Publishers

Introduction

Publishers have existed for many years. This process likely started with books, or scrolls (where scrolling comes from, right?), moved on to music, both paper and then recordings, and all sorts of computer software, including games.

Publishers sit between creators of works, the artists and developers, if you will, and the wholesale sellers that ultimately deliver products in bulk to the retailers.

Other industries have arrangements, such as actor's agents, that procure work for the actors and take a percentage, and also provide TV and theatre production staff with a port of call for actors.
 

 What Is a Publisher For?

You might think that the purpose of a publisher is to deliver a finished product to market. In it's simplest form, that's all we need, as the maker of a product. Sure, a bit of PR is required to make everyone aware of the product, then use your contacts to get the product into wholesale and thus into retail. That's a developers'-eye view of the requirement.

Of course the publisher has a different view. Like insurance companies and banks, they`re not there for the safety and security of their clients, they`re there to make money. That`s all.

 

The Music Industry

As an established industry with good legal precedents already established, let's start with the music model of publishing. Sharon Osbourne, yes THE Sharon Osbourne, recently presented a documentary on the BBC which shed some light on how the music publishers, i.e. the record companies, have changed their deals over the years. Sharon was managing Ozzy`s solo career.

 

Just to complete the picture, music acts make money from their records, and also from live performances. They also have a third angle, other merchandise. This typically includes T-shirts, key-fobs, badges and patches.

 

Let's just wind back to the 70s for a moment, when I first started going to gigs. Firstly, we bought our music on vinyl, or possibly musicassette, but we preferred the presentation of a nice 12" card package with some fine artwork. You really knew you'd bought something. So much the better if it had a gatefold sleeve with a 24" x 12" centre picture and a lyric sheet.

 

If you went to a gig you could buy a programme, often again 12" x 12" with super glossy paper, more photos and usually some interesting text. You could also buy a T-shirt, a sweat-shirt, sew-on patches for your denims, small enamel badges, maybe even a belt buckle. What you couldn't buy at a gig was records or tapes. This tended to make me think that the record company didn't have much to do with the band touring. If they did, they'd surely be selling the album that the band was out promoting on their tour, right? A band would always incorporate at least half their new album into the set-list. Personally, I'd always have bought the new album before going to the gig as I'd enjoy the familiar music more. If it was Rush, I'd be listening to be sure that all the notes were correctly played, and they were. However, since we could go to a gig every few weeks there would be some bands that we hadn`t got the latest album, and others must have been the same. Maybe they had a deal with the wholesalers not to bypass them?

 

So, did the record company pay for the tours? From what Sharon Osbourne was saying, the record companies would advance the band money for touring, paid for out of royalties on the record sales. As an example from Sharon`s programme: Van Halen went out on some big early sell-out tours and thought they were doing really well, until after 3 years they found out they had received 10 million dollars more in advances than the record sales had earned! Therefore they still owed the record company that money in either future sales or they'd have to pay it back some other way.

 

The other factor in touring was dealing with the promoters. They organise the tour: hire the venues, organise the transport, and sell the tickets. Up to the early 70s they did all this for some 85% of the tour take! It took a big act and a very determined manager to change that around: one Peter Grant, manager of Led Zeppelin. He decided he was going to flip that percentage around, so that the promoters got 15% and the band got the 85% If the promoter wanted Led Zeppelin, that was the deal, and they did.

 

After that, other big name bands followed suit and started to get the bigger percentage too. This would have allowed the bands to fund their own tours more easily without getting such big  advances from the record companies. Remember: advances aren't hand-outs, they're a loan against future sales. The flip-side is that of course if the band fails then it will have no assets to claw back anyway, so the publisher will lose out.

 

If a band gets really big, it can form its own transport company and organise its own tours. Similarly merchandise can be self-organised and it becomes self-financing. Yes, the bands do need a certain amount of stability and capital to be able to do that, but at least now the touring percentages are in the bands` favour and they can make a profit after a while. It`s only the bigger bands that can do this. Smaller bands still drive themselves to gigs, sleep in the van, and get by on junk food. Many successful bands did indeed set up their own labels and management companies. You need to have a certain level of success to be able to support these mechanisms. I believe that some bands who have set up their own labels are able to then work for other bands. Maybe there are also co-operatives?

 

Slide forwards to 1984, and bingo! CDs are invented. This means that record companies get to sell you all the same albums you already had on vinyl again, on the new smaller medium. We instantly think it`s better quality because there are no pops and clicks of needle on scratches and dust. Personally I'd never go back. However, some transfers to CD were done without much care, and the result was a lack of clarity. Don't worry though, because with digital re-mastering of old tapes, there was an opportunity to re-master the albums properly and sell you the same album you had on vinyl and have on CD, AGAIN! Ker-ching!!!

