What is a fair deal between a mobile game publisher and a developer? Of course, there are many ways to approach this question. So I thought why not compare numbers with adjacent industries, like the music business?
From: http://www.flickr.com/photos/jensview/ (CC licensed)
So I came across this book "All you need to know about the music business" from Donald Passman which seems to be some sort of industry standard literature.
Passman takes the example of 500'000 units sold (gold album) and calculates revenues for the artist:
Profit Statement Music Artist
(From Donald Passman, All you need to know about the music business, p.102)
- The artist makes about 34% of royalty revenues and 20% after paying his personal and business manager, that is $170'250 or $100'000 respectively
- However, there are additional costs to be covered by the artist. He/she has to pay a personal manager and a business manager (for managing financials). Normally, PM alone will get ~15% of gross revenues. Sometimes PM fee is capped at 50% of artists net income. So the figure is rather conservative.
- Recording costs are usually pre-financed by the record company, and is deducted in the form of a recoupment.
- The producer gets about 3%, a star producer will get more
- Free goods for physical CDs are a form of discount.
- The situation in the music industry is quite comparable to the mobile or online gaming industry
- Recording costs can be compared to development fee of a mobile game developer. These monies are paid upfront and recouped from the artists revenues but risk is carried by the publisher. In any case, the more is paid upfront to the artist/developer the better of course because of NPV (net present value)
- Overall, roughly 25-30% share for the content creator (artist, game developer) seems to be industry norm for creative industries.