People
Royalty Points.
 |
daraddishman
    Member since: Apr 8, 2008 Rank: Warrior (123 Posts) |
[Quote Member] |
I've been thinking about RP, and how to deal with them. The more I think about it, the better I like how it is sort of undefined right now. It leaves it open for different methods and the needs of the individual company/business.
I've been thinking about taking a % of the revenue of the product and allocating it to CH RP, and then dividing up RP based on manhours spent. I can typically get a good projection on the manhours needed to do a project, and then allocate out from there, keeping some RP in reserve for when the programmers inevitably run long, or the artists work slower because of emo binges.
I'm looking into some sort of legal paperwork that can be drafted for everyone to sign into when I do a CH project, so everyone knows what they get for what they do, and for how long. Royalties don't have to last for ever...
I've been thinking about taking a % of the revenue of the product and allocating it to CH RP, and then dividing up RP based on manhours spent. I can typically get a good projection on the manhours needed to do a project, and then allocate out from there, keeping some RP in reserve for when the programmers inevitably run long, or the artists work slower because of emo binges.
I'm looking into some sort of legal paperwork that can be drafted for everyone to sign into when I do a CH project, so everyone knows what they get for what they do, and for how long. Royalties don't have to last for ever...
 |
Emesee
Member since: Apr 16, 2007 Rank: Warrior (155 Posts) |
[Quote Member] |
From what I know about rp there may be some limitations.
For example, companies can create more shares to raise more capital. How are royalty points supposed to work differently than shares?
Suppose you use up all 1500 royalty points, can more not be allocated as needed? Or suppose someone's work becomes less valuable relative to others' work as the business progresses. And then they are stuck with a disproportionate and unfair share of royalty points...
For example, companies can create more shares to raise more capital. How are royalty points supposed to work differently than shares?
Suppose you use up all 1500 royalty points, can more not be allocated as needed? Or suppose someone's work becomes less valuable relative to others' work as the business progresses. And then they are stuck with a disproportionate and unfair share of royalty points...
 |
Kevin_Cox
Member since: Oct 14, 2006 Rank: Viking King (557 Posts) |
[Quote Member] |
It the real world there would not be a set amount. It would be unlimited.
It should be set up so there is no set number. Where you could issue points as the equivalent of a percentage of the company. Where if you take on more group members the points are simple rearranged by ratio to equal out in percentage.
So, lets say I have 100% and I split that 100% with ten people so I give them each 10 points. Each users now has 10% but if there is the need for other members to do more work. Then I simply issue more points and the percentage of profit is split by the ratio of work. Just like in real life systems.
It should be set up so there is no set number. Where you could issue points as the equivalent of a percentage of the company. Where if you take on more group members the points are simple rearranged by ratio to equal out in percentage.
So, lets say I have 100% and I split that 100% with ten people so I give them each 10 points. Each users now has 10% but if there is the need for other members to do more work. Then I simply issue more points and the percentage of profit is split by the ratio of work. Just like in real life systems.
|
|
daraddishman
Member since: Apr 8, 2008 Rank: Warrior (123 Posts) |
[Quote Member] |
Uh, Kevin, I think you are confusing royalties and equity.
In theory you have an unlimited number of shares ( equity ) you can give out. I say in theory because there are SEC laws involved, costs of having a lot of shares ( a C-Corp in Delaware pays taxes based on the number of shares issued and outstanding ), and complexities with share/investor dilution.
Royalties, on the other hand, can only ever equal 100%. At that point, all the revenue off a product is going out to payments. Royalties have a VERY finite amount.
Royalty Points are -NOT- equity as far as I can tell. They are a share in the profits/revenue from a project. Revenue/Profit share options are a solution I have often used with contractors, usually in combination with upfront billing as a way to lower the price for services. In the short term, higher risk for the contractor. Long term, there is potential for larger rewards.
In theory you have an unlimited number of shares ( equity ) you can give out. I say in theory because there are SEC laws involved, costs of having a lot of shares ( a C-Corp in Delaware pays taxes based on the number of shares issued and outstanding ), and complexities with share/investor dilution.
Royalties, on the other hand, can only ever equal 100%. At that point, all the revenue off a product is going out to payments. Royalties have a VERY finite amount.
Royalty Points are -NOT- equity as far as I can tell. They are a share in the profits/revenue from a project. Revenue/Profit share options are a solution I have often used with contractors, usually in combination with upfront billing as a way to lower the price for services. In the short term, higher risk for the contractor. Long term, there is potential for larger rewards.
|
|
Kevin_Cox
Member since: Oct 14, 2006 Rank: Viking King (557 Posts) |
[Quote Member] |
Equity has financial risk and royalty does not have financial risk.
There is never more then 100% but, the percent you own will dilute accordingly depending on how much work you put forth.
