Guess what? Making Money Is Hard
Chalk this up as a post about something that was a big deal on the internet three weeks ago. There’s been a lot of hoopla over in the video game community about Valve setting up a system for paid mods in a game called Skyrim. [Tycho from Penny Arcade] (http://penny-arcade.com/news/post/2015/04/29/ethically-sourced “Ethically Sourced”) chimed in and made an interesting comment:
As someone who pays their rent with ostensibly “creative” work, I know a lot of people who supplement their income with creative endeavor, and so hearing that mod creators were being paid twenty-five percent of the purchase price for this content wasn’t as shocking to me as it must have been for others. That’s every day for many creators: in truth, most would be paid a single sum as many as three months after they made the work, and would not be remunerated for subsequent sales at all. I’m not saying that’s awesome, or anything. People have this very strange thing they do where you will make a statement of fact, and then they will imagine that you are advocating for that fact, when you are actually making an observation. But, knowing the state of play may help reveal some of the decision making. Sometimes, when you’re trying to make a new version of something, the bugs get ported too.
And I thought, yeah, I know that’s right. Then, I went and read [the surrender/announcement from Valve.] (https://steamcommunity.com/games/SteamWorkshop/announcements/detail/208632365253244218 “Valve Surrenders”) And I read some of the comments. This one, from user “Funky Munky,” really blew me away:
Why exactly did Valve think they were entitled to 30% of the profits? All they (Valve) did was create the infrastructure. 30% is just extortion. That’s like paying the government for every kilometre I drive instead of paying registration. Rediculous greed.
We have a tendency to see numbers and make gut-level calls about whether or not they are “fair” without understanding the context. I think that’s what the Penny Arcade post sublty points out. I don’t have a lot of context for the video game industry, but I do for the book industry.
Amazon, for instance, takes 55% of the retail price of a print book as its “share.” Fairly across the board. “All they did was create the infrastructure!” one could argue. One wouldn’t even be wrong — but it doesn’t matter. The infrastructure is worth whatever they say it’s worth. You can choose to use it or not, but if you choose to use it, it’s worth 55%.
Big, New York publishers pay, typically, 6% royalties on paperback books — and a lot of the branded series are done as work for hire — a flat fee, no royalties. So, buy one copy or ten, the author got paid what they got paid, and the publisher is either making bank or still trying to figure out where they went wrong.
It’s hard to make money
It really is. In the video game example we’re discussing, Valve “only built the infrastructure,” but no one complaining has any clue what that cost. The accounting system alone, to take payments, divvy them up properly, pay all the parties involved, and remit proper tax paperwork, is going to eat at Valve’s “extortion” level profits. Then you have server costs, customer service costs, development cost that’s being amortized over these sales.
At it’s core, this is what I wish we would decide as a community:
It’s worth paying people for really great work.
I see it locally. I see it in my own life. I certainly see it on the internet. We all think we deserve access to great stuff for free. We’re spoiled. We wouldn’t dare walk into a craftsman’s workshop and say, “Hey, that beautiful piece of metalwork? The one that you made because it’s your passion? I’ll take that for free.” But we do it to people who create electronic products all the time. We’re like Bob and Doug McKenzie, trying to get our beer for free.
The best use of your money is paying for good things. Electricity, water, food, art, movies…all of those are good things. So are great game experiences, great reading experiences, great music. Pay for the stuff you love. Chances are, if you do, you’ll get more of it. That seems pretty simple. But understand that there’s lots of people involved in the sale. And everyone needs to get paid. If you understand that, then you understand that it’s hard to make money.