Does Crowdfunding make a game commercial?

[Lihinel]

(Not sure if this is the right forum or if it should go into commercial games discussion)

As the title suggests, I am curious if a developer could use crowdfunding or donations to acquire funds for say custom assets or script/plugin commissions (or even just resource packs), but still keep the game in the non-commercial category by releasing/publishing it for free and have all the benefits and/or drawbacks that follow from it.

This isn't just a rhetorical question, as the games status would influence whether resources classified as free for non-commercial use could still be used.

 

[Poryg]

No, I don't think so. Crowdfunding doesn't generate any sort of revenue or income as long as you don't run away with the money.

 

[MushroomCake28]

It always depends on the interpretation of the word commercial in the contract, or on the laws (or customs) of the jurisdiction if the contract is silent (don't even get me started on international law if both parties come from different jurisdiction). Some could interpret commercial as earning any form of revenues from the project or anything accessory to the project. Others could interpret "commercial" as only when the project itself creates directly revenues (I'd that's rarely the case lol). More often indirect ways (such as crowdfunding for the game) are also considered commercial. Now there's also the issue of either the funds are received for the game, or if they are just accessories to build the project (so purchasing assets). Anyways, if both party disagree on any of the mentioned issues (and believe me, there are more), you'll have to fight it in court (although I highly doubt anyone in the RPG Maker will have to go to court, but hey, you never know).

So my advice: always consider donations/crowdfundings/*******/etc like commercial, even if the price tag is 0 but you gained some money through other means, or even if your project is intended as a charity or other non-profit organisation, (would probably be considered non commercial, but laws for non profit varies depending on the country). The moment you receive money = commercial. That way you'll be safe no matter the interpretation of "commercial".

SOURCE: Currently a law student.

ADDITIONAL FACT: If we were in court and I was the asset creator's attorney, I would probably argue that any money generated by any means in any matters related to your project would make it qualify as commercial. In fact, how you spend the money (either for your personal gain, or to simply invest into your project by buying assets) has no impact on the qualification of commercial of not of your project.

 

[Holder]

Being crowd funded pays for the creation process, that wouldn't define if it's commercial or not. If it's then to be sold that would make it commercial, but you can still release a free non commercial game if you've paid for content within it (like scripts, music or graphics).

 

[MushroomCake28]

@Holder Depends on your country. For many legal jurisdiction, the fact of gaining money alone is enough to qualify a project as commercial. The way you generate the money is irrelevant (game sales, *******, crowdfunding, etc.) as long it's related to the game. Also, how you spend the money is also irrelevant to the qualification as commercial (so it doesn't matter if the money is used to buy assets, pay employees, for personal gain, etc.).

 

[Andar]

it completely depends on the terms-of-service for whatever resource you plan to use.

Some people (like victor for example) have expressively stated in their terms of use that they consider crowdfunding and donations to make a game commercial, requiring payment for the use of their resources that were only free as long as the game developer does not generate any income from any use of that game. And yes, on the specific blog page for the TOS victor expressively states that even a donation button on the same website as a free game is enough for him to consider it commercial.

As soon as something like this is entered into the terms, it does not matter what your country says - the terms of use for that resource always take precedence over more general laws.

The question only comes up if the terms from someone do not specifically define what they consider "commercial" or "non-commercial".
In such cases the country laws of the person who made the resources (or in very few cases the country where the website is hosted) will make that definition - it will NOT be your home countries law unless one of those countries is yours.

So in a lot of cases the advice around here is yes, please consider crowdfunding to be commercial - because in a lot of cases it is, and it is usually more work to work through the legal books to find out if the resource in question can be considered an exception than to find an alternate resource that is usable.

release a free non commercial game if you've paid for content within it (like scripts, music or graphics).

only if you paid for the resources yourself. Having someone else pay for those resources is the same as selling the game to pay for those resources.
"Commercial" has nothing to do with making money, you can easily loose money on a commercial project if you paid too much for creating whatever you sell.
If you get money to make something, then that is often considered to be enough to turn it commercial even if you don't get as much money as you paid.

