
Developers Deserve Residual Royalties - frostmatthew
http://www.dustinclingman.com/journal/2012/2/4/developers-deserve-residual-royalties.html
======
patio11
If a game developer thinks he deserves royalties, he should probably ask for
royalties. He will be laughed out of the room, because nobody _deserves_
royalties, they are merely a particular term negotiated in an abominably
screwed up relationship between two medieval cartels. The only reason those
cartels are relevant to the discussion at all is the developer is experiencing
monopoly-power envy, and these two cartels enjoy anomalously high social
importance to impressionable young men.

Game studios will instead choose to hire developers who enjoy being exploited
for low wages and in terrible working conditions. They are, empirically,
legion, because many young men continue to make poor choices. (There are
roughly anomalous phenomena in people trying to get into, say, publishing or
non-profits, but those folks don't typically possess skills which are as
readily marketable as game developers. The typical coffee-fetching assistant
editor could not triple their income and halve their hours _immediately_ by
being an assistant editor at a different firm.)

If a developer wants to continue earning from code they wrote once, there are
_many ways to make that happen_ , though. Most of them do not involve
videogames professionally. One not-trivial-but-straightforward path is to own
the company you're negotiating with regarding employment terms.

~~~
lifeformed
> "One not-trivial-but-straightforward path is to own the company you're
> negotiating with regarding employment terms."

That's what I did. I make games and I _only_ make money from royalties. It's
super rewarding having complete control over what I do, but it's a succeed-or-
die kind of venture.

~~~
lgas
Aren't all businesses "succeed-or-die" ventures?

~~~
lifeformed
Well, "die" as in "fail really hard". Like work 2 years for no pay and then
make no money after you launch. Thankfully it hasn't happened yet, but it's
always a possibility.

Also, you know within the first hour of launch whether or not your game will
be profitable or not, so it's a suspenseful time.

------
tptacek
The business relationship between a musician and their publisher and a game
developer and their studio are nothing at all alike.

Most musicians don't make a dime on their recordings, and nothing more than
subsistence on live appearances. For most musicians, "live appearance" means
the corner of a bar, or a wedding. And music publishers as a rule don't
provide musicians with a salaried job. They're much more like venture
capitalists than employers, funding cohorts of 10-20 artists hoping that 1-2
breakout successes will cover the losses from the remaining 18-19.

Developers are as a general rule full-time employees, with steady salaries and
benefits. More importantly, when a developer leaves one job, they are
(relative to the broader economy) extraordinarily likely to find another job
at comparable wages. A developer's role in this market is cushy enough that
employers who are willing to accommodate them can be reasonably sure of
eventually finding a good developer.

There is a word for the kind of developer who commands residual income from
their work: _startup founder_.

Reward tracks _risk_ , not merit.

~~~
zedshaw
What? You are massively uninformed about the music business. You are ignoring
everything from copyright laws, mandatory licensing, agents, gross vs. net
point compensation, musician's unions, the producer's role in it all, and seem
to only be focusing on the studio musicians who take a paycheck rather than
points on an album.

Your entire comment shows you know nothing about the music business other than
the little bit of pro-piracy drivel you've been fed over the internet. I _am_
a musician and an author with real contracts that I've signed who's had to
take classes and talk to lawyers about this subject, so I know what I'm
talking about. You do not.

~~~
tptacek
You've taken exactly the opposite point from my comment that I intended.
Developers get salary and benefits. Musicians do not. I am, for whatever it's
worth, vocally _anti-_ piracy, and though I'm not a musician, I come from an
immediate family of them.

If you wrote a top-level comment about how the music business was different
from the software business, and included details like typical contract terms,
that comment would head up this thread instead of Patrick's and my own. But I
submit to you that it would reach basically the same point as my comment,
which is that songwriters and recording artists get royalties because they
bear risks; developers tend not to get royalties because they are paid up-
front.

 _[edited]_

~~~
wglb
Hmmm. Was there a little sarcasm in his comment?

~~~
tptacek
I can never tell. I'm making french toast for my kids, watching this jump
thingy, and cleaning the kitchen too. Maybe I just missed the joke. Sorry, if
so.

------
sokoloff
I worked at a successful game company in the mid-90s and we did get royalties
(ours were on the net, not the gross, and they stopped when we left the
company, so not exactly what Dustin is proposing).

I see two problems with his proposal: the VAST majority of games are
commercially unsuccessful to break-even at best. So, for most devs, this would
be meaningless.

Second: we're already well paid, and I think of some of that up-front comp as
pre-paid royalties.

If you want back-side royalties, you probably have to give up some up-front
comp, which is a bad trade for the overwhelming majority of game devs.

------
ftwinnovations
Complete nonsense. After creating a hit song, does a team of singer come along
and maintain it and add features? Does yet another team build the next version
of that song? Or that movie? Or that painting? Or whatever artistic work?

The logistics if the software industry are nothing like the music or movie
industry. This post is absurd.

And further, to claim anyone "deserves" a royalty is ridiculous. I know a
developer who is quite rich off of a software residual deal. He did not
_deserve_ it. He _negotiated_ for it and _earned_ it. Good for him!

I love the idea of working a royalty deal as a developer and hope more devs
can pull it off profitably, but it would obviously have to entail getting paid
less to nothing up front, similar to a starting musician. Risk vs reward. The
ultimate balance.