 

Let`s do a quick breakdown of the costs of a music CD to see where your wedge at the till goes. I don't think it'll spring up any surprises, and you'll see some familiar-sized percentages.

 

I got my info from a BBC article when VAT was still 17%, and CDs were about £8, so I've adjusted it slightly. For an £8.24 CD, we might get something like:

 

Record company             30%

Retailer                            17%

VAT                                  20%
Artist                                13%

Manufacturing costs         7%    

Distribution                       8%

Copyright royalty              5% 

 

 Notice that the record company gets more than twice what the recording artist gets. The manufacturing costs will vary a bit depending on how fancy the insert or custom packaging is. Packaging has oddly become less standard and more lavish recently, which is nice, but has forced me to throw away my racking system since more and more CDs don`t fit.

 

The copyright royalty is all going to have to be split proportionally between the authors of the songs. That`s why you`re going to be much better off if you can write your own good songs. Note also that radio, TV and movies that want to play your song will also pay another royalty each time the song is broadcast - fantastic, royalties for life!

 Why does the record company need twice the amount that the artist gets? They`ll tell you that only 10% of their artists make a profit, so they`re covering their 90% losses. Of course that`s not your problem. Maybe the swanky offices, company cars, expense accounts and their higher wages come into the equation too? 

 

There are now digital streaming services, which should have a similar royalty mechanism to radio and TV royalties. These will go to the authors, and the owners of the publishing rights, the record companies. The publishing rights are transferable, since Michael Jackson owned the publishing rights to all the Beatles songs. Lennon and McCartney still got author`s royalties.

  

Move forwards in time to now, and we see that digital downloads are popular. There are no per-unit manufacturing costs to this. The distribution will be done by the record company passing data directly to the online retailers. Digital downloads do cost us consumers less than CDs but not much less. My information is that digital downloads tend to offer the artists more of a 50/50 deal, which I read as 50% to the publisher and 50% to the artist, after the download site has taken its fee. Mostly these websites support the substandard MP3 format, which is OK for your portable devices and earbuds, but you're missing out on a lot of the quality and detail that is on the original recording. There are websites where you can buy high definition downloads but they tend to be quite expensive, and territory-controlled. Yes, the quality is better than CD, but by how much is tough to decide since one`s amplifiers and speakers don't go to the higher frequencies, and so much can be lost in the cables and transistors. I digress, that`ll be another blog page.

CDs are the other medium of choice. The packaging is much smaller than vinyl, CDs can be pressed at very high speed and only cost about 20p a unit to produce. The actual process of recording an album has become mostly a digital process, with plenty of expensive recording equipment needed, and an album can take many months to write and record. Being all done in the digital domain at high sampling rates, your digital outputs for download, CD and hi-definition all fall out of the process. A bit of 5.1 mixing makes the icing on the cake for those so inclined, and we can buy the album again. Ker-ching!!!

 

Once you hit 24-bit samples per channel you've exceeded the best the old analogue master tapes could manage, and only people with exceptional hearing can detect that low bit. Indeed, for DVD-audio discs the technicians salted away security codes in the least-significant bits of the music as a copy-protection method. They played protected and pure versions of the music to a sample of people with exceptional hearing and a few could spot the difference consistently. You would think they'd have thought to encode something in the digital data stream that was checked by the player and removed so it didn't get to the loudspeakers at all. Anyway, DVD-A is sadly no longer being recorded on, though since I have some; I still need a player capable of playing them (take note, TV manufacturers no longer supporting 3D). For anyone who hasn't heard a 5.1 mixed album, there are DVD and Blu-ray discs available of quite a few albums that will sound fantastic on your home cinema system in surround sound.

 

Back to the plot, then: since bands are making more from touring, and can do their own merchandising, they can make a lot more money doing that than making albums. This has forced the record companies to re-think their deals that they offer, at least to the big names. You may remember Robbie Williams on the news after he made his £85M 5-year deal with EMI. This was what they call a 360-deal, covering all aspects of the artist again, so the record company gets in on the tour and the merchandise. Advances paid to the artist then can be clawed back on royalties for CDs, digital downloads, T-shirts, coffee mugs, and likely the tour tickets too.

Big and smart bands nowadays tend to form their own publishing label so as to keep the publishing rights to their own songs. This seems eminently sensible. The label may be administered by a larger publisher, but they retain ownership. I cannot stress enough how important that is.

 

Exclusivity

Another example from the music industry that can occur is that your contract with a publisher contains an exclusivity clause. Not that the publisher only wants to work with you to the exclusion of all others, but that you can`t work for anyone else. This ensures that they get all of your product, regardless of how well or badly they perform.

