ROYALTIES AND TERMS of PUBLISHING
We like our designers and we like to pay them fairly. In general, we offer royalties as a percentage of the actual selling price (which, by the way, is not necessarily the retail price). A typical royalty rate will be in the range of 7 to 10% of selling price, paid out annually. Depending on the game and many other factors this percentage could be higher or lower. We are even open to revenue sharing for designers who have a near complete product, are going to be heavily involved with the project and who bring great marketing with them.
In addition, the designer will be given a number of copies of the game when published to do with as he pleases and the ability to purchase additional copies at distributer cost (really, we want you to promote the game as well, so this allows you to sell copies and promote it too).
Rates are, of course, negotiable and the final rate will vary from game to game and designer to designer based on many factors including (but not limited to);
- completeness of the game design,
- the amount involvement the designer will have
- the designers experience and reputation
Some terms and definitions;
Advance: An advance is an upfront payment that comes out of your royalties until it’s been fully recouped. So if you get a $500 advance then you will forego the first $500 of your royalties. Sometimes it might not be an advance but an actual signing bonus which doesn’t come out of your royalties. Generally speaking we do not provide an advance on royalties except in extremely rare cases, nor do we provide a signing bonus.
Percentage/Royalties: This is what you will get paid for each game that is sold. You will be given a percentage based on their selling price – not retail price! If you are an unknown or first time designer, expect the royalties to be on the lower end of the scale.
Copies of the game: There’s more to this than just how many copies of the game you get when it’s been published. You will have a clause in the contract that states that you can buy the game directly from the publisher at any time at distributor cost. If you’re planning on doing a bit of your own marketing (which you definitely should), then you’re going to want access to more copies of your game for cheap.
Duration and extent of the rights licensed: Another important aspect of the agreement between the publisher and designer is the duration and the extent of the rights licensed. The duration is usually a set period of time (3 or 5 years) from the time the game gets released. It will also include an expected publication timeline and define what happens if the publisher fails to publish the game within that time. Most contracts state that they are automatically renewed for a similar or shorter (6 or 12 months) time after the initial period if none of the parties object to it.
As a publisher we ask for exclusive rights to the game published : we don’t want to compete with another publisher to sell the same game.
The contract will also include the geographic area and/or languages that are covered, and the status of any other rights : digital versions of the game, use of the name, promotion purposes, merchandising items, etc. We will almost always ask for exclusive worldwide rights, in all languages, as well as rights to the use of the name and merchandising items.
Contract end: A contract is usually just a piece of paper sitting in a folder for as long as all goes well. It is generally only pulled out for reference when paying royalties, to check its range and duration, and when it ends. A contract can end in several ways and for several reasons. It is at that time that the contract becomes very important. Making it easy and painless to deal with the contract end for both parties ensure you only end that contract and not your whole business relation and that you can still work together for future projects.