There's no shortage of speculation as to what impact Mike Wilson's new publishing company, Gathering of Developers, might have on the gaming industry.

　　What Wilson and his assembled g.o.d. crew are doing could have biblical-sized impact on the way game developers are represented by their publishers.

　　As we went to press Thursday evening, GameSpot News had just secured the text of g.o.d.'s "Ten Commandments," the statement Wilson and g.o.d. partners have been prepping for weeks now.

　　The "commandments" were crafted by executives from g.o.d. partners 3D Realms, Epic MegaGames, PopTop Software, Ritual Entertainment, and Terminal Reality. The "commandments" state what developers should know before they sign on the dotted line - and what the Gatherings' stand is on each of the guidelines.

　　So what do the commandments say? Read on. And remember, these aren't the words of GameSpot, these are the words of g.o.d.

　　Gathering of Developer's Ten Commandments

　　Presented here for all developers of the world, courtesy of Gathering of Developers, are guidelines and inside information that may otherwise take you years to learn, and many regrets along the way. Make no mistake, this is inside information your publisher doesn't want you to know. With this knowledge you'll be able to negotiate far better publishing agreements that give your company significantly improved revenues, power and value.

　　Our hope here at the Gathering is to raise the bar for all developers in our industry, not just those signed with us. Without further ado, we bring you two tablets of great knowledge and wealth...

　　Intellectual Property Rights: IP rights, as they're commonly referred, include your game's name, characters, story, trademarks, logos, copyrights, source code, and any art, illustrations, music or other content that you create for your game. All of these rights should remain the property of the developer, and should not be transferred or assigned to the publisher as part of the publishing agreement. IP rights are among the most valuable rights a developer can own, and are a primary factor in determining the value of your company. What's more valuable to the Coca Cola Company, their material assets (factories, buildings, etc.) or their trademarks, logos and other IP?

　　The answer should be obvious.

　　Another IP right is that of your future games, such as sequels. If at all possible, do not include sequel rights in your agreements, but at worst only sign the rights to one sequel, and make those rights "matching offer rights." What this means is that you can shop your game to other publishers, get their offers, and the publisher with the matching offer rights will get the new game only if they match the best third-party offer, otherwise you sign the game with the publisher who gave you the best offer. Do not confuse matching offer rights with "right of first refusal," which is not a good right to sign away--it means that the publisher with this right gets first choice on publishing the game, and does not allow you to create a bidding war. Gathering of Developers' Stance: We never request that a developer sign to us their IP rights. They are owned fully by the developers who created them.

　　Royalties: This is typically the most important point in any publishing agreement, the one that the majority of the negotiations revolve around. In general, royalties vary greatly, based on the following circumstances: (a) your experience and track record; (b) the advance you're requesting (larger advances generally mean smaller royalties); (c) the genre the game is in (some genres, like puzzle games, have less potential to sell hit numbers); (d) how much content (i.e. story, characters) and code (i.e. 3D engine) the publisher or a third-party contributes; and (e) any associated licenses (i.e. NFL or a hit movie) or celebrity endorsement (i.e. John Madden or Michael Jordan).

　　Royalties should be based on the game's wholesale price, which is the total revenue that the publisher gets for the game, whether they sell it to a retailer directly, or to a distributor. Do not base your royalty on SRP (suggested retail price) because it's a fictional price and doesn't represent the actual revenues received by the publisher. Also, do not base your royalty on the publisher's profits, unless those profits are very strictly defined with very few deductions, and certainly no deductions relating to marketing, sales staff, inventory storage, etc. The one off-the- top deduction that most publishers can reasonably ask for is "cost of goods" (COGs, which is the game box, CD, DVD or other delivery media, game manual, etc.), which should be capped at no more than $1.50 to $2.50 a box, unless you and the publisher agree to a more expensive box style or bonus to be included in the box, such as a tee shirt or mouse pad.

　　Use "escalating royalties" to get around the publisher's argument that they're putting a lot of money and risk into funding, marketing and distributing the game. After 150,000 unit sales these costs are typically recovered, so your royalty can rise higher and higher at increasing sales milestones. Let's say your royalty starts at 28%, after 150k units have sold you can request that it get bumped to 30%, then after 300k have sold it rises again to 32%, on and on, possibly rising every 150k sales until a royalty cap is reached, perhaps at 38%. These figures are just examples, and it's up to the developer to get the best figures possible from their publisher. The key point is that these escalating royalties are easy for the publisher to swallow because they protect the publisher's marketing budget and other initial fees for the game, yet give the developer a better return if the game is a hit. There's really no reason for the publisher not to sign a deal that incorporates escalating royalties.

　　Gathering of Developers' Stance: Escalating royalties are used. In fact, at each escalation point the new percentage that is reached is applied *retroactively* to all previously sold game units. Most publishers will not apply the higher percentages retroactively to previously sold units. If your publisher sub-licenses your game to another distributor, probably to handle sales in another country, you should get a higher royalty, since your publisher is taking less risk and acting as your agent in some respects. Accept no less than 50% of your publisher's gross revenue from sub-licensed deals.

　　Other guidelines pertaining to royalty rates:

　　- Giving your publisher cross-collateralization rights means that your publisher will recoup their advances from all the revenues from the various versions of your game and its derivatives (i.e. PC, Mac, consoles, add-on packs, hint books, merchandise, etc.). Sometimes your publisher may even include multiple games and even sequels in their cross-collateralization noose. All this does is put more risk on the developer, and less risk on the publisher.

　　- Never let multiple original games be cross-collateralized. And even with different versions of the same game, create different sub-groups that can only be cross-collateralized within themselves, such as the console game group, PC game group, and merchandising group. Avoiding cross-collateralization altogether is the best course, but this point is not worth much effort as long as you have sub-groups in place.