 

Quincy Jones, the producer of Michael Jackson`s Thriller album wanted Eddie Van Halen to play a guitar solo on Billie Jean. Unfortunately EvH was exclusively contracted to Van Halen`s publisher. Nevertheless the producer wanted Eddie and Eddie wanted to do the solo, so they arranged for Eddie to record the solo uncredited., and he did it for free. Listening to the track, it`s pretty obvious it`s Eddie van Halen, no-one else played like that.

 

Music publishers do allow artists "by arrangement" to work on other projects, but the artist has lost a lot of control over what they can and can`t do. Run your own publishing and you can do what you want, when you want... and get paid for it! 

 

Back to Games

Video games are somewhat different. Games developers don't do tours, nor guest sub-routines! We have done a bit of promotion work in our time, mind. Was anyone at the HMV store in Oxford Street when they were doing the "Nipper vs the Cats" final? That was a promo demo that we put out for HMV on the Amiga in the early 90`s. Jason Page coded it based on our Fire and Ice game system in a few weeks. We got to meet Nipper himself! There were some monster scores being racked up on that demo too, we were amazed as we'd played it a lot and thought we'd optimised our strategy.

 

The breakdown of costs for a video game on CD or DVD will be broadly similar to those of a music CD. The only element that drops out of the equation is the copyright royalty. This strikes me as a serious omission. Games didn`t used to get seen publicly, but now they are being displayed in game museums, on youtube videos, and maybe on Dara O`Briain`s Go 8-Bit TV programme. 

 

Similarly there are now ways to download modern games legitimately from websites, though the number of bytes to download can be massive. Indeed, developers might favour this method as they can deliver fixes, improvements and additional content easily. It does also mean, buyer beware, that products can be released before they've been fully debugged. It`s not so difficult to provide download services, at least temporarily, as a developer. You can just rent some space in the cloud. The other thing that games can do which music can't, is monetise the product, either by adding advertising or in app purchases. Now I don't particularly like either of those, I would prefer a one-off unlock payment after the game is installed, personally. That`s better than a download access cost because it means that anyone copying the game can help me distribute my product, knowing that when it starts up on a fresh computer it`ll ask for payment and I`ll get my fee. This all neatly and clearly removes the need for a publisher of games. If you want to sell a real disc then you could do so on amazon, ebay or any other marketplace that allows 3rd parties to sell, plus set up your own website and a P.O. box.

 

You can begin a marketing campaign through your own social media, and do it daily. I follow a few bands on twitter and find that they send out one or two announcements every day to ensure that no-one misses anything. There`s also nothing stopping you from courting magazines and placing an ad if you want to. Drop some artwork out of the game and add some text, it all spreads the word.

 

Now if you choose to go and find a publisher for your games, this is the sort of thing that will happen. Firstly you`ll get a contract to sign, which naturally makes sure that they get control of everything but can still drop you like a stone and leave you with nothing. They don`t tend to want to negotiate on any of the contract content either, especially with new people. We did get a few changes put in to our contracts after a while. We actually had a lawyer tell us that if we had left the contract as-is, the judge would have laughed the contract out of court as being unfair, but because we had dragged it a little more to the middle it was still laughable but just about legal.

 

The sorts of things that get tucked away in the contracts are that the publisher can sell your game on a compilation or at a budget price, where you get a tiny fraction of the already small usual royalty. They'll have a special deal in Brazil whereby you don't get any royalty at all, and when you ask why, they'll say: "Don`t ask." You can bet your bottom dollar that clause will ensure you don't get any sales in South America because the Brazilian distributor is exporting to the neighbouring countries. Don`t ask.

 

Next, you`ll find a clause that says they can reproduce the game on other formats using other developers and don`t have to show you the game before its release so you can OK the quality. They`ll also be allowed to produce sequels and spin-offs without you knowing about it, let alone getting any royalties from those.

 

After nearly 40 years of publishing games there still isn`t a formal way of providing copyright royalties to the original authors. If there were, I`d be more than happy with emulator copies of my games being downloaded, because even if I got 2p every time; I`d at least be able to have a beer twice a year. 

 

You`ll also find that once you start to take advances against your next game, to pay for development kit, or software, or food, that the publisher will own you. They can start to demand changes to your product. Instead of bug reports coming through, you`ll get feature changes being asked for, and then the game is not your own. They`ll start leveraging changes by withholding further advances that you now rely on because you`ve employed two more graphics artists to make the game bigger and better.

