Legal Opinion: Where does your money go?

Barrett M98B

By on April 3, 2014 at 1:42 pm

Games publishers pay all sorts of people to bring you the games you play. More than just developers and marketers, publishers have to budget in payments to musicians, payments to arms manufacturers, payments to celebrities, and even payments to porn stars (if your game is Saints Row 4).

We talk product placement advertising as if it’s some sort of bad thing, but just about everything you’ll see in game is owned by someone—and often that someone is not the developer or publisher. And often they demand money. And often they insist on how their property can be used in the game. Today we’ll be looking at where your money goes when you buy a game, and how it influences what you see and hear when you start playing.

Licensing fees, not royalties

The first thing worth noting is that in general, these costs are not actually royalties. Unlike movies, where artists get paid performance royalties for when the movie is shown with their song in it, games publishers have managed to weasel out of such an expensive cost. Instead, most artists and other asset owners are instead paid a flat licensing fee.

Whether this is a good thing really depends on perspective. A flat fee is good if you just want a quick buck and exposure. However, if something suddenly becomes a hit, royalties are much better for the artist.

Consider our latest MMO darling: The Elder Scrolls Online. When I first loaded up the game, there was that familiar riff: Da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-daaaah. Sing with me. Anyway, this was probably composed years ago by Jeremy Soule for what would be a pittance these days. Publishers didn’t pay artists much money back then.

Jeremy has probably been paid a fair bit more since then for its use in the more recent Elder Scrolls Games, but this can be directly contrasted with Stan Jones, who in 1948 independently wrote Ghost Riders in the Sky, a song that’s been covered by about a million others since. For every cover and performance made of Ghost Riders, Stan got paid. He could have lived off that one song. You won’t see the same happening for even the most successful game music composers.

Trademarks and product placement

Next to music licensing fees, the next big cost is trademarks. These can range from everything to guns, to celebrity likeness, to movie rights. The agreements to use these will involve both a cost on the publisher, as well as some agreements as to how the thing is used. But what’s more interesting is how these agreements also serve as product placement to govern how the trademarks can be used.

For example, Barrett Firearms Manufacturing is pretty insistent on people paying to include the Barrett 98B rifle in games. The gun’s a trademark. Barrett’s licensing terms also prohibit certain uses of the guns – for example, you can’t put the Barrett in the hands of the bad guys. Even though FPS players like playing with real guns, to get those real guns in the game requires a form of product placement. UPDATE: EA, however, has never paid and openly flaunts this.

The 2010 reboot of GoldenEye also saw this. While GoldenEye 64 starred a pixelated Brosnan, GoldenEye 007 had Pierce’s likeness scrubbed from the franchise, Kim Jong un style. There can only be one Bond.

The takeaway point is that product placement is happening all the time, even if it’s not there on some big billboard. Many things you see in game have their own little restrictions on how they can be used.

Can you just dodge trademarks?

So what happens when a publisher says “I don’t want to pay!” Well, it happens. Games use several tactics to avoid trademarks.

The first is to just make it all up. Most easily done when you can invent all sorts of crap about mass drivers and intergalactic travel and rainbow space lasers due to owning your own franchise, but it also happens with real world things. Despite being bankrolled by Nintendo, GoldenEye 64 took interesting liberties with its guns to avoid trademark issues (and licensing fees—they were already paying enough for Bond, after all). Bond’s signature PPK became the PP7, and the FN-P90 became the RC-P90. And it was made of wood. Everyone who’s seen Stargate knows it’s really polymer.

Nintendo didn’t get sued, so this apparently worked, although it’s possible the arms companies would have had a case. To avoid trademark infringement, the trademark has to be so diluted that it’s no longer distinctive and can’t be recognised. But PP7? Come on. That’s just replacing one letter! For a while I even thought the real gun was named PP7. This confusion is what trademark law is meant to stop.

The last approach is to argue trademark law does not apply because you signed a contract. This happened recently with EA Sports using the images of thousands of American college sportspeople in its games. All college players sign a contract with their governing body (the NCAA) that prevents them from using their game for money—keeping them as amateurs, essentially. The NCAA and EA took this as free reign to just shove whoever they wanted in their games.