~~~
cgray4
_After creating a hit song, does a team of singer come along and maintain it
and add features? Does yet another team build the next version of that song?
Or that movie?_

Remix? Sequel? Live performance?

~~~
ftwinnovations
C'mon man that's arguing for the sake of arguing. You know that's not the
same.

------
chaz
SAG came about in an era when there were relatively few studios who produced
the vast majority of movies. As a result, the options for skilled workers was
low, and you had no choice but to endure poor conditions for low pay because
your options were heavily limited. Software engineers today have thousands of
companies that can hire them.

I actually think that movies and shows should go the other way. Talent and
production people should have a stake in the studio, and we should have a lot
more of them. It would align interests and we'd have fewer people who are in
it just for the preset day rate. We would see more innovation in content,
distribution, pricing, and rights.

------
wallflower
Left unsaid is some of the craziness associated with Hollywood unions:

I have a friend who was a PA (e.g. drive cross-town to get a particular type
of food for Christina Aguilera). Every ten days or so they would get fired and
rehired the next day. Why? Because if they worked past ten days they had to be
part of the union.

On a set, the unions require a certain amount of union workers to be present
(even for extras). To get around this, they hand out union vouchers (which
makes you virtually but not literally a union member for a 'day').

Why are movies so expensive? A friend of mine has a cousin who is one of the
on-site EMTs for a Hollywood studio (e.g. he idles near the ambulance in case
of emergency). For that, he gets paid north of $200k/yr. For (usually) doing
nothing.

------
chaostheory
I feel that this post is out of date by about a year or two. Game developers
no longer need a big publisher anymore. With the success and reach of all the
app stores, game developers can just take a risk themselves, own their IP, and
reap the full benefits of owning that IP.

With the rise of stuff like Kickstarter, they don't even need to fund
development themselves anymore either. Take this game for example:
[http://www.kickstarter.com/projects/obsidian/project-
eternit...](http://www.kickstarter.com/projects/obsidian/project-eternity)

------
mgkimsal
Extract:

" 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."

It ain't gonna happen in software while the majority of people want a 'job'.
It's not that there's anything inherently wrong with that mindset, but it
shift the control to the job providers, vs the laborers. The SAG seems to have
been set up to help actors in lieu of having a 'job' which would provide a
degree of stability. I'm not sure the idea of 50+ year residual royalties was
a primary factor in getting SAG off the ground, but I may very well be wrong
here.

The closest thing we may have in software right now is working for 'equity' in
a company, or profit-sharing options. I've proposed profit-sharing to some
consulting clients, and only a handful were even open to the idea. The blog
author may be (probably is) looking at this solely from the games-industry
point of view, and it might work there, but it's not something that I think
most orgs are ready for.

------
fabricode
Ironically, his blog is title "Mystic Rhythms: We Suspend Our Disbelief and We
Are Entertained"

This is a song title and lyric taken without credit from Rush, specifically
their Power Windows album. <http://www.songmeanings.net/songs/view/108820/>

He decries the lack of respect given to developers of creative works, yet here
he steals ideas from another creative group and uses it without any
attribution whatsoever.

I'd say it detracts from the strength of his argument just a bit.

(Note: hopefully he fixes this in the future, but no attribution as of Oct 14,
2012 10:51am)

~~~
gruseom
I'd give him the benefit of the doubt. Sometimes people quote things in that
way because they're huge fans and the source is taken for granted in their
world. They think everyone knows it and those who don't, should. (I've done
this myself and realized later that it looked like plagiarism, which dismayed
me because my intention was exactly the opposite, to honor the source by
acting like it didn't need to be mentioned.)

Blog titles are also a common place for people to adopt cool quotes that are
particularly meaningful to them - it has almost become a little genre - and it
would spoil the fun to footnote them. This guy actually has quotation marks
around his, so he's more punctilious than most.

------
tomjen3
Yeah, we should form a union so we can continue getting paid even when we no
longer produce value. Because the real problem in the world is the amount of
people who produce value.

