Blog posted by JPickford on Tue, 01 May 2012
Over the last few weeks I've heard of a business practice amongst indie developers that I found quite shockingly unfair. This lead me to thinking about the concept of fairness in business.
I suppose, along with my brother Ste, I've been a businessman on-and-off for the majority of the last 25 years. We haven't yet become rich but I like to think we've always been fair. Perhaps those two things are related? I don't know.
One thing about the video games business, it doesn't take long to encounter some astonishingly unfair practices.
One of the first contracts we negotiated as a fledgling developer back in the 80's was for the princely sum of £15K (yes, to make the whole game). Well that's what we negotiated but when the final contract was eventually faxed through the fee had been mysteriously reduced to £13K. We’d already started work and needed the contract too much to start a fight at that stage. This was to become a familiar theme.
Many years later a big publisher was so keen on our self-funded original game demo that they signed us up instantly to produce two original titles (one based on the demo, the second on a game design doc). Once we were established, and had recruited the staff they demanded, they immediately cancelled the second original title and offered us a licence game instead, knowing full well we weren't in a position to refuse. Of course they also took IP rights in the original game (although we later got those back).
Often, when a publisher wanted to make significant changes to a project (usually extra work), milestone payments would mysteriously be delayed or completed milestones would be rejected for trivial reasons. The next thing you know they wanted to talk about the game content, knowing we were now on the brink of closure and unable to argue.
On one of the few occasions where we were earning royalties, we noticed that our per-copy royalty was significantly smaller than it should be in certain European countries. This despite the fact we were on a fixed percentage of sales revenue. On querying this we were quietly told that the publisher owned the major distributors in those countries and thus sold its own games to its own distributor at a much lower ‘transfer price’ - neatly squeezing our agreed cut and retaining more revenue internally. I've no idea if that was even legal.
On top of this is the standard 'advance on royalties' deal, which is fundamentally unfair but I guess that's a whole article in itself.
So, with all this stuff being a regular occurrence, why was I so surprised about an indie developer being less than fair? I think that's down to the indie community.
We've been operating as an 'indie' developer and self-publisher for a few years now. We haven't made a lot of cash but the work is incredibly rewarding and we've made ends meet by taking on the occasional paying contract. One of the best things about the indie scene is the real sense of community and co-operation. Whilst theoretically competitors, other developers and studios will regularly help each other out with technical advice, business advice and even promote each others games on Twitter, Facebook etc.
When I was learning to develop for iOS I found I had a number of people within the community I could turn to for help, which was always offered freely. Towards the end developing Magnetic Billiards I was stuck on implementing Game Centre leaderboards. An ex-colleague offered to help and basically implemented the whole thing for me in a couple of days. A little while later, another indie developer was having similar problems and asked me for help. Now, I wasn't much use, and I could hardly hassle my friend again, so the simplest solution was to give the indie developer the full MB source code and let him see how it worked.
It might seem crazy to give a 'rival' developer access to your codebase, but that's the atmosphere within the indie community. Everyone is incredibly supportive of each other.
So what was the practice that bothered me so much?
I've heard several stories of developers being offered contracts by an indie studio where they would be paid via a ‘capped revenue share’. There would be no money up front but the developer would be paid an agreed development fee from any sales revenue that might be generated. Payments would end once the agreed fee was recouped (the ‘cap’).
Capped revenue share isn’t revenue share, it’s exploitation.
The individual developer takes all the risk and the very best they can hope for is to be paid, eventually, if the game does well, but with every chance they won’t get paid at all. There’s no upside.
Working for no money up front is a risk, of course, but with a fair, uncapped revenue share deal, the chance of not being paid at all is balanced against the possibility of earning big should the game go on to be a financial success.
There are no end of young developers who are keen to get into the industry and it seems many would likely sign up to capped revenue shares just for the experience, perhaps not even spotting the unfairness of the deal. But is it right to take advantage?
One could conceivably run an entire studio on this basis (and maybe that's what's happening). Whole teams of developers working for nothing, taking all the risk and being explicitly excluded from any significant rewards.
This is wrong.
The very nature of indie development means that people are likely to be working for no-money up front. In most cases there is no money available, so that's a given. We currently have two projects in co-development with other developers on this basis (Naked War iOS and a Magnetic Billiards spin-off), and in both cases our co-developers are full partners in the project. They will receive a share of the revenue and full (and prominent) credit for their involvement.
My initial reaction was that there needs to some sort of code of conduct amongst indie developers. A kind of 'fair trade' agreement perhaps backed by a logo we could use to help promote our games; 'No developer was ripped off during the making of this game'.
Whenever I talk about stuff like this it's generally only a matter of seconds before someone points that business is business and I'm being hopelessly naive.
Perhaps they are right but I'd rather sleep at night, and I’d hope other indies would as well.