The concept of sharing future revenue is a proven one in buisness today.

It involves registering a company, splitting ownership between founders and investors, offering stock options to employees and writing contracts which govern the IP ownership rights. These contracts must also transfer rights for any property that was produced before incorporation.

This alone carries expenses and considerable effort, at which point investment, even if relatively small, becomes very tangible and real. For this reason, the founders or owners carry huge risk, since they are the ones who receive initial investment. The revenue they are pitching is not fictional or potential, their business plan requires them to generate revenue and it describes how it will be split. The very second investors feel venture isn't meeting its goals, they will prefer to liquidate it and write off sunk costs.

Trying to discuss per-pixel share however is... impractical.

It's much easier for a couple of friends to use some form of incorporation while still in school so they can bill for the stuff they hack together, building everything from scratch as shared ownership and by splitting profits equally. There are indeed many cases of such ventures, but they imply close personal relation so that other issues don't crop up. Even then, they often do as soon as first real revenue shows up.

Basically, how do we stop the project owner from assigning ridiculously large numbers of shares to contributions made by himself or by people who would pass a cut of the monetary gains back to him?[/quote]
By asking for money in advance. As worker/employee you don't care about future - your bills are due today. This is definition of greed. Lust for some big money without any tangible proof. Historically, nobody won this way.

In business, unless you have a stake (legal, on paper, with real institutions, in compliance with laws) in venture, you have no stake. So take the money and be done. It's the most you will ever see.

The scenario you mention above was solved by laws with emergence of Robber Barons. Laws cover this problem for incorporated entities. So to begin, one needs a registered company with everything that comes with it.

Four seconds of googling does wonders...

Once again, revenue sharing is far too complicated already once you're actually making money that complicating things further by saying "X gives Y amount of profit and by doing Z you increase your revenue by A" just gives everyone a hard time and leaves a bitter aftertaste if things go south.

complicating things further by saying "X gives Y amount of profit and by doing Z you increase your revenue by A"

No one has said that.

[quote name='forsandifs' timestamp='1301331733' post='4791397']
Under the system we propose said contracts would legally enforce a sharing of any monetary gains amongst the contributors proportional to the contribution they made. The workers are not paid zero.

That would be an unfortunate wording, especially on an open project.

One image is larger than another, are they equal contributions? One person draws a 16MP wall poster while another draws a 16MP texture sheet, are they equal contributions? One person generates placeholder animations that are used through the entire development cycle yet are replaced at the last second, since it doesn't ship does this qualify as a contribution?

One programmer submits 50000 net lines of source code relating to hundreds of minor features, yet there are many bugs; Another programmer submits 5000 net lines of code and they are bug free and critical to the game; A third programmer has a net of -7000 lines of code, and by removing and simplifying has radically improved both the quality of the code and the performance of the game; How do you compare these contributions?

A producer contributes thousands of hours to getting the game finished, negotiated publishing deals, submitted ESRB ratings, and managed the funding through the project, yet has not contributed any code or data to actual game. What is their proportional contribution?


More importantly, if your organization was sued to ensure that the proportion was correct, how does this get verified?

This is why it is much better to make compensation entirely discretionary.
[/quote]Under my proposed scheme everyone IS paid, but they are paid in credits, and how profit sharing relates to credits can be well defined. So I don't see how this is different from a more regular paying setup... if someone does work which isn't good, you fire them. You either set prices on small tasks or agree hourly rates with people and make sure their work/hour is of high enough productivity/quality. If you fire someone after a week or two, that small amount of work they did is still contributed barring major issues, just like if you hire someone for a real job and decide they're not right for it in the first week... they still get paid for that time.

[quote name='DarklyDreaming' timestamp='1301353637' post='4791524']complicating things further by saying "X gives Y amount of profit and by doing Z you increase your revenue by A"

No one has said that.
[/quote]
Oh?

[size=2]The way I might approach this is to say that each piece of work contributed would be worth a certain share percentage. Say for example a 3-D model consisting of 1000 polygons might be worth 0.0001% of the profit. Another one consisting of 2000 polygons might be worth %0.0002 of the profit. Or a 3 minute sound track is worth 0.0001% , etc...[/quote]

That sure sounds like it.... (X amounts of polygons gives Y amount of profit and you can increase it by A amount if you do Z polygon increase or whatever)

[quote name='frob' timestamp='1301332954' post='4791406']
[quote name='forsandifs' timestamp='1301331733' post='4791397']
Under the system we propose said contracts would legally enforce a sharing of any monetary gains amongst the contributors proportional to the contribution they made. The workers are not paid zero.

That would be an unfortunate wording, especially on an open project.

One image is larger than another, are they equal contributions? One person draws a 16MP wall poster while another draws a 16MP texture sheet, are they equal contributions? One person generates placeholder animations that are used through the entire development cycle yet are replaced at the last second, since it doesn't ship does this qualify as a contribution?

One programmer submits 50000 net lines of source code relating to hundreds of minor features, yet there are many bugs; Another programmer submits 5000 net lines of code and they are bug free and critical to the game; A third programmer has a net of -7000 lines of code, and by removing and simplifying has radically improved both the quality of the code and the performance of the game; How do you compare these contributions?

A producer contributes thousands of hours to getting the game finished, negotiated publishing deals, submitted ESRB ratings, and managed the funding through the project, yet has not contributed any code or data to actual game. What is their proportional contribution?


More importantly, if your organization was sued to ensure that the proportion was correct, how does this get verified?