To cut a long story short, some former players sued, and the NCAA recently announced they were leaving the video game business as a result. The case hasn’t been fully resolved and involves many complex issues, but it does illustrate just how widespread potential trademark infringement can be in games. So the next time you play, think about all the subtle product placement going on—and who is getting screwed over to make it happen.

33 comments (Leave your own)
Ralph Wiggum

I personally like games with authentic gun names, if anything for immersion and trivia knowledge. Counterstrike and SWAT4 are games which come to mind where the gun names were altered.

It’s trademark protection really which is fair enough. I wonder if films/television have the same issue in having to pay licence fees for gun trademarks?

 
Loophole_62ndFF

It’s interesting to consider: Should developer’s pay license fees to use real-world objects, or should those object’s trademark owners pay the developers for advertising? Or maybe the two fees should cancel each other out! :-)

Suing somebody for trademark infringement is enormously expensive – as with copyright, it’s the lawyers who ultimately profit from the whole system!

 

GOD PATRICK, YOU AND GUNS JESUS.

:P I remember the issue of BF3 and Bell helicopters, as well as EA formally cutting ties with weapons manufacturers etc etc. There’s a whole host if this happening in funny ways.

Can EA exercise their right to freedom of speech though with the use of weapons in games or is that perhaps a bit of a stretch in this case… At the end of the day it’s almost free publicity for the manufacturers in some cases, any publicity can be good publicity right?

 

High Five Patrick! Much gun love.

 

Maaaan, this has been up for well over an hour, I’m here ready with my pitchfork and torch. What’s going on? This pitchfork is getting heavy :(

 

loophole62ndff, that’s not so much a ‘who should pay who’ in the right/wrong sense, but a simple haggle/trade value proposition. i.e.:

- you’re a small publisher and you want to have authenticity, whoever owns the rights to a product might make you pay a licence.

- however if you’re CoD – you may actually charge for the ‘advertising’ space your game provides due to audience access (just like website ads etc).

Depends how you come at it from a business negotiation. To be honest, I don’t think you’ll see games aimed at a market including minors reaping advertising money for weapons any time soon. The ethical look would be terrible and a PR disaster on a scale writ large.

Best you can hope for (as a publisher/dev) is that a weapons company simply wont charge you to use their IP as they see the marketing value.

 

We talk product placement advertising as if it’s some sort of bad thing, but just about everything you’ll see in game is owned by someone—and often that someone is not the developer or publisher. And often they demand money. And often they insist on how their property can be used in the game.

It IS some sort of bad thing, and the two categories are completely different.

Advertising is specifically designed to make you want to buy the product or service in question.

Intellectual property used in games is used to make the game better.

The above statement is like saying, “People don’t want mandatory McDonalds ads in their cars – but (the IP in) everything in your car is owned by someone!”

 

So this is GunsOnNet now?

…because I’m ok with that.

 
Ralph Wiggum

If gun companies are advertising their wares through games, it must be very, very subtle because I’m not aware of it :D

 
James Pinnell

dinofreak:
So this is GunsOnNet now?

…because I’m ok with that.

Well I support gun restrictions, so no :)

 
Patrick Vuleta

ashigaru:
GOD PATRICK, YOU AND GUNS JESUS.

:P I remember the issue of BF3 and Bell helicopters, as well as EA formally cutting ties with weapons manufacturers etc etc. There’s a whole host if this happening in funny ways.

Can EA exercise their right to freedom of speech though with the use of weapons in games or is that perhaps a bit of a stretch in this case… At the end of the day it’s almost free publicity for the manufacturers in some cases, any publicity can be good publicity right?

You’re right! I forgot about EA’s refusal and placed that update in the article. Other publishers aren’t so strenuous about it, however.

It’s one of those grey areas that’s never been tested. As I wrote in the article, they may have a case, but no one’s been bothered enough to sue over it. They’re still having publishers pay them, so it’s more a thing for the negotiating table.

As for guns in general, I really didn’t try to fit them into this article – it’s 3 out of 15 paragraphs. :P They just appear in games a lot and are one of the most prominent form of IP.