There is never more then 100% but, the percent you own will dilute accordingly depending on how much work you put forth.
|
|
daraddishman
Member since: Apr 8, 2008 Rank: Warrior (123 Posts) |
[Quote Member] |
Ah, I think I follow what you are saying Kevin. You are talking about treating Royalty Points as a relative system based on what everyone is doing? Similar to how Glory Points and the CH CoOp work?
I don't know if I would do them that way, but that is an approach I hadn't thought about. I think the nice thing with RP is that it can be flexible for different business models and approaches.
I don't know if I would do them that way, but that is an approach I hadn't thought about. I think the nice thing with RP is that it can be flexible for different business models and approaches.
 |
GordonMcDowell
Member since: Aug 15, 2006 Rank: Viking King (924 Posts) |
[Quote Member] |
Kevin_Cox~
It should be set up so there is no set number. Where you could issue points as the equivalent of a percentage of the company. Where if you take on more group members the points are simple rearranged by ratio to equal out in percentage.
CH FAQ~
All products start with 1500 Royalty Points. If the product is so successful that all the points are distributed, additional Royalty Points can be added to represent development of new features.
If you want more RPs for your project, we'll add them for you. But I'm sure that would entail some discussion with all project members (and CH staff such as myself) about the devaluation of their current RPs in your project.
I think the fact without CH staff intervention there's a limit to RPs is a good thing. It keeps people from pulling a THE PRODUCERS type scam where shares of profit are oversold. Certainly if people were putting in serious effort into a project in return for RPs I'd expect there's be additional communication to make sure both/all parties were on the same page.
In the same way Bazaar entries are really just a way to communicate broadly the availability of jobs, who's working on a job, and to spark further conversation... RPs are a way of tracking profit sharing info with your project members, but they aren't defined enough that you can skip direct discussion about your profit sharing model.
|
|
Kevin_Cox
Member since: Oct 14, 2006 Rank: Viking King (557 Posts) |
[Quote Member] |
If anyone wanted to pull a scam they would simply give people points, then keep the profit for themselves.
I simply want to use them as a measurable way keep track of work and not have to worry about coming up short or distributing them unfairly. I want a reliable system that I don't have to worry about down the line. If there is a better way to do this I am all ears.
Its obvious that current businesses are failing under the current system. Not necessarily all because of this issue, but I am just saying things need to change a bit before new results happen. Have a look: http://www.cambrianhouse.com/business/
I simply want to use them as a measurable way keep track of work and not have to worry about coming up short or distributing them unfairly. I want a reliable system that I don't have to worry about down the line. If there is a better way to do this I am all ears.
Its obvious that current businesses are failing under the current system. Not necessarily all because of this issue, but I am just saying things need to change a bit before new results happen. Have a look: http://www.cambrianhouse.com/business/
|
|
daraddishman
Member since: Apr 8, 2008 Rank: Warrior (123 Posts) |
[Quote Member] |
I don't think the system is to blame for the businesses failing on CH.
I place that blame firmly on the people involved.
I place that blame firmly on the people involved.
|
|
Kevin_Cox
Member since: Oct 14, 2006 Rank: Viking King (557 Posts) |
[Quote Member] |
Not to say all blame lays on the system.
|
|
Emesee
Member since: Apr 16, 2007 Rank: Warrior (155 Posts) |
[Quote Member] |
voting based on royalty points
say you have 100 people in your business
You could vote for certain things, like increasing the value of everyones royalty points (x2 xX, whatever) and then adding X number of royalty points...
then everyone could vote, and everyone's vote could count as much as their share of the royalty points.. so if two people together have 750 royalty points they could have 50% of the vote and the other 98 having 750 royalty points could together control the other 50% of the vote...
then certain things may require 1/2 vote, or 2/3 vote...
and if people were not active this may affect things, so votes could be set for maybe a minimum of 2 days and a max of a month depending on what action is sought
say you have 100 people in your business
You could vote for certain things, like increasing the value of everyones royalty points (x2 xX, whatever) and then adding X number of royalty points...
then everyone could vote, and everyone's vote could count as much as their share of the royalty points.. so if two people together have 750 royalty points they could have 50% of the vote and the other 98 having 750 royalty points could together control the other 50% of the vote...
then certain things may require 1/2 vote, or 2/3 vote...
and if people were not active this may affect things, so votes could be set for maybe a minimum of 2 days and a max of a month depending on what action is sought
|
|
GordonMcDowell
Member since: Aug 15, 2006 Rank: Viking King (924 Posts) |
[Quote Member] |
On April 21, 2008, 3:45 pm Emesee said:
voting based on royalty points
say you have 100 people in your business
You could vote for certain things, like increasing the value of everyones royalty points (x2 xX, whatever) and then adding X number of royalty points...
I think that's too complex, and probably what's needed in a project is strong decision making on the part of the project head. If you can't trust the project head to decide wisely on the value of royalty points... you're screwed no matter what.
- Ideas Submitted
- 7259
Posted: April 15, 2008, 3:24 am