New OGL - what would be acceptable? (+)

[TheSword]

I know. But for small publishers, profit margins are small. Specifically, if the profit margin per unit is smaller than revenue-royalty percentage, a successful publisher can lose money, as the royalties eat up the profits. The goal of that item was to prevent this possibility.

Some other terms to prevent that eventuality would be acceptable.



Yeah, but that's a completely different arrangement. Author-publisher is not the arrangement we are talking about here. Specifically, as the author of a novel, your financial risk is limited - you don't put your own money into getting the thing printed and distributed.

For game products, the licensee is assumed to not only be doing the creating, but taking all the financial risk of publishing.

I think the difficulty with basing licensing fees above a threshold on profit, is that it is easy to work the accounts to minimize paper profits. Which I suspect is why WotC is targeting revenue. It’s particularly easy for SME’s that don’t have so many shareholders and are likely to be family businesses or partnerships. Directors can pay salaries - including to themselves to eat up any profits, albeit with personal tax implications, or they can invest back into the business - increasing its value (and their wealth) without generating profit.

A better system is to make the fee based on revenue but, and more modest and scaling as suggested - with increasing percentages only increasing on the sales over the threshold.

I would also suggest while irrevocability is just not feasible (what responsible company would bind its hands like that) a fixed term with review makes more sense. Five years then a review with the understanding that anything published within that time is safe and can continue to be sold even if the license is revoked,

After all, the other big IP’s, Star Wars, LOTR, Warhammer aren’t given in perpetuity. The license is voluntary after all, it should last for as long as it’s working for both parties.

 

[Michael Linke]

The royalty is only for publishers that make ANNUAL revenue of 750k, not life time. And they only pay the royalty on revenue in excess of 750k. And it only counts revenue of licensed works, not total company revenue. And it doesn't count sales prior to January 1, 2024. ("no royalties will be due on any income earned before January 1, 2024 – no matter how much that income is.")

Again (as I said in another thread) I really really really don't buy the idea that there are people out there selling $750k in OGL content a year that can't transition their efforts toward non-OGL content with the one year heads-up that WotC is giving them.

 

[Cadence]

The royalty is only for publishers that make ANNUAL revenue of 750k, not life time. And they only pay the royalty on revenue in excess of 750k. And it only counts revenue of licensed works, not total company revenue. And it doesn't count sales prior to January 1, 2024. ("no royalties will be due on any income earned before January 1, 2024 – no matter how much that income is.")

Again (as I said in another thread) I really really really don't buy the idea that there are people out there selling $750k in OGL content a year that can't transition their efforts toward non-OGL content with the one year heads-up that WotC is giving them.

Do they have to sign 1.1 to get that one year?

Does that potentially give up 1.0a for all time regardless of what turns up with it's revocability?

 

[Michael Linke]

If WotC's stance here is "we always intended for the OGL to empower small studios, not to provide our competitors with unfettered access to our game systems", and the way they're handling that is to let small publishers sell $750k worth of product in a year... I take back what I said earlier. This license is completely fine.

If you're a medium sized publisher selling more than $750k, but not quite enough to stand on your own two feet without access to OGC resources, then maybe split up into seperate entities, each operating under the $750k limit?
The only potentially worrying part then is the idea that WotC can use your content for themselves in the future. I bet the intent here was for WotC to user your novel MECHANICS in the future, not that WotC would gain the right to use original or licensed IP that happens to appear in your products, and if it really is just about permission to use mechanics, i'm once again actually not worried about this.

 

[Kinematics]

If you're a medium sized publisher selling more than $750k, but not quite enough to stand on your own two feet without access to OGC resources, then maybe split up into seperate entities, each operating under the $750k limit?

The license explicitly says you can't do that.

IX. J. You will not attempt to circumvent or go around this agreement in any way, such as by creating separate entities to try to evade payment of royalties.

In addition, since they can terminate and update this license at any time, there's the very high possibility that they intend(ed) to reduce that $750k royalty limit. After all, they also demand everyone report all financials if they make over $50k, so everything between $50k and $750k is open for them to decide, based on their data, that they want a piece of.

 

[Art Waring]

If WotC's stance here is "we always intended for the OGL to empower small studios, not to provide our competitors with unfettered access to our game systems", and the way they're handling that is to let small publishers sell $750k worth of product in a year... I take back what I said earlier. This license is completely fine.