 

[Windows i7]

The question only comes up if the terms from someone do not specifically define what they consider "commercial" or "non-commercial"

I've seen in many EULAs that there is a section dedicated to defining terms in the context of that EULA. Sometimes it is done when the term first appears by defining it in parentheses. A good EULA IMO will always do this sort of thing to avoid ambiguity.

 

[MushroomCake28]

The question only comes up if the terms from someone do not specifically define what they consider "commercial" or "non-commercial".
In such cases the country laws of the person who made the resources (or in very few cases the country where the website is hosted) will make that definition - it will NOT be your home countries law unless one of those countries is yours.

Mostly true (as for most of what you said, there's just one exception to the "the contract is the law of the parties" rule, which is when a clause if forbidden by the home country, in which case the law will be above the contract of the parties for that clause). However, in most most case of business transactions between two "companies" (or at least two people on the "same" negotiating level), the question of which jurisdiction has authority is trickier. General rules (again, it may differs from countries, but these are general rules):

1. The competent jurisdiction to hear the case is the one of the defendant.
2. The competent jurisdiction is the one of the weak party (employee vs employer, normal person vs company or government, etc.)
3. The competent jurisdiction is the one pre-agreed or agreed by both parties (rule #2 may make this rule null in some countries though).

But again, this is a complicated question and the answers depends on so many factors like the quality of both parties, the contract, the domicile of both parties, if they have a different business location, etc. So much simpler to simply consider "commercial" as everything in which you receive money (unless explicitly agreed otherwise, and you better have it in writing lol).

I've seen in many EULAs that there is a section dedicated to defining terms in the context of that EULA. Sometimes it is done when the term first appears by defining it in parentheses. A good EULA IMO will always do this sort of thing to avoid ambiguity.

Yeah, well the problem arises usually when the term isn't defined, and it may happen more often than you think lol. It's not necessarily a bad thing to not define everything: contracts that define everything age very badly in general, and their application might be very limited (often the business relationship evolves and both parties might need to do stuff they didn't think about when they wrote the contract). But again, a contract that is too imprecise is also a terrible contract. The sweet spot is in between. One of my law teachers said that most common mistake from freshly graduated attorneys is making contracts that are too rigid though.

 

[gstv87]

technically it is commercial, because crowdfunding falls within the production aspect of the work.
except, the producers involved (through donation) won't expect to profit from the commercial use of the work.

double check the wording of the contracts, because terms like "production" imply "retribution", often in monetary form, and if for some reason one of the contributors decides to argue unfair use of their "funded production backed up by their monetary contribution", they'll most likely target the profit made by that work when sold to parties other than the ones actually funding the production.

*concepts*.
.....and,... *money*
that's why I hate economics.

 

[Holder]

it completely depends on the terms-of-service for whatever resource you plan to use.

only if you paid for the resources yourself. Having someone else pay for those resources is the same as selling the game to pay for those resources.
"Commercial" has nothing to do with making money, you can easily loose money on a commercial project if you paid too much for creating whatever you sell.
If you get money to make something, then that is often considered to be enough to turn it commercial even if you don't get as much money as you paid.

I put Commercial as a state of simply being sold. As only way to access the game is via a transaction.

Look at it as a charity-esk situation fundraising to release a free thing. Would that then still be considered a commercial venture? You'd get money to pay for lets call it assets then they become transferable though your media to then publish (or rather put out there) available for no transaction.

The only thing I don't agree with is when you say it's the same as selling the game to pay for the resource. You've been given money on the basis of paying to have something created not for what will be distributed either freely or (can't think of any other word) commercially. Like how certain funding sites don't allow for you to take the money and use it to pay to learn how to do things. You're asking for money to help create x, y and z, then with that what's been created you construct something to then give away or sell.

I understand that some ToS can have different takes on this, but again each to their own.

 

[MushroomCake28]

@Holder That's the thing. Your definition might not be that of the contract, or of the other party. And believe me, you do not want to go to court for a silly reason like this. Better to be safe.

 

[bgillisp]

Right. Because last time I checked, under US law if you collect $0.01 or more from the game (either during development or after it is made) it is considered commercial. So any crowdfunding automatically makes it commercial.

Best to just assume it will be commercial rather than risk a long court battle and losing all your crowdfunding revenue in lawyer fees.