This is why it is much better to make compensation entirely discretionary.
[/quote]

Under my proposed scheme everyone IS paid, but they are paid in credits, and how profit sharing relates to credits can be well defined. So I don't see how this is different from a more regular paying setup... if someone does work which isn't good, you fire them. You either set prices on small tasks or agree hourly rates with people and make sure their work/hour is of high enough productivity/quality. If you fire someone after a week or two, that small amount of work they did is still contributed barring major issues, just like if you hire someone for a real job and decide they're not right for it in the first week... they still get paid for that time.
[/quote]

The biggest difference between your scheme and a normal pay system is that your landlord, utility company, grocery store, etc. won't accept credits.

Another difference is that if you get paid in cash, you know what your contribution is worth. If you get paid in credits, you have no idea what kind of compensation you'll get, if any, because your compensation is 100% dependent on sales. So if the project leader offers me 100 credits to do some difficult and complicated work, and I refuse, and then he offers me 10,000 credits to try and persuade me, the lead hasn't actually offered me any more money at all, but has devalued the every existing credit to date including my own.

Because a massive amount of work needs to be done before the game can even potentially be sold, inflation can explode at any time after I've already negotiated my "compensation" and before I even have a chance to see a dime, reducing the value of all the work everyone has already done.

And a producer/project lead/whatever can still assign themselves ever-increasing numbers of credits, artifically maintaining or inflating a set percentage of revenue generated by the project, by drawing that money from the "compensation" held by every other worker. With cash, this doesn't happen in the same way, because if you're out of money to pay people you aren't going to get more work done, so you can't force increases in your own compensation this way.

This also introduces potential for crazy lawsuits. If the project leader decides to delay publishing the game to add more content, issuing more credits and devaluing all the ones I already have, but I feel that the game should be released now and an expansion released later, can I sue? And what would I sue for? The ability to force the game's release, or for some credit re-valuing scheme to protect the "value" I have?

The same is true in the other direction as well-- if a worker thinks that the game was released too early, impeding sales and the compensation I get, can I sue to force additional development to improve the game, either for more credits or to improve the remuneration I get off the credits I already hold?

The biggest difference between your scheme and a normal pay system is that your landlord, utility company, grocery store, etc. won't accept credits.

I didn't say it was exactly the same, merely that it keeps track of things in an auditable way.

Another difference is that if you get paid in cash, you know what your contribution is worth. If you get paid in credits, you have no idea what kind of compensation you'll get, if any, because your compensation is 100% dependent on sales. So if the project leader offers me 100 credits to do some difficult and complicated work, and I refuse, and then he offers me 10,000 credits to try and persuade me, the lead hasn't actually offered me any more money at all, but has devalued the every existing credit to date including my own.[/quote]That's why it's higher risk. In a regular job you get paid $X regardless how well it sells. In this scenario you might get paid $0, or $100k, or you might simply get a dribble of 'royalties' for several years.

Because a massive amount of work needs to be done before the game can even potentially be sold, inflation can explode at any time after I've already negotiated my "compensation" and before I even have a chance to see a dime, reducing the value of all the work everyone has already done.[/quote]Well duh.

And a producer/project lead/whatever can still assign themselves ever-increasing numbers of credits, artifically maintaining or inflating a set percentage of revenue generated by the project, by drawing that money from the "compensation" held by every other worker. With cash, this doesn't happen in the same way, because if you're out of money to pay people you aren't going to get more work done, so you can't force increases in your own compensation this way.[/quote]I think it would be pretty clear this is happening and it would make you liable to get sued. Some rules on this would be in the contract, I don't think it's a show-stopper.

This also introduces potential for crazy lawsuits. If the project leader decides to delay publishing the game to add more content, issuing more credits and devaluing all the ones I already have, but I feel that the game should be released now and an expansion released later, can I sue? And what would I sue for? The ability to force the game's release, or for some credit re-valuing scheme to protect the "value" I have?

The same is true in the other direction as well-- if a worker thinks that the game was released too early, impeding sales and the compensation I get, can I sue to force additional development to improve the game, either for more credits or to improve the remuneration I get off the credits I already hold?
[/quote]Interesting point but ultimately the project lead is in charge and the fact you are not paid up-front doesn't change that. They are also on the credit system so the main thing is that they stand to benefit/lose just as you do from bad decisions. Of course you are relinquishing responsibility to them in this matter but that's how it is in a regular job too. And don't forget regular jobs often pay bonuses based on sales/success which are prone to the exact same issues... suing your employer because they released a game while buggy and screwed your chance of a bonus is crazy (though in USA i am sure it's happened).

Anyway this is just an idea. I might post a proper thread on the model one day, for now I fear we are derailing the original question.

Business runs on the principle of Risk vs Reward - Company founders usually take the financial risk, which is why the employees just get a salary while the founders end up owning the company. If you expect your employees to take the financial risk of starting your company then they should get the reward - equity in the company. Anything less isn't a fair reward for the risk being taken.

1. Anyway this is just an idea.
2. I might post a proper thread on the model one day, for now I fear we are derailing the original question.

1. A common one, and a very bad one.
2. No, what's happened is that objections have been posted, stating why your idea is so bad. If you want to start a business, do it in a businesslike way. Get money, and pay your people.
http://www.igda.org/games-game-september-2008
http://www.igda.org/games-game-october-2008
http://www.igda.org/introducing-games-game-march-2003
http://www.sloperama.com/advice/lesson29.htm

Business runs on the principle of Risk vs Reward - Company founders usually take the financial risk, which is why the employees just get a salary while the founders end up owning the company. If you expect your employees to take the financial risk of starting your company then they should get the reward - equity in the company. Anything less isn't a fair reward for the risk being taken.

I think that sums it up perfectly tbh. I adopt it as my opinion on the matter if I may. It presents the option of starting a company and rewarding employees with equity in the company. Any objections to that?