Orymus I usually personally get the feeling the project isn't serious as soon as someone writes "We will share any profit we have..." etc,

This, exactly. Most of these projects don't even put these profit sharing schemes into contracts with milestones and objectives that must be demonstrated in order to recieve the promised money... So first you know the guy isn't professional, and thus probably won't succeed, and second you don't actually have any guarantees if the project does work out. This is bad for the project leader too; without an agreement you could revoke their rights to use the works you've produced "for them", crippling the project or holding it ransom.

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The reason I'm asking is because I've set myself into a position where I have no upfront financial means to produce a project that is promising (acquired licensing, etc, but have only limited funds, already invested in hosting services, etc).

What a lot of companies do is produce all the material provided for a pitch. Then hopefully someone else will give you money up-front (under strict contracts like I mentioned) that you can use to cover development costs.
Interestingly, these agreements usually do include royalty payments as well, but your up-front costs are deducted from your royalties -- so if you get $1M up front, and you make $1,000,001 in royalties, then you get a cheque for $1.

Not that its particularly promising when a group offers royalties, but I think its mostly an attempt to address a frequent question pro-actively.

Imagine if you saw this:

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Imaginary Help Wanted Posting: Compensation: This game is being made for fun, but if any money is made I will keep it all to myself and gorge myself on Papa John's with all your hard work.

I don't see the harm for a hobby project -- most are never going to see a dime.

In the professional realm I say yeah, avoid working for royalties -- and if you do, make sure its the type that invest you in the company -- e.g. stocks or partial ownership.

Couple years ago I joined a group from here that was for royalties only. Game actually got done and was released commerically as a digital download. How much of the royalties I actually saw? $0. It was a nice mark for my resume and I have gotten my current job because of the game so its not all bad. But never again would I work only for royalties.

For indie games that don't really have any real chance of selling then some royalties on the off chance it does sell is fine. But if you really think your game has a real chance of going somewhere and you need a team of people to make it then paying money up front is the way to go to get it done. If you really think your game is all that then you really shouldn't have a problem getting a business plan together to get a short term loan.

It probably sounds a bit selfish, but I've had some real jobs now and I'm basically past the hobby indie stuff. I'm not going to be the one taking the risk on the game making money or not. Thats the project owners problem and not mine.

Royalties? Assuming you're working with a real company with a real legal department who passes out real paper documents for you to sign, then Royalties rock!

It is great to randomly get cheques in the mail when you're not expecting them. Would I want my entire income based on it? No, not at all. But getting royalties for small jobs that you spent a few weeks or so on can give just such a wonderful feeling of random income.

Of course, it can also be rather ridiculous at times. I get a cheque for $0.03 every time this one crappy movie (Which I refuse to admit to having any part in its production.) plays on TV. (And every time I send them an email telling them to either just keep track of it and send a total out every year or two, or just forget it at together. Then I get a letter back saying they would be happy to do so, usually that same week I'll get two or three more. The stamps alone cost like 20 times what they're paying me,...)

Talroth "Royalties? Assuming you're working with a real company with a real legal department who passes out real paper documents for you to sign, then Royalties rock!"

Are you for serious? Have you heard of Hollywood Accounting?

http://en.wikipedia.org/wiki/Hollywood_accounting

I know Hollywood is not game dev, but still....

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Original post by FableFox Talroth "Royalties? Assuming you're working with a real company with a real legal department who passes out real paper documents for you to sign, then Royalties rock!" Are you for serious? Have you heard of Hollywood Accounting? http://en.wikipedia.org/wiki/Hollywood_accounting I know Hollywood is not game dev, but still....

Thats not royalties in general though, Hollywood accounting only works with profit shares (Since profit can be shifted from one product or company to another)

Royalties are usually revenue share or a fixed sum per copy/play/performance/etc.

What I read here is two different concerns:


1 - This is unprofessionnal
I have to agree in parts here, as I wouldn't easily be persuaded to work for royalties unless I was sure the project would get done. Luckily, I've already delved into the paperwork, and I do have "a plan" for royalties altogether. The only problem I'm having with it at the moment is having a minor onboard, which I'm not sure would be legal in the U.S.?
Regardless, yes, its a bit of a turn-off

2 - It's naive
This one I don't agree too much with. I think royalties have earned themselves a derogative connotation because of every failure we've seen (and God knows how many projects randomly pop-up on gamedev offering them never to be heard from again). I suppose the credibility of the project owner/manager should definately be taken into account. I'm not personally a very old gamedev member, nor have I earned a large credibility over here, but I'd like to think that, as Project owner, I've got more experience than possibly 50% of the community (provided there are so many indie people that have not nor will ever break into the industry, and that there are many people who are actually in the biz).


As for loan, I'm affraid that's out of the question. I'd say I've capped that with my domestic loan already ;) The best a loan could give me is the ability to give no more than 3$/hour to team members, which I believe is cheating people.

Also, I believe the audience here has been misunderstood. I am not looking for pro developpers, but I'm looking for indie people which are serious enough to eventually become pros. In that regard, this is a risk but also an investment for them to actually join a project like mine. To keep things fair though, royalties are my way to really compensate for their work. The project used to be voluntary, which seemed fair, as a lot of developers produced work while it was still being considered voluntary. (The whole purpose of this change is related to another recent thread on artists, where we've established that, for a strange motive, artists need to see the shiny rocks before getting anything done).