IP wants to be owned

So, we’ve finished our negotiations with Jarkko Vuori about my continuing role in his game development project. To sidestep any suspense, the short of the story is that I’m signing over any remaining rights to what I’ve worked on thus far for the project, and go on to other projects. The price is nominal compared to what I make doing layouts or normal writing jobs, but this particular 350 € is also the first money I make in computer games, so of course it is a bit of a thrill. I hope Jarkko will succeed on the groundwork I lay, or at least get a ride worth his money.

The reason for my departure is the one I mentioned in my last post on the topic: we simply come from too different worlds, and do not have the energy to bridge the gap in a manner acceptable to both parties. We spent quite a few hours discussing the game industry, leadership and the dangers of different models of incorporation, but ultimately I couldn’t convince Jarkko to switch over to a co-operative model, and he couldn’t convince me that it’d be worth my while to work on a project with no ownership nor salary. I just couldn’t wrap my head around a business model that is predicated, not on investment of work and money, but on donations of both. This is the first time I encounter such a model, and while the professionals in the field apparently don’t see this as particularly weird, for a guy coming from outside the software development industry it sure seems exceptional.

The talks themselves weren’t a total waste, however: I had to question my own assumptions about the kind of terms I’m willing to work with, and even develop some ideas of my own about the topic. Jarkko did definitely negotiate in good faith with me, with all intent to find a mutually agreeable solution, so I had to develop all kinds of ideas about how I would go about structuring a game development company that I’d be happy with. Making games on a zero budget, too; not quite trivial, especially as I’m not quite the expert on the art and science of economics. However, I did have some ideas which I’ll lay out here, just in case they’ll end up being useful to somebody else:

Assumptions

Games are created by teams. To make a good game you need several people, not only because of the amount of work, but because it’s specialized work. Speaking of computer games, you need somebody to program it and somebody to visualize it. If you also want original design you need a game designer, and sound never hurts, so you need an audio technician. Having a producer is also essential if you want to stick to any kind of a schedule, if you want to use high-prestige marketing venues, or if you want to sell your game to a distributor. These five basic roles can be combined in different ways, and they scale quite differently to more ambitious or different projects: one each of game designer and producer get you a long way (and you can get pretty far by combining those with something else or each other), but both artists and programmers will soon find themselves understaffed.

Anyway, the point is that you need many people to make a computer game, with very different profiles of work. To respect everybody’s rights and the value of their work is no simple proposition when you also have to look to the essential factor of project integrity: having rights and such is great and all, but it is also irrelevant if the project is frail and never gets finished because the structure of the studio fails in some particular manner.

Also an important assumption: the reader realizes that I am not a lawyer nor any other kind of legal professional, so anything I say about how contracts or copyrights work is the mere knowledge of a layman and artist, albeit a self-interested one trying to navigate the world of publishing himself, now and then.

My 1st solution

The contract technology of book publishing industry is older than my country. Hundreds of variations have been explored and field-tested by authors and publishers in an extremely competitive industry where success is rare and difficult to replicate. While younger arts are right now going through struggles for the rights of artists, authors have friggin’ trade unions and standard contracts that basically mean you can’t be screwed too badly by a reputable publisher.

So one might imagine that modeling a corporate structure and the role of the game creators on book publishing would result in a pretty robust and sensible company, right? Here are the precepts:

  • The game designer owns his work in the form of the design specification of the game. This document of text and illustrations is, after all, a book. It might go through constant revision during the project and it might gain significant influence from the rest of the crew, but it’s still written by one author, just like anything else. Or if there are several significant designers in the project, well, it’s not the first book in the world written in cooperation.
  • The contract between the game designer and the production company has to affirm one special thing: the final game created by the production process will be considered a derivative creative work based on the original design specification. This is far from clear in terms of court rulings, note; the basic principle of game copyrights is that game design elements like rules and such are not covered by copyright, only the specific way they are depicted is. But that’s why the contract bypasses the issue by having the production company confess pre-emptively that the game they are making is, in fact, a derivative work. This is important and useful exactly because there is plenty of experience in older art forms for determining how derivative works can be used.
  • The contract will also assign rights and royalties between the designer and the production company, but all that stuff is really quite simple and a foregone conclusion already, relatively speaking: writers and publishers have already figured out how first-publication rights, resales, out-of-print clauses, profit calculations, sequels and all that stuff work. Any of these rights and more can easily be assigned to either the designer or the production company, and a royalty as well as a possible advance can easily be determined at whatever level seems sensible.