　　- Bundling and OEM (original equipment manufacturers) deals are very simple for the publisher, with little financial risk, and therefore should earn you a higher royalty, no less than 50%.

　　- Do not let the publisher put in clauses or conditions that will lessen your royalty if you don't make a certain milestone date or completion date.

　　- Make sure you get royalties on add-on and level packs made by the >publisher, even if these add-ons are created by another developer, in which case getting 50% of your basic royalty is okay. If you make the add-on, then your full royalty should be in effect.

　　- Make sure the publisher gives you all the accounting information you need when they submit royalty checks. This should be spelled out in the agreement. The most basic information to request is the number of game units sold at each wholesale price point.

　　Have the right to audit the publisher's books, at your cost, up to once per year. And, if there is a significant royalty shortfall discovered as a result of this audit, then the publisher should pay all reasonable audit costs, plus an interest penalty on the shortfall amount.

　　In general, here are a few simple royalty examples:

　　A proven hit-making developer should never get less than 30% as a base rate, and escalations should take the rate to as high as 40%. Advances $2 million and up are reasonable.

　　A new, unproven team will need to pay their dues (unless comprised of individual developers with a track record) and accept first-game royalties as low as 15% to 20% (with escalations going to 25% or 30%). The key is to only sign one game at a time, so that if your game does well, you'll have increased leverage for improving your next game's royalty rate. Advances around $300,000 are reasonable.

　　Gathering of Developers' Stance: Royalties can escalate to 50%, all applied retroactively to previously sold game units. Advances of $2 million are standard, and higher are offered.

　　Merchandising and non-interactive media exploitation rights: Don't give your publisher these rights unless they plan to exploit them. These are rights such as making a movie based on your game, and clothing, novels, toys, etc. If you do sign these rights to your publisher:

　　(A) If the publisher is going to sub-license these rights, then you should get no less than 50% of what the publisher makes.

　　(B) Set a maximum time period in which the publisher controls these rights, such as two years. If the publisher wants a longer term, then have that time period extended automatically if you are paid a minimum total merchandising and media royalty, such as $300,000, in the first two years, which then grants the publisher an additional year or two.

　　(C) Maintain approval right on all merchandising and media exploitations. Gathering of Developers' Stance: We do not automatically reserve the right to handle your merchandise and non-interactive media derivatives, though we are very competitive acting as an agent to handle these areas for developers, if the developer chooses us to handle them.

　　Ports and console versions: Most publishers will demand these rights as part of the overall deal. Established developers can typically request extra advance money for handing over these rights, or only give the rights on a first option basis. Royalties for ports are much lower than PC royalties, due to the very high manufacturing and licensing fees that must be paid to the console companies (i.e. Nintendo, Sony, Sega). The key is to cover the ports in the agreement one way or the other, so that there's not future ambiguity. If the publisher has no intention on making or selling the console version of your game, then do not give them console version rights in the agreement.

　　Gathering of Developers' Stance: We include the console rights for all games. If we do not exercise those rights within a reasonable time, then those rights bounce back to the developer.

　　Get the game's minimum marketing budget in writing. Keep approval on key marketing materials, such as ads and the game box. Make sure your logo is at least as prominent as the publisher's logo.

　　Gathering of Developers' Stance: We give each game a $750k baseline marketing budget (for North America, other countries have separate budgets). Proven titles, such as sequels to big hits, can be approved for higher marketing budgets.

　　Your company's name in lights! Do you watch Paramount movies or Jim Carey movies? Do you watch Fox or The X-Files? Do you buy Virgin music CDs or Madonna? (Okay, maybe a bad example!) The point is that people become fans of specific talent (or ensemble of talent) rather than the publisher or distributor. No one cares that a game is distributed by Microsoft, Electronic Arts, Eidos, Interplay, Sierra, GT Interactive, Activision or otherwise, because those are unfocused brands that mean little to players and consumers. Instead, players case much more about the actual talent and artists behind the games they play, such as Sid Meier, Peter Molyneux, John Romero, Richard Garriott, Shigeru Miyamoto, and specific developers like id Software, Rare, Blizzard, Westwood Studios, and 3D Realms.

　　The problem is that publishers have a hard time understanding that their name doesn't have much value on the game box, in advertising, etc., and therefore try to put their name and logo on the box in a more prominent position and size than the developer's name and logo. Make sure your agreement states that your logo, at worst, will be no less prominently displayed every place the publisher's logo is displayed.

　　The primary benefit is that players will becomes fans of your game style, and look for future games from your company, giving your company's name and logo the reputation and value it deserves.

　　If the publisher fails to publish your game then you should get all rights back, allowing you to pursue other avenues. For example, if you deliver a completed game to the publisher, the publisher should be expected to release that game within two months, otherwise the full rights of that game return to you (and you should keep all of that publishers advance money, too), allowing you to take it elsewhere.

　　Have the publisher pay for a 3rd-party company to test the near-final copy of the game.There are many companies that specialize in this, and it's especially effective for machine compatibility testing. The publisher should also handle and pay for technical support for your game.

　　Miscellaneous Points:- Make sure that the indemnification clause goes both ways, protecting both the publisher and the developer. You should only be held liable for actual content you create.

　　- Have a clause that does not allow the publisher to hire your employees for up to two years beyond the date your game was released, known as a non-solicitation clause. Your publisher will rightfully want the same protection for them.

　　Get a good attorney who knows software contracts and intellectual property law! Never sign an agreement of this much importance without having a qualified attorney review. Spending a few thousand on an attorney is your best insurance against losing hundreds of thousands later.