How would a royalty system work for software? | Hacker News Reader

How would a royalty system work for software?

3 pointsDracophoenix13 comments

Screenwriters, songwriters, and authors can obtain lifetime residuals for a script, song, or book they wrote forever and half ago. Most coders/engineers however are payed for the length of their usefulness on a project or in a job, whether on a contract or full-time salary. Coding is as much of an art as it is a science and it seems to me that it should have the same right to be compensated as an art.

If one wanted to move to a royalty system for usage of source code or compiled binaries, how would one go about enforcing it? Pay per compilation? Pay per opening of the compiled program? Any other ideas?

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I think this is a very interesting question and worth debating. The problem with startup equity is that the chance of a payout is extremely small. I've also wondered, if you switch jobs 10 times, and pick up a slice of equity each time, what are your chances of a life-altering exit? And joining a FAANG at a later stage means you won't get a huge payout if you create something valuable. Your equity might just appreciate and if you are lucky maybe you'll get a refresher.

In contrast, in the movie industry, you don't have "equity" that can vaporize or become worth nothing overnight. You share in the revenue. You know with a higher likelihood whether the movie will work or not. So this increases the chances of getting a payout and this payout could potentially last decades. Look at major 80s movies from which people are still making good money.

@tgflynn you are incorrect that a movie or other artistic work only requires a few people. Movie productions require very large teams and these people all need to get paid and get a revenue share. It's also heavily unionized in contrast to the situation with our software industry. You are also incorrect that most people are employees in the film industry.

I didn't mean that movies don't require large teams, I used that as an example that does look a little more like a software project.

Are you sure that everyone who works on a movie gets royalties and not just a salary while they are employed ?

Camera operators and lighting people probably are just paid by the hour. I'm not an expert, so I'm going by what I've heard left and right from industry people.

But, anyone who writes a script, acts in the movie (and is not an extra somewhere in the background), works on the sound effects or composes the music, very likely walks home with a rev share, and possible also with a chunk of money up front.

Another data point - someone recently told me they got 120K up front for a few minutes of singing in a commercial which airs on TV.

Isn't this a bit backwards? The royalty system for writing and music evolved in a different age, an age where a physical artifact carried the writing/music and thus it was relatively easy to charge for it, count the reproductions, and distribute any income. You also have to include the huge special interests that have... motivated... the current royalty system. Google for the story of "Mitch Glazier" and "work for hire" to see what shenanigans have been discovered.

Programmers and the job of programming evolved when a physical artifact wasn't necessary, and has become impossible to attach to a work. It's more or less impossible to count reproductions or uses. Any income collected would be less than the number of reproductions or uses, but by how much is utterly impossible to determine. Distribution of the income would be similarly arbitrary.

The screenwriters, songwriters and authors should be paid like programmers, not programmers paid like screenwriters, songwriters and authors.

hahaha... do you really think these people will accept to be paid like programmers? they have unions.

No, just saying that there's a lot of history, and path dependence wrapped up in that issue. Ideals don't enter into it.

Ebook authors, Netflix screenwriters and Spotify artists are still able to obtain royalties for every download or view, so I wouldn't say it's a system of a bygone era just yet. Indie video games, for example, show a path (albeit one with a middleman) to how one might obtain royalties for a work that is "impossible" to count reproductions or uses for.

I think some programmers were paid that way back in the 80's, with companies such as Broderbund and Penguin Software acting as publishers (although not all programs sold by these companies were royalty-based as some were built in-house).

In some ways, today's app stores act as publishers, where indy programmers can get paid roughly 70-80% royalty (or where the programmers pay a 20-30% publishing fee). Difference is back then, there were many publishers, but today there is only one publisher for iPhone, and effectively only one publisher for Android.

In today's royalty model, the indy developer takes all the risk. I think back in the 80's, one could sometimes get an advance from the publisher (like with authoring books).

Software is paid that way, but companies collect the residuals, not individuals. That is the pricing model of SaaS. Feel free to start your own and collect - the viability of doing so is exactly why many people are interested in software to begin with.

But you also might want to look at how "art" is truly compensated. You chose writers, but look at painters. They do not collect money as their works as re-sold over time. They get a one-time fee as they sell it to the first buyer. Again, there are parallels in software: Write an app, sell it to a company, and move on.

I don't want to discourage you from trying to achieve something new. Just be aware that we are not as far off of the business of making money from art as you might think.

Painters might create "litographs" or reproductions or whatever they are called, of major works and keep selling them. Or they turn works into NFTs or whatever. There are various ways to turns works into recurring revenue.

Buyers of art are paying for artistry. The product is the art itself, or something closely related. Buyers of software are paying for working productive machines with inputs and outputs, same as a train or a tractor, but which happen to be virtual.

Sometimes it takes artistry to build machines, but it's an incidental input, not the product. People who design a ship don't usually expect a cut of the cargo it carries, no matter how much more effective their artistry made it.

As someone else points out, a company which owns IP or rents out capability (like a SaaS) might be a closer analog to artists getting royalties.

That's essentially how proprietary software has always worked except the copyright is usually owned by a corporation rather than an individual.

Unlike most artistic works software projects usually require large teams rather than being the product of one or a small group of authors.

The only parallel I can see would be with films. I'm not sure how compensation works in the film industry but my guess is that most people who work on a film are employees of the studio and only a very small group of people receive any royalties.

If you're familiar with Brew, the creator has started a new project called Tea – to try and address this very issue!

https://medium.com/teaxyz/tea-brew-478a9e736638

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