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Kickstarter Backers Need Contractual Protections Against Drastic Changes In Projects

Submitted by kmeisthax on Sat, 04/13/2013 - 21:59 in Rants

Today, the Kickstarter-funded project "Shadowrun Returns" announced... a modification of sorts to their original project. You see, they had originally promised DRM-free copies of their project as part of their Kickstarter rewards. The key phrase is "DRM-free": Many modern PC game stores - yes, including Steam, this is why people used to HATE Steam - have technologies that allow the owners of those game stores to remotely disable copies of games arbitrarily. This is "DRM" as it's known in the gaming world. The problems with it should be painfully obvious on every level... except for publishers, who want this ability because they're busy trying to staple their own shadow to a lightbulb (fight piracy).

The reason why the DRM-free copies are an issue is because the publisher they're sublicensing the Shadowrun copyrights and trademarks from - Microsoft, in this case - specifically mandates that the game must be sold with DRM technology attached. This is most likely a standard contract term in the entire industry which would require major concessions to negotiate away, assuming that DRM was even up for negotiation in the first place. The reason why standard contract terms exist is to provide an anchor in negotiations. One party (typically the one that has more leverage) creates the first offer, which will typically be their standard contract terms. And you have to negotiate to get certain terms added or removed to the contract. And often times these standard contract terms tend to be rather one-sided to begin with, chock full of things that need to be removed to reach anything resembling a fair deal. So there's very much a limit on how much you can get, and the less negotiating leverage you have, the shittier your contract is.

Reading the original Kickstarter update gives me a pretty good idea of what probably happened behind the scenes. In short, they created the Kickstarter project while contract negotiations were still in progress. When the negotiations were completed, someone in legal realized that they had overpromised on their Kickstarter, or what have you. Microsoft was only willing to grant a narrow exception for the base game and the DLC pack given to Kickstarter backers; and only for the copies that were promised to Kickstarter backers. Their actual sales plan is Steam - and only Steam. Other DRM-free stores like GoG are off the table.

While this new plan technically means the backers still get what they originally paid for, we have to keep in mind too that Kickstarter is not a store, it is not for pre-ordering games. It is forĀ investing in games, and other kinds of projects. The fact that most game related Kickstarter projects use their backer rewards as a way to facilitate Kickstarter as an extreme pre-order platform does not mean we should treat it as that. Right now, the average Kickstarter user has no protection against the scope of a project changing under their feet. It gets to a core problem with Kickstarter in general, in that there's no penalty for failure.

In the traditional investment world, venture capitalists get ownership over the resulting corporation as part of the investment deal. In fact, they often times get so much ownership that company equity given to early employees of a start-up can wind up getting wiped out in the next VC funding round, because VCs want that to happen. I really don't like this model - after all, as Mitt Romney himself admitted, corporations are people. And how exactly, Mr. Romney, is it ethical to enslave and sell people? The ownership of a corporation should stay with the people that make it up. (That's a very badly rephrased version of the central tenet of socialism, by the way.) But aside from the ethical quandries, it gives VCs lots of leverage in negotiations. It's also not an option for Kickstarter, as the ToS explicitly bans corporate ownership as a backer reward, and allowing it would take us waaaay out of the realm of croudfunding.

In mass culture media products, however, there's a second method of fundraising: publishers. Instead of funding an entire corporation, they only fund individual games. Like VCs they have ways to decrease their risk. However, instead of doing it through corporate ownership, they do it through a publishing contract, which stipulates what the game will contain, how it will be sold, and so on. These contracts exist to protect the publishers, who fund the game's development. In fact, this is precisely the kind of contract that Microsoft used to stop DRM-free releases of Shadowrun Returns.

What Kickstarter users need is some kind of equivalent to the publisher's contract. A contract for backers which protects their investment - no matter how small or large - from drastic changes in the funded project. The thing is, Microsoft was able to force DRM-only releases for the game because they had more negotiating leverage than the Kickstarter users. Having an agreement already in place with the community would make it harder for Kickstarter users to get wiped out by bad publisher contracts - at the very least, letting us revoke our monetary support if the project changes.

Incidentally, there are also contracts involved in the relationship between publisher and console manufacturer, too. This is why, for example, Nintendo can't just release an update which makes their purchasing system not staple all your games to a single console and instead use accounts like every other sane service. The licensing contracts stipulate what permissions the users have. This is why, for example, certain DSiWare can't be played on a 3DS: Nintendo had to get permission after the fact to allow the software to transfer ownership to the 3DS and be sold on the Nintendo eShop.

This is also why we need more competition in PC direct download stores. I'm tired of hearing from Nintendo authorized developers about how much easier it is to get on eShop than it is to get on Steam. I don't care. What I really care about is how much veto power arbitrary third parties have on my game being sold: With Nintendo, they can (and will) veto your game if they plain don't like it. They did it to The Binding of Issac - the developer was denied permission to sell the game on the eShop because the game had "questionable religious content". Whereas on PC you can sell your game whatever way you like, and this is a good thing. PC and Android have competing stores, most of which you can just install on your hardware and buy from. You don't have to buy another $200-$500 device to switch ecosystems in the PC or Android world, and everyone is much better for it. So we really should encourage buying games OUTSIDE of Steam.

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