 

You`ll then find that you`ve signed a 6-game deal that you can`t get out of, even if you can pay back all of the advances, plus interest, and they`ll blacken your name so much that you`ll never get another game to market.  

 

There`s another bad angle to this too: publishers can be bought by other publishers, go bust on their own, or be shut down by their parent company, whereupon your contract is just a saleable asset. You at least need a clause in the contract to ensure that publishing rights revert to you if anything changes like this at the publisher end. They`ll tend to let you have that because they can`t contemplate that happening to them, but it does... a lot. I would also get a time limit put on the contract, even if it`s 10 years. It`ll stop long-term exploitation when they claim they`ve lost where to send the royalties.

 

Let`s suppose that all goes well and you do get a game completed that everyone`s happy with. The next hurdle might be the artwork for the box and the ads. In our experience, it looks as if the best any artist was given for our games was a few screen-shots, they wouldn't get a copy of the game to get a flavour of the product. You`ll be lucky to see the artwork before you open the magazine and there it is. Yeuck, what were they thinking? At least bands used to get to choose their album artwork. 

 

Steve's Profit Diagram

Steve Turner drew out a graph of sales versus profit to show that with a typical royalty deal with advances being paid, that the publisher starts making a profit after selling N copies, and the developer starts to make a profit only at N x 6 copies. Our advances only covered our running costs from month to month, no profits were made at that point. We therefore were relying on getting sales, and good ones.

 

When Steve showed his diagram to a notable publisher he was told not to ever show the diagram again.

This is the 16-bit revised version:

It shows that if the publisher makes a profit after N sales, the developer makes a profit at N x 6 sales, by which time the publisher has made a very nice profit indeed. Of course if sales start to drop off at, say N x 4, the publisher may well decide to cut and run, they don`t need to put any more money into extra marketing, they`ve made their profit. That leaves the developer with an overall loss.

Another delightful thing you might find publishers doing is reporting sales to you and paying your royalties, only to find that a month later they report that they arranged with the wholesaler to take back unsold stock and swap it maybe for a box of a different product, not yours though. Suddenly you owe royalties back to the publisher. Sure, they`ll offset that against your next product, but it`s a debt you didn`t want, expect, or need.

A publisher may decide to just bury your product and not publish it at all. This is totally demoralising and means you have no chance of making a profit, indeed you may have used other funds to finish and are now showing a loss. This can and does happen, especially on console games where the publisher is asked to put forward a bond to pay for up-front production costs to the console manufacturer. These were running well into 6 figures in 1994). Even if you could engage another publisher it might take a year to get to market, and sometimes titles are time-sensitive, or the console is superseded. 
 

Magazine Awards 

In about 1987 there was a notable change in the UK where we noticed that individual programmers or musicians weren't being celebrated any more. Instead, awards were being given for Best Publisher, or Best Marketing Campaign. We felt squeezed out. No longer was artistry being celebrated, it was just about the money, since publishers bought magazine advertising space. Shortly after that the consoles hit the shores and shook everything up forever.

 

We were lucky enough to be nominated in 1993 in France for an award with Fire and Ice, so we got to visit the newly opened EuroDisney, as was, in January. We didn`t win, but I got to climb the Eiffel Tower, I chose not to take the lift, and we stayed at a lovely hotel next to The Louvre. I also had my one and only "Burning Beer" where they put some Fire Water (that's what it said on the bottle) into a brandy glass, light it, and then pour a beer into the middle while it continues to burn.

 

Rainbow Islands was also nominated for another award in Europe somewhere, which we only found out about weeks after it got a runner-up place. It was collected and then unceremoniously left in a night-club. We were told about it later, and miraculously the award did get to us eventually, albeit slightly damaged.

 

In Conclusion

My advice to anyone who can get a game developed is to ensure firstly that you retain total copyright of your product. Own the copyright personally, or as a separate company, not under your development company.

If you sign up with a publisher, you lose a large chunk of control over your product: content, art, release date, conversions, sequels, and they take the lion`s share of the money for doing it. You have no say in what they do nor how they do it. Get into a dispute with them and they'll skin you alive.

 

Publish yourself. The internet is a great enabler, as well a source of information. There are enough mechanisms to get the product to market on your own website or using an online distribution system. Use 3rd party marketplace environments. You have the skills already.

 

It`s quite nice to take a few days out from programming at the end of a project. A PR campaign might cost you a bit of time. Don`t go mad, you`re not competing with Mario. For your first products use your social media and any contacts you can to get your game noticed. You can publish a few seconds of video of your game onto social media to whet the appetite. There are websites and indie magazines that would love to review your game. I`d tend to compile up an incomplete game with "Review copy - not for distribution" sprayed all over it.

Good luck!