If you read the full 1.1 available here on the forums, you will see that they can revoke the license at any time, and they can also change the terms of the license at any time. Anyone who has signed the new license making 50k or more will potentially be at risk of paying royalties, having their work reapprorpriated by wotc if they get too big, and then resold on the market without paying the creator royalties.

A 25% royalty kills businesses both large and small. Many 3pp's are already skating by an razor thin profit margins, some are even in the red after their kickstarter has ended due to production costs.

This affects everyone who is a 3pp publisher, and the new license will also affect anyone making content, that includes youtubers, bloggers, other vtt's, online tools, tik tok, you name it.

 

[TheSword]

The license explicitly says you can't do that.


In addition, since they can terminate and update this license at any time, there's the very high possibility that they intend(ed) to reduce that $750k royalty limit. After all, they also demand everyone report all financials if they make over $50k, so everything between $50k and $750k is open for them to decide, based on their data, that they want a piece of.

$50k in a year is not an insubstantial amount. Boutique / Cottage self publishers are probably under that threshold.

$750k of licensed product is pretty darn substantial. I get that the first book you make costs you a fortune but every book after that has a pretty darn good margin right? So when we’re only taking about sales over $750,000 that covers a hell of a lot of cost.

What is the suggested alternative to being able to terminate the licence at any time? Not being able to terminate the license? Outside of this case who would willingly enter into an agreement that would tie your hands regardless of the changing circumstances? As one of the legal posts mentioned elsewhere - from a business point of view that’s pretty irresponsible. It’s pretty rare to be in a contract you can’t get out of… ever!

Now a fixed term - with a guarantee protecting work produced in that period seems reasonable. It’s how most business leases work for instance.

I’ve seen the FAQ information that makes it clear that the clause about using your material is to stop creators suing frivolously, not to enable WOC to steal the stuff though I get that people are naturally suspicious. These clauses have been in place for a while though… are there any actual cases where WOC has stolen someone’s work for their own under a licence? From DMsGuild etc or is this just scaremongering.

 

[Kinematics]

$50k in a year is not an insubstantial amount. Boutique / Cottage self publishers are probably under that threshold.

I didn't say otherwise. It's still probably most people who would do this for a living, rather than a side hobby. And $50k is total revenue, not net. Someone who sold $50k worth of material might be scraping by on $20k personal income, at best.

$750k of licensed product is pretty darn substantial. I get that the first book you make costs you a fortune but every book after that has a pretty darn good margin right?

From comments here and there, the profit margin most publishers are working on is in the 10%-20% range. Making the book is a lump sum cost, but printing the book is a pretty large repeating cost. And that doesn't count other fees (eg: Kickstarter fees), taxes, shipping costs, inventory/storage costs, etc.

What is the suggested alternative to being able to terminate the licence at any time? Not being able to terminate the license?

Well... yeah? The GPL, the Creative Commons, most any open source license, they're all implicitly or explicitly irrevokable. So yes, that's a perfectly viable alternative.

Outside of this case who would willingly enter into an agreement that would tie your hands regardless of the changing circumstances?

If some part of the license is subject to "changing circumstances", that's your first clue that this shouldn't be an open license. At the very least it should be a separate contract, and probably a privately negotiated one, not a global public one.

It’s pretty rare to be in a contract you can’t get out of… ever!

Not rare at all. Consider pretty much every piece of open source software on the planet. It's fundamental to most Linux distributions, with the GPL. The world is teeming with such contracts. (Or at least for the duration of the copyright, which is effectively forever for most people in the US.)

I’ve seen the FAQ information that makes it clear that the clause about using your material is to stop creators suing frivolously, not to enable WOC to steal the stuff though I get that people are naturally suspicious. These clauses have been in place for a while though… are there any actual cases where WOC has stolen someone’s work for their own under a licence? From DMsGuild etc or is this just scaremongering.

I didn't make any assertions about the argument over what WotC can use of the licensees' works. I have no specific stance on it at this time.

 

[Michael Linke]

The license explicitly says you can't do that.

Where? If I'm on track to sell $800,000 worth of product this year, you're telling me I'm NOT ALLOWED to scale back my business, produce less content next year, and let some of my contributors leave to form their own company, who may or may not want to start producing content of their own?

 

[Michael Linke]

As far as I can tell, this license is no threat to small teams, or independent creators, that want to make a living producing OGL content. It's only a problem for people who wanted to start business models dependent on the idea that Hasbro would be kind enough to just handle market development for them for free.