I don’t think it’s heavy advertising, but no product placement is. I’m sure if the Barrett started shooting rainbows or was used to kill Americans in games (with rainbows) they’d be more interested in suing over it.

 
Patrick Vuleta

ralphwiggum:
If gun companies are advertising their wares through games, it must be very, very subtle because I’m not aware of it :D

I think it’s more relevant in countries with laws lax enough to allow replica airsoft guns, for example. Manufacturers have apparently seen sales increases of replicas after a game.

Those things are illegal in Australia, so we don’t have that here.

A lot of this stuff bounces off us because we’re not the target market.

 
Patrick Vuleta

caitsith01: It IS some sort of bad thing, and the two categories are completely different.

Advertising is specifically designed to make you want to buy the product or service in question.

Intellectual property used in games is used to make the game better.

The above statement is like saying, “People don’t want mandatory McDonalds ads in their cars – but (the IP in) everything in your car is owned by someone!”

The only reason I know about the SPAS 12 is because of “Clever girl…”

I’m sure it wasn’t meant to get people to buy the gun, but I’m also sure it led to increased exposure. And it probably led to dinosaur-obsessed boys buying replicas in countries which allowed it, which in turn are a licensed product.

Main thing is you can have a billboard effect where you don’t have an actual advertisement, and the inclusion is for artistic purposes, but it still creates sales. That’s a form of advertising people want to protect.

 

James Pinnell: Well I support gun restrictions, so no :)

then your a bad person

 
Thermal Ions

Patrick Vuleta
I don’t think it’s heavy advertising, but no product placement is.

Well no good/natural product placement is. You do come across examples from time to time where it’s obviously forced – admittedly more so in movies/tv than games though in my experience.

@James. Ignore squishie.

 
Patrick Vuleta

Yeah, I need to look into forced examples of product placement. Let me Bing! it.

 
Nasty Wet Smear

“And this is the PewPew-matic.”
“It looks like a Glock 9m.”
“Yes, it does, but it clearly says ‘PewPew-matic’, so it isn’t.”

GAME EXACTLY THE SAME! :O

 

James Pinnell: Well I support gun restrictions, so no :)

squishie: then your a bad person

Journalist vs guy that can’t use your/you’re debating gun control.

I’d just like to remind everyone that the seat belt and no smoking lights are on because this comment section is about to take off.

 
Patrick Vuleta

Let’s talk about the many paragraphs that were about music and movies. And there’s a couple about sports games.

The EA Sports case is interesting as a judge thew out a claim by EA that “freedom of speech” meant the case against them should be thrown out, which is the basic argument they’ve been using for all their trademark issues.

The right position is probably the one stated by Ivan, in that even though this all is technically infringement, EA is in a position of power with marketing exposure, which means the cost benefits disfavours lawsuits. The EA Sports lawsuit is a class action, however, so a bit less costly for the many participants.

 

Who wants to talk about that when we can yell at each other? :P

 
Leave a comment

You can use the following bbCode
[i], [b], [img], [quote], [url href="http://www.google.com/"]Google[/url]

Leave a Reply

PC Gaming Calendar 2014

Follow Games.on.net

YouTube

Steam Group

Upcoming Games

Community Soapbox

Recent Features
Screencheat

Five Australian Indie Games We’d Hand Arbitrary Awards To: AVCon 2014

From a split-screen shooter where everyone is invisible to an abandoned space station, Australian indies are killing it at this year's AVCon.

Mass Effect 3 580x300

Here are 10 things BioWare absolutely must NOT do in Mass Effect 4

The hard truths that BioWare don't want to hear.

Survarium

Survarium Beta (PVP): Hopeless landscape, hopeless hit registration

James picks up where STALKER left off, but finds that the PVP part of this game may not have been the best way to go public.

Heroes of the Storm

Heroes of the Storm makes other MOBAs look like crap: My scientific analysis

Five highly objective examples of why other MOBA games can just get lost, thanks.

Streaming Radio
Radio Streams are restricted to iiNet group customers.

GreenManGaming MREC

Facebook Like Box