POSTED BY Micah Kesselman

One of the most important steps, and one where the footing is never as solid as would be hoped, a content creator makes along the journey to putting a product to market is signing with a publisher. Be it game development, music, video, or any other sort of media product, it has to be published. What binds the creator and the publisher will of course be the contract the two entities create—be it verbal, written, or some mixture of the two. Unfortunately, this is also where many content creators, especially independent creators, tend to be weakest.

All too often, creators’ instincts are to look at a contract as a framework outlining fairly intuitive common sense scenarios. One side creates content and the other side (for a split of the pie) will bring it to the attention of the relevant consumers; however, the role of contract as risk allocator is, more often than not, overlooked by content creators—which publishers are keen to take advantage of (as you would expect any self-interested actor to do).

Howard Tsao, CEO and Founder of game developer Muse Game, posted an overview of the contracting issues his company faced when originally signing with a publisher. In his conclusion, he writes that one of “the lessons that we learned through it all [is]: Have an acceptable exit strategy if you are unable to do what you promised to do or if you are not getting what you were asking for.” Another way of saying this is, have a way of folding your hand when it becomes necessary. It is easy to become so infatuated with your own ideas and ambitions that the very thought of them not coming to light as planned is painful to even consider. But it does need to be considered. Contracts are more than simply memorializing an agreement—they are mapping out the geography of risk, benefit, and probability that is about to be traversed and demand a practical and impartial eye.

Even big players fall victim to underestimating the importance of every contractual clause. In a recent (as of the time of this writing) unpublished opinion by the 4th Circuit Court of Appeals, the court held in favor of defendants Epic Games in a suit filed by Silicon Knights claiming, among many other things, fraud.[1] A standard and relatively boilerplate warranty disclaimer proved to be fairly robust protection against a claim of fraud. Had Silicon Knights more thoroughly considered the prospect of Epic Games’ product not being capable of Silicon Knights’ ambitions and that Epic Games might not be inherently interested in remedying the issues of a single, possibly one-off, client, closer attention may have been paid to the disclaimers in the contract.[2]

At the end of the day, in an environment where it is becoming increasingly common to quickly glance over a contract before agreeing to it, it behooves small and upcoming content creators to pay particularly close attention to agreements they enter into. Of course, new situations may arise, but more importantly the central role of contracts in allocating risk in clear and favorable ways merits a central focus when artists, developers, or other content creators sit down and take what is hopefully more than a cursory glance at publishing (or any other, for that matter) contracts they are considering entering into.