Successful profit sharing for team members?

watermark

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Many artists and composers refuse to agree to a profit share plan where they get paid after the product reaches a certain number of sales etc. I assume its because we hear a lot of horror stories of how artists never get paid in the end because the game never got made or had lackluster sales. Although it does have risk, I don’t think the model itself is wrong as it’s been successfully used in other industries.

So has anyone been part of a successful profit share plan? If so, what made it work?
 

Wavelength

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Just speculating here, since the only "profit sharing" I have ever been a part of has been more of a small bonus that comes in addition to wages/salary. But I think a few factors are important in this kind of contingent-payment relationship:
  • The leader has to have a well-established reputation - this gives the team a reason to trust him (or her), but also gives him an incentive to stay true to his word in order to keep that reputation spotless.
  • The team has to have a way to go after the leader to be made right (or at least to bring the leader down with them) if the leader renegs on their responsibilities, especially the responsibility of paying out the money once profit is obtained. Factors such as co-location, and working as part of a bigger company, make this a lot easier. Having sales go to an escrow can help, too, I imagine.
  • The chances of the project succeeding have to be big enough, or the potential payoff for success has to be large enough, to justify team members devoting their time and energy to the project in the face of a potential "honest" failure (where the project falls apart halfway or the end-product flops).
For all of these reasons, a global RPG Maker forum is an especially bad place to do Profit Sharing agreements, which is why we don't allow profit-sharing offers (except as a bonus in addition to immediate payment) anywhere on our boards.

But even with all of those things in place, agreements can sometimes fall apart if people don't have enough moral fiber: see Hollywood Accounting for some great examples.
 

Andar

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To agree to work in shares requires all people involved to have trust in each other, and are willing to put in equivalent work.
That trust doesn't happen from itself, it requires history - either personal (friends) or professional (several finished games by the project lead AND similiar proof of work for every artist/coder/developer who will be part of the team).

And even then things can go wrong - for example there is a game "Fortune's Tavern - the fantasy tavern simulator" made with RMXP that was available on Steam for a few years before it had to be taken down from the shop because the Team that developed it broke apart and couldn't agree on future sharing of the profits.
Because yes, if you go commercial with a shared copyright any one team member can block the future sales of the game for everyone else simply by revoking his/her part of the shared project, and everyone else will loose that income as a result. So you not only have to trust everyone to keep their work promise but also trust them not to leave the agreement and block everones income out of spite.

So basically that model can work, but has a lot more problems that people think it has.
I think the absolute requirements for this are a low number of team-members (every added member increases the risk of a clash of opinions) and a lot of history between all the team members.
And every team member needs to have a secure income outside the project as well, because "profit shares" in game development also means that you'll have to wait years before you get the first meager compensation for your work.
 

BCj

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Just out of curiosity - if someone drops out and tries to block your income, why can't you replace the work that person has done with your own? E.g. if it's scripts, get someone else to write them?
 

Andar

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Just out of curiosity - if someone drops out and tries to block your income, why can't you replace the work that person has done with your own?
you can, but for that you would have to know what that work was (which is sometimes difficult, especially if it is not only resources but also design decisions of a team) and you would have to be able to do that (for example replacing a lot of artwork if you aren't an artist yourself? replacing plugins if you don't know to code).
And even that will not be enough if the person who parts had done too much work on the project, because then it would be easier to do something new from scratch than to find every case of work in the project and on the database and on maps and so on and replace it with something else while still keeping the game working.
 

watermark

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@Andar Very useful points! I’ve always paid upfront for group projects, but being a poor dev :p theres very limited funding to do everything that’s needed. So I’ve been thinking of how this might work. I absolutely intend to honor my agreements, but like you mentioned, a participating artist can only count on my word for that. Perhaps actual legal agreements would help? Still, contracts may be invalid between countries anyway. Trying to sue someone on the other side of the globe is impossible unless you got a big time lawyer friend, even then its probably not worth the fees.

Another way I think might be possible is to work toward a small goal. Like say get a small demo ready for Kickstarter, and if it gets funded then continue with the big project. This way its limited risk for everyone.
 

Eric_SD-RPG-Studio

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Hopefully some days some smart people will create a platform that online strangers can work as a team with fair profit sharing, and members don't need to trust each other, they just need to trust the system.
 

Andar

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@Eric_SD-RPG-Studio sorry, but that can't work either - how is that platform supposed to enforce problems like one team member refusing (or simply being unable due to real problems) to continue working on such a project?
and that is only one of the possible problems with that idea, another is that such a platform needs to be paid, and too many team projects fail without any problem simply due to the fact that the people involved underestimated the work.

just look at kickstarters - they are basically a primitive form of that idea, and even if a kickstarter is founded correctly that money might simply be lost to the supporters if the project still fails...
 

eluukkanen

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Simply I would instead of profit sharing, I would make one-time payments. Good both for team leader and team members. With profit sharing, if its not a big success game right away, the amount each one gets is small for team members to get anything out of. Also in profit sharing, someone needs to bill that all the time (extra work) if its not automated. (still in that case it has to be setup)

With one-time payments team members get the exact amount you agree on and the team leader gets to keep what the game itself makes. Win-win for everyone if it is made right.
 

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