Royalties instead of hourly pay?

Subject: Royalties instead of hourly pay?
From: "Geoff Hart (by way of \"Eric J. Ray\" <ejray -at- raycomm -dot- com>)" <ght -at- MTL -dot- FERIC -dot- CA>
Date: Tue, 2 Feb 1999 14:08:48 -0700

Beth Kane is <<...about to take on a moonlighting job that I'm
really excited about, documenting an outdoors-oriented software
program. The owner/engineer thinks it has terrific market potential
and has mentioned the possibility of paying me not hourly, not by the
job, not exactly by royalty either, but by giving me a percentage of
ownership in the product.>>

This sort of thing always depends on how much of a gambler you are;
the software marketplace is littered with the corpses of developers
who "knew" their product had great market potential--even though,
tragically, nobody they tried to sell the product to shared this
delusion. As the old saying goes, parents are never objective about
the beauty of their children. Moreover, there are plenty of great
products that died on the vine simply because nobody at the company
understood marketing (did someone say "Apple"?) or because the
company couldn't find a distributor willing to do good work for them.
Odds are you won't make a penny for your work. But if the developer
is right, and you've got something unique that will sell thousands of
copies, you could end up making a bundle too. No way to know this.

<<I'm so interested in this product I would almost document it for
free. It would be fun, and I think the product can make millions.>>

If it's really something you'd do for the love of it, by all means do
it. Even if you don't get rich, it'll still be great fun, and it'll
look good on your resume. But I suspect there's a useful middle
ground. Could you negotiate an "advance against royalties", just like
book publishers do? That way, you make some money up front no matter
what happens to the product, yet the developer doesn't have to pay
you all at once or pay you any huge amount if it turns out the
product never sells; if it does sell, you get paid from profits, not
out of the developer's pocket. Sounds like a reasonable compromise to
me. Of course, the trick is still to figure out what % of the take
you get.

<<...he has also said that he doesn't think I should have any
ownership unless I do more than "merely" document the product. I
don't know what else I could do when I have to maintain my full-time

How about interface design, usability testing, audience analysis, and
acting (as you say you can do) as a subject-matter expert? How about
promoting the product in newsgroups, locating a distributor for the
product, and developing press releases? How about asking to be signed
on as vice-president, marketing and documentation? If you're spending
as much time developing content and flogging the product as he's
spending on the programming, you're certainly entitled to a large
share of the profits.

<<But I don't know just how to propose going about getting a share.
This is a privately held company, a new venture.>>

You have to come up with some way to figure out how much value you're
adding that both of you can live with. No way to know that without
explicit details on the project, and even then, it'd only be _our_
opinion. List all the value-added functions you can provide, use your
communication talents to impress the heck out of him, and see if you
can up your percentage share.
--Geoff Hart @8^{)} Pointe-Claire, Quebec
geoff-h -at- mtl -dot- feric -dot- ca

"Patience comes to those who wait."--Anon.

From ??? -at- ??? Sun Jan 00 00:00:00 0000=

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