Team Member Contracts & Profit Sharing

I’ve got two questions related to team member contracts so I decide to answer both of them in the same post.

Question:

Let’s say I want to make a team, a programmer and a graphics guy. What should the share in money be? What is the best solution when it comes to money in teams?

Answer:
I believe that the best policy (for indie team) is this: You – as the game producer – should make sure that everyone in the team benefits. Don’t make this mistake that some team leaders/idea owners do: never hog the profits so that you get most of the profits just because you want. Aim for win-win situation. Ask and discuss openly about the profits. I generally think that artist (sounds & music) should get one time payments and rest is shared evenly among programmers/producers depending on the contributed tasks/hours they spend. Basically – if all team members put roughly 10 hours per week then each should get an equal share. I don’t believe making such a big noise about who is the most talented or who contributed 70 hours and who 80 hours . If your team is focusing too much on how to split the revenue then I think there’s something wrong with the team. You could make a plan and set profits according to the finished work (like gameplay coder could get more than interface coders). Make rough guidelines. Remember to include profit sharing also in the updates – usually game programmers need to update & fix bugs in the game after the release. Make sure you take this into consideration when producing the game. That is actually one reason why I think one-time payments for artists is good: they usually don’t do much work after the initial launch.

The most important rule (in everything in life): Would you accept the suggested profit sharing if you were in other person’s shoes? Think how you would feel if you were the artist/programmer doing the assigned task and getting the profit you suggested.

I won’t go into greater details for bigger companies… but generally I think hourly rates and team bonus systems are a good way to go.

Question:

I am trying to get into the mobile game market and to do so, I definitely need to hire an artist. Now, some artists will sell their work for a flat rate. But does this mean that the work now belongs to you? I know that this depends on the artist and that it all should be worked out before hand, but some tips or links to more information would be great.

Answer:
You partially answered to your question: yes, it depends on the artist – and the contract you make with them.

I would simply define this in the contract: Write down that all rights of the artist’s contribution is owned by you (or your company) and that artist reserves only the right to show the art in his portfolio (if he wishes to do so). All rights are totally transferred to you and the artist cannot re-sell or anyway modify the work for another company. I would hire a lawyer if you need to do proper paperwork. There’s a guy called Tom Buscaglia, a game attorney available for indies. Check it out in case you need more assistance.

7 thoughts on “Team Member Contracts & Profit Sharing

  1. Thanks Friend for your lighting. please give me authorize to put your articel on my blog with your link.

    Best Regards
    Achmad Sofyan S.Kom

  2. @Jay: Thanks for the comment. Really nice.

  3. Protection? Nothing – nothing solid at least. (You can try contract papers… but those won’t really count – if guy from let’s say China joins your team and you are from US – what are the chances to legally bind the other member to do work? There’s none. In real life.)

    I’ve noticed one thing: When you trust others, they trust you. I wouldn’t concentrate on logging everybody’s activities – that’s simply impossible. If your time (and everybody’s time in the team) goes to arguing who should get what instead of trusting others to do their best – your team is not ready to make games. You can create rough guidelines & responsibilities to help divide the share & workload – but that’s about it. You really cannot *know* that people would do anything (or anything *productive* – I’ve seen that too) at all… you just have to focus on positive aspects and motivate people to act. Let people have responsiblities – mutually discuss & agree on them. Base profits on that. Have everybody to agree. Make sure the contract says: “if person leaves, then his share is divided among others and the team can use his work”.

    You cannot have solid protection for this. That’s why you should screen the people who want to join your team. I think I’ll put another post about that subject in the future.

    I recommend checking Leadership books: Kenneth Blanchard has written some excellent books about the subject. The One Minute Manager series is fun to read & very practical to use.

  4. I read a lot of advice telling groups to make agreements about compensation and ownership before they actually start the game. If a group of 5 decides each member gets say 20% ownership and profits, what protection do they have against members dropping out, or simply not putting their fair share of effort in to the project?

  5. At Singletrac, back in the glory days of Playstation 1 development, we had a great profit-sharing plan that unfortunately we never saw enough profit to really receive. But the concept was that a portion of the profits would simply be put in a profit-sharing pool, and that EVERYONE would get a portion of it weighted by their base salary. So even the office manager benefited if the games succeeded (the idea being that she helped everyone else be more productive).

    The plan worked pretty well the first couple of years – everyone was focused on the proper goal (making sure ALL of our products were successful), and put in some insane amount of effort to giving them the best chance to succeed. There were few complaints about resources getting shuffled between games – the success of the other team’s game had the chance to go into your own pocket.

    At other companies I saw that it was more project based – which meant the most experienced team members always gravitated to the low-risk sequels instead of the new products which really needed the most attention. More abstracted (and CAPPED!) bonus plans replaced profit-sharing or royalties, which further eroded the personal stake the team members had in even their own projects.

    In the world of indie game development, of course, it’s a tougher call. Something like 95%+ of first-time indie projects never see completion, and most that do never see a profit. It’s pretty high-risk. It’s very difficult to attract qualified team-members based on promises of shared profits. That doesn’t mean they shouldn’t get a share if you do manage to succeed, of course.

  6. Thanks that answered my question. Just one comment:
    //Would you accept the suggested profit sharing if you were in other person’s shoes?
    This is a hard question, if I were an unknown artist in the industry I would be glad to do something for free but if I were really good… So, yeah it always depends on who the person is.