 

[MushroomCake28]

^
Exactly my point, and the law is different for each countries (although it's usually the "you receive money by any means, it's commercial" rule). So better safe than sorry.

Personally I wouldn't mind having more legal battles: more money for us lol. (Just joking, please don't put more of a strain on our already overloaded legal system).

 

[Kupotepo]

Depend on website policy, for example, It is neither commercial or nonprofit:
https://www.kickstarter.com/rules?ref=global-footer

• Projects must create something to share with others.
• Projects must be honest and clearly presented.
• Projects can’t fundraise for charity.
• Projects can't offer equity.
• Projects can't involve prohibited items.

https://www.gofundme.com/start/charity-fundraising

It is non-commercial if you do not make you do not make a profit. However, you need to write all of what down on your crowdfunding webpage. Accountability because you might liable for a fraud crime and misuse money by deceiving.
It is considered a gift because of the meeting of the minds between a donator and a receiver. Just like someone here gives money to others. You do not draft a contract because you are volunteering to give money.

You can go to gofund page and say to people there you want money to buy assets. It is a choice of people to give your money and you are not creating a Ponzi scheme. What is legal ground someone can sue you?

However, you should ask a lawyer to make sure you everything is ok.

 

[Finnuval]

ADDITIONAL FACT: If we were in court and I was the asset creator's attorney, I would probably argue that any money generated by any means in any matters related to your project would make it qualify as commercial. In fact, how you spend the money (either for your personal gain, or to simply invest into your project by buying assets) has no impact on the qualification of commercial of not of your project.

In my neck of the Woods you'd win the case based on that. So yeah depends on local Laws.

The basis being that anything you do related to said project is considered part of said project and money gained with ANY part of said project would therefore be considered commercial gain.

 

[bgillisp]

@Kupotepo : If that definition were correct many games (and movies) would be able to say non-commercial and that would change a lot of things. But they can't, so I think your definition is wrong. Plus in my country all you need to make is $0.01 anytime for the game for it to be commercial. Doesn't matter that the $0.01 is not enough to make a profit, you are still a business now and made some money.

Also I'd not put much stock in the terms on the website, as any lawsuit could challenge those definitions and win still. I mean I can scream a game is non-commercial all I want, it doesn't make it non-commercial though.

Basically though, since crowdfunding is dealing with an international site, unless you want to restrict what country can donate to you, you have to go with the strictest definition from every country that can donate to you. Since some countries say a game is commercial the minute it receives any money, that is the definition you should probably use.

 

[Finnuval]

@Kupotepo as @bgillisp points out its not about profit, rather its about reveneu.

 

[bgillisp]

Right.

Also I did say $0.01 or more, but oddly enough it is possible to send someone $0.0001 where I live. Not sure what someone would do in game development with a 1/100 of a penny though. And the only way to do it that I know of is to give them 1 share of a stock worth $0.0001 as stock shares go that low. So I really should say $0.0001 or more.

And yes, someone did just give someone a stock share, hence why I thought of it. An NFL player gave his offensive linemen shares of Amazon stock earlier this week.

 

[Kupotepo]

@bgillisp, I live in the US lol. You are view @Lihinel as the business entity. http://uschambersmallbusinessnation.com/blog/business-license-online
You are corrected on that which you will need to clear asset to IRS.
Obtain an Employer Identification Number

The requirement is not reached as a business entity.

Someone back me up too!
https://www.quora.com/Do-I-pay-back-the-money-I-get-from-crowdfunding-websites

I see as the transfer of money freely between givers and receivers. I see as you giving to school to help people other students from their house burning down. The question that I still not sure is do you have to report to a tax collector?

 

[bgillisp]

I think you are confusing something else vs the definition of commercial for purposes of asset use. For purposes of asset use, the game can be considered commercial if you ever receive any cash from it, period. Which means legally someone could go after you and say you made some $ so it is commercial so you can't use this asset as it was not intended for that.

So probably just better to just say commercial = you received money for it. Unless someone wants to risk it and then spend $$$$ in legal fees trying to fight it in court, and the fees would probably cost you more than you ever made in crowdfunding.