</sarcasm>

------
mgkimsal
Cached:

[http://webcache.googleusercontent.com/search?q=cache:8InlVBD...](http://webcache.googleusercontent.com/search?q=cache:8InlVBDPrd0J:www.dustinclingman.com/journal/2012/2/4/developers-
deserve-residual-
royalties.html+http://www.dustinclingman.com/journal/2012/2/4/developers-
deserve-residual-royalties.html&cd=1&hl=en&ct=clnk&gl=us&client=safari)

------
anigbrowl
Isn't this basically the purpose of giving people options? If the company
turns out to be profitable, the developers who exercise their options can
share in the benefits. If not, they wouldn't make anything from royalties
either.

~~~
tptacek
Options track the performance of the whole business. Royalties track the
performance of a specific offering.

------
restauranteur
Do construction builders "deserve" residual royalties as well?

------
mdasen
This really came about because of monopoly power and it takes time for things
to change.

Here's some pseudo-history to illustrate a point. Imagine living in a city
like New York a hundred years ago. There are a limited number of theaters and
you can't have infinite theaters and potentially can't even have enough
theaters to keep up with demand for people wanting to see theater shows. Why?
It's hard to get contiguous land, current theater owners oppose planning
permission for new theaters, etc. These theaters rake it in on high margins
since the supply is restricted compared to the demand. They also have power
over the actors since there are more people who want to be actors than there
are acting positions and so they exploit them for low wages and/or poor
conditions. Even if you're an electrician and you're getting paid market wage,
you're annoyed because the theater owner is raking it in due to their
monopolistic/oligopolistic power in the market place and you want in on some
of that fat margin. So, you form unions to get in on that fat margin. The
theater owner can afford it because you're now both exploiting the theater
going public. Under better economic conditions, theaters wouldn't be able to
charge so much and there wouldn't be the margins to support above market
wages.

The same is true in film and TV. There are again limited theaters to show
movies and the theater wants to make the most off a show so they want to run
big ones. This provides fat margins to movie makers. Of course, your need for
actors has been drastically reduced making your margins way better than stage
theater owners could ever dream of. Of course, seeing those fat margins, the
actors want a piece of it. Realistically, they aren't doing something more
than stage actors were, but c'mon the money is there and a normal person would
want a piece of it. Same goes for television: there were/are a limited number
of channels due to licensing.

Programming is different. In many ways, we fight against that economically bad
situation. We disrupt markets. Our culture is one where we think you should be
rewarded for doing something good for people, not entrenching yourself and
keeping others with good ideas and products out. Our medium also tends to be
infinite. There aren't a limited number of channels (websites) or a limited
number of games that could be created. We can create as much as there is
demand for.

In fact, as we look at the entertainment industry and its stance on copyright,
we can see how we're slowly killing their old way of thinking. We don't want
to watch reruns - make more content for lower budgets rather than restricting
the amount of content. We don't want to pay the high margins - we see that the
entertainment companies are exploiting us (along with the actors, techs, and
others taking their cut of the exploitative margins). We see how it's rotten.

And it's important to note, as others have, that the way entertainment is set
up is somewhat like a lottery. There's a lot of actors who spend a decade
waiting tables only to give up. That doesn't really happen in our profession.
Heck, having graduated from university half a decade ago, the only people I
know who have been employed non-stop are CS people. We create good value
across a broad spectrum of skills and we get good compensation for it -
however, we don't have a lottery. Now, if we artificially restricted the
number of websites allowed to exist (or games allowed to be made), those few
websites would hire the best (aka, the star actors) for higher wages than they
currently get, but many people might be waiting tables, trying to make
connections, running white-board algorithms auditions all the time, etc. I
mean, I know some people that dream of getting that Google job, but the
difference between the somewhat low-end in CS which offers a higher than
median income salary with good benefits and Google isn't the difference
between waiting tables and being Liam Neeson.

And, frankly, getting a union like SAG wouldn't help us in the way SAG helped
actors. It helped the actors because the movie companies were exploiting the
public. As such, a union would help the actors get in on the price gouging and
if they asked for a lot, the movie companies could raise prices a bit. The
companies we're working for usually don't have margins like that because it's
easy enough for another company to come in and offer the same service at a
lower price. Like, a search engine couldn't charge you $1 per search because
Google, Yahoo, etc. are free. If Google started charging, you'd just use Bing.

I know how nice it would be to live in a situation where you got higher
margins for your work, but in the end someone has to pay that: the general
public. That only works if you restrict people from competing and make the
supply scarse. Culturally, that isn't us (we prefer disrupting these types of
situations) and economically, we wouldn't be able to pull it off since we
don't have the history of barriers. I know, I sometimes pine for the lack of
competition that lawyers, doctors, actors, etc. enjoy. But ultimately, that
even comes at a high cost to them: once you're in, it's great, but on the
outside actors have a hard time breaking in, doctors have to go through a
decade of schooling, and law school basically tortures its students. Because
we operate at the margins we operate at, people can't force us to bow down to
them: we can wear what we want, often get flex time, and usually get and keep
jobs on our ability to do the job (at least more than many professions).

