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Additional Compensation > Related Issues - Pg. 198

The Publishing Contract Standard deductions "off the top" of gross receipts are: 198 · Agent's commissions. An entertainment agent usually takes about 10 percent. A merchandise agent will take anywhere from 25 percent to 50 percent. · Third-party distribution fees and costs-- (which can be as high as 45 percent in territories like Japan); (see discussion of these costs in Chapter 7, "Licensing"). · Intellectual property registration and enforcement. The cost of intellectual property enforcement and registration is a surprise for most. The major cost centers are local and international copy- right and trademark registration; anti-piracy measures; and suits against infringers. The en- forcement/registration costs for the game are often borne by the publisher and recouped off the top of revenue. Intellectual Property Ownership and Control There are a lot of property rights to keep track of in a game development deal, particularly if you created the original IP. Most people are accustomed to understanding property rights as a binary: either you own something or you don't. Law students learn to think of ownership as a "bundle of sticks," with each stick representing a certain right in and to the property. Particularly with IP, the sticks can get split down to splinters. Take the example of television rights. Even that stick gets broken down further into series, mini- series, and movie of the week, and those are subdivided further into live action and animated rights. Aside from the granular definition of a category of use of the property, the terms of its use and duration of that use create even more complexity. If the publisher is granted the use of your engine, will it still have that stick if the contract terminates? Another way to understand duration rights is to think back to the reversion/option structure. A re- version takes the stick out of the bundle and gives it to the publisher, but it creates another stick for the developer's bundle--the right to reclaim the property should certain events occur or not occur. An option leaves the stick in your bundle but creates one for the publisher's pile--the right to make certain uses of the property should certain events occur or not occur. How these sticks get divided--for instance, who owns the property and who has a license or ex- clusive license or reversion--is the subject of intense negotiation. The main goal is to ensure that, no matter what happens between the parties and whether the contract terminates or not, everyone involved will end up with all of the rights they need to receive the benefit of work performed under the contract and to maximize the exploitations of the property. The four main properties to analyze are 1. 2. 3. 4. Underlying technology Content/the property trademarks and copyrights Game/Product (source and object code and audiovisual assets) Property licensed from third parties (such as engines or vocal talent) Related Issues Sublicensing Rights If the IP belongs to you, the publisher will need to be able to sublicense property rights to other parties, such as the right to license the game (since software is generally licensed to the end-user, not sold--see discussion in Chapter 5), manufacture and sell merchandise based on the game, or the right to produce and distribute a direct-to-video film based on the game. The publisher can only sublicense those rights you have granted. For more on this topic, see Chapter 7. This is really an issue of third-party contracting. Let's say a film based on the game is produced. Most likely, it will be the publisher and not you who negotiates and contracts with the producer, distributor, and merchandise agents. If you want to influence decisions made by those parties, you will have to lever the publishing contract. When a publisher has certain restrictions on its use of the