So the game designer is covered, what about others? Personally I’m happy if my own rights are protected adequately with a contract that is legally required to come out and directly list all licences I’m giving up to the production company, instead of being a blanket coverage of everything. However, the contrary bastard that I am, I would probably require the exact same considerations if I was the programmer or artist of a game design project. I’m even less of a programmer than I am a computer game designer, but if I were a professional programmer, my credo would definitely be the ownership of my own code; code can be recycled and reused, so often the only real advancement a programmer does in his career are the constantly expanding libraries of solutions that increase the efficiency of the programmer with an exponential rate. Likewise, any commercial artist knows that the same piece can be sold several times, and there usually is no reason to give up any more rights than the project in question really, realistically needs.

Others might disagree, of course, when it comes to the rights of programmers, artists, doormen and whoever else happens to work on the project. No matter for this solution, as salaried people, owners and authors working on royalties can easily work together in the same project, as is done every time a book is published. It is the best kind of flexibility when a project can offer each participant the kind of reward structure that best reflects their stakes and nature of their work.

My 2nd solution

Partnership companies are older than the contract law, so the most obvious possible means of recompensation for a team of working professionals is to split the ownership of their undertaking. I still have no clue as to the fundamental reasons of why Jarkko doesn’t as a matter of course go for this particular solution, considering that it’s pretty much the standard method of starting a company with no capital: the people who are willing to invest their work in the project end up owning the project. I have difficulty imagining how things could be any other way when you’re not paying a salary.

The traditional form of control and ownership in a company in Finland are “osakkeet”, shares. I think this kind of company (“osakeyhtiö”) is called a corporation in English. It’s not difficult to reward people in a corporation, even if you don’t happen to have money at hand! Just give them shares! Have a shareholder meeting, create some shares, and give to the company purse to be used as play money. Work out monthly salaries in shares if you want, or give them out on a per-project basis! And when the company starts actually making money, nothing is easier than selling those shares back to the company, or just giving out the money in dividends. This is not rocket science, people!

If dissolution of control is what you fear, have two series of shares and keep the ones with voting power yourself. Or have a “golden share” like the French do, where one guy gets veto over anything and everything. Again, this form of contractual relationship is ancient, constantly tested and the matter of everyday life for millions of people in the world. Saying that you can’t start a game studio this way is, to me, simply ludicrous.

Controlling risks

Of course, coming back to our long talks with Jarkko, the point of the exercise for him doesn’t seem to be in whether it’s possible, but whether it’s desirable. While either of the above models of creator rights would be eminently executable, they both share a flaw that is, understandably, somewhat fatal from the viewpoint of the producer: if a creative team has individual rights, those rights might get exercised, which might mean the end of the project when head-strong individuals withdraw their support from the project. A solution where one person owns all prevents all this, because creators can always be replaced, and the project may certainly march on without a dissonant voice, as long as that voice wields no power.

So that’s pretty much the fundamental point of disagreement, I feel: Jarkko, and probably many others who hold similar views, is an idealist beholden to a vision of creating a game company. To him the rights of the people committed to the vision are secondary to the vision itself. The team breaking up and potentially scuttling the project is a failure for him, whatever the reasons. So it’s no wonder he needs and requires a corporate structure that minimizes these risks.

In this particular philosophical point I, on the other hand, am in full opposition, and this is probably the root cause for our surface disagreement as well. As far as I’m concerned, the motivation for starting a game studio in the first place rests on the individual motivations of the participants. It is because they want to have a studio and make a product that the studio is. Therefore limiting the rights of the creators is counterproductive and prone to send the studio in directions that do not, anymore, serve the original purposes it used to have. We have to have faith in the fact that if the studio should fall apart due to personal disagreements of the participants, that was for the best; to think otherwise is to think that the people comprising the working team are less important than the existence of the team itself. And down that road lies slavery, if I’m allowed to wax a bit melodramatic without offending anyone.

All this doesn’t, of course, mean that the studio shouldn’t consider personnel risks. But the positive way of considering them is not to make it punitively impossible for artists to withdraw their support from the project (which is the case when the only reward you may have from the project is something the leader only gives you if he still likes you at the end); it is much more sensible to work out exit strategies for the participants, mature forethought plans that allow them to depart with as much benefit for both parties as possible. A well-assembled team will be just as strong in growing as it is shrinking, because the team is predicated on sensible exit strategies all around.

My own departure from Jarkko’s project is an example of an exit strategy: it was agreed from the first that my commitment to the project would only span the concept development phase of the project, and we would reconsider things at that point, when we’d seen if we could work productively together. A part of the exit strategy is also the fact that I never signed away the rights to my work thus far; even if the copyrights of game designers are weak, it was obvious to both parties that I would have to be compensated somehow. The final point of the exit strategy is the team meeting we’re going to have next Sunday: therein I will have an opportunity to coach the rest of the team on the material and plans I have for the project, ensuring a fluidly continuing project. Even after that I am not going to disappear from the face of the earth; I will still be available for consultation and advice, even if I won’t be burning the midnight oil for the project. This is a successful exit strategy, because everybody’s rights were protected, the project did not suffer, and nobody had to change their name or leave the industry. This should be the case always: treating outgoing personnel as a security and resource risk just means that you can’t ever rebuild your team to respond better to different challenges; the people you have will always be with you, whether they want to or not, even whether you yourself need them right then and there. Much better to let everybody answer their own needs of the moment with flexibility and vigor, as this ensures you a team that is always to the point!

Conclusion

So that’s pretty much the story of my getting into computer game business – not happening now, it seems. I still have a rather interesting team meeting coming next Sunday, where I’ll meet the team that will be implementing Karta Machiton. I’ll do my best to prepare a quasi-sensible lecture for them about the game. There are still some major design hurdles unsolved in Karta, and it still needs a couple of hundred different cards, so the team still needs a game designer. If anyone of you readers knows somebody interested in working with Karta Machiton, let me know; you’ve seen Jarkko’s deal in my blog, and while it doesn’t satisfy me, it might work very well for you. Jarkko is a nice guy, there is no NDA, and not being paid also means not having to stress overmuch about accomplishing things if you don’t feel like it.

Meanwhile, this has hardly been a waste of time for me – working with Jarkko’s project has awakened a bit of a hankering, an electronic game design bug, you might say… It might very well be that I’ll end up doing more computer game design at some point, perhaps with a corporate structure closer to one of the options I envision above. While it seems that reputable companies are not doing this kind of thing now, I’m pretty sure that this cannot last indefinitely. After all, things have changed in other arts as well, when people used to think that nothing could change. I’ll stop on that thought for now, but before I end this posting: a clip from Sergio Aragones, from the very first issue of his creator-owned comic book Groo the Wanderer, from the halcyon days of the early ’80s:

Sergio Aragones on Intellectual Rights

I suspect that Sergio actually says what I’m trying to say here much, much better, and definitely more succintly. Even if he doesn’t speak English. Must have something to do with the graphic medium and a picture being worth a thousand words, or something like that.

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3 Responses to “IP wants to be owned”

  1. Tina Says:

    I was searching the net for something else and ended up here. Interesting blog! I just couldn’t help it, I had to comment on your “easy” business models. I see your 2nd solution as a nightmare! Even starting a company is not free, running it surely is not. I can’t quite see how it would be easy to have continuous discussions with share holders to dilute their shares. A good layer in the first negotiations would be essential (exit strategies, agreement on dilution etc). I don’t know about Finland but I guess you also have to pay the government every time shares change hands. And also you have to pay for changing the article of associaton (amount of shares belongs to this category). I can’t see this done if the company does not have money from the start. And I also can’t see that almost strangers could succesfully negotiate about money without serious disagreement – it is difficult enough to agree with friends as who pays for lunch 🙂 But good luck to both you and this Jarkko, I’ll vanish back to cyber space now!

  2. Eero Tuovinen Says:

    Well, in practical application of the share economy I’d probably just lump the various transactions into annual ones, while keeping informal records for day-to-day purposes. Other than that, I don’t think shares as salary would be taxed that differently; they are all benefits, it doesn’t make a difference by law hereabouts whether you pay it in money or cows. That’s as far as I know, anyway.

    As for strangers being successful in negotiations – I’m not so certain that I want to work with people who aren’t. Preferences of course may vary, but artistic disagreements are difficult enough without saddling yourself with a team that can’t agree on monetary issues. For some reason folks often pass on requiring this trait in their coworkers, but I’d like to have mature, sane people to work with, not the kind of half-insane children Jarkko has, indeed, described to me as the barrier to any kind of profit-sharing arrangements. If the only reason you can’t have a sane and just corporate structure is because your coworkers will become madly jealous and start killing each other with staplers at the office, then you obviously need to switch coworkers, not corporate structures. (And what are you doing with an actual office and staplers anyway in this era, anyway?)

    Of course this is all academic in that I’m not nearly an expert in this sort of thing, and the practical application of any sort of corporate structure will have to be harmonized with local law in a zillion different ways. So in that regard this is just academic musing for me. But thanks for the different viewpoint, anyway.

  3. Ben Lehman Says:

    It seems remarkably easy to generate an IP ownership structure where one person pulling out doesn’t ruin the project… just give rights to the company to use the IP for the project.

    I imagine that there are probably other things